DISTRIBUTION AGREEMENT
This Agreement, made as of November 7, 2002 by and between The Forester
Funds, Inc. (the "Fund"), a Maryland Corporation, and Unified Financial
Securities, Inc., an Indiana corporation ("Distributor").
WHEREAS, the Fund is registered as an open-end management investment
company registered under the Investment Company Act of 1940, as amended
(the "Act"); and
WHEREAS, Distributor is a broker-dealer registered with the Securities
and Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Fund and Distributor are desirous of entering into an
agreement providing for the distribution by Distributor of shares of
beneficial interest (the "Shares") of each series or share class of shares of
the Fund (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of
the parties contained herein, the parties agree as follows:
1. Appointment.
The Fund hereby appoints Distributor as its exclusive agent for the
distribution of the Shares, and Distributor hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the
Fund shall not sell any Shares except on the terms set forth in this
Agreement. Notwithstanding any other provision hereof, the Fund may
terminate, suspend or withdraw the offering of Shares whenever, in its
sole discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Distributor will have the right, as agent for the Fund, to enter into
dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering
price (as defined in subparagraph 2(d) hereof) stated in the Fund's
effective Registration Statement on Form N-1A under the Act and the Securities
Act of 1933, as amended, including the then current prospectus and statement
of additional information (the "Registration Statement"). Upon receipt of an
order to purchase Shares from a dealer with whom Distributor has a dealer
agreement, Distributor will promptly cause such order to be filled by the Fund.
(b) Distributor will also have the right, as agent for the Fund, to sell such
Shares to the public against orders therefor at the public offering price.
(c) Distributor will also have the right to take, as agent for the Fund, all
actions which, in Distributor's reasonable judgment, are necessary to carry
into effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series shall be the
respective net asset value of the Shares of that Series then in effect, plus
any applicable sales charge determined in the manner set forth in the
Registration Statement or as permitted by the Act and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. In no event
shall any applicable sales charge exceed the maximum sales charge permitted by
the Rules of the NASD.
(e) The net asset value of the Shares of each Series shall be determined in the
manner provided in the Registration Statement, and when determined shall be
applicable to transactions as provided for in the Registration Statement. The
net asset value of the Shares of each Series shall be calculated by the Fund or
by another entity on behalf of the Fund. Distributor shall have no duty to
inquire into or liability for the accuracy of the net asset value per Share
as calculated.
(f) On every sale, the Fund shall receive the applicable net asset value of
the Shares promptly, but in no event later than the third business day
following the date on which Distributor shall have received an order for
the purchase of the Shares.
(g) Upon receipt of purchase instructions, Distributor will transmit such
instructions to the Fund or its transfer agent for registration of the
Shares purchased.
(h) Nothing in this Agreement shall prevent Distributor or any affiliated
person (as defined in the Act) of Distributor from acting as Distributor or
distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Distributor or
any such affiliated person from buying, selling or trading any securities
for its or their own account or for the accounts of others from whom it or
they may be acting; provided, however, that Distributor expressly represents
that it will undertake no activities which, in its reasonable judgment, will
adversely affect the performance of its obligations to the Fund under this
Agreement.
(i) Distributor, as agent of and for the account of the Fund, may repurchase
the Shares at such prices and upon such terms and conditions as shall be
specified in the Registration Statement.
3. Sale of Shares by the Fund.
The Fund reserves the right to issue any Shares at any time directly to the
holders of Shares ("Shareholders"), to sell Shares to its Shareholders or
to other persons at not less than net asset value and to issue Shares in
exchange for substantially all the assets of any corporation or trust or for
the shares of any corporation or trust.
4. Basis of Sale of Shares.
Distributor does not agree to sell any specific number of Shares. Distributor,
as agent for the Fund, undertakes to sell Shares on a best efforts basis only
against orders therefor.
5. Rules of NASD, etc.
(a) Distributor will conform to the Rules of the NASD and the securities laws
of any jurisdiction in which it sells, directly or indirectly, any Shares.
(b) Distributor will require each dealer with whom Distributor has a dealer
agreement to conform to the applicable provisions hereof and the Registration
Statement with respect to the public offering price of the Shares, and neither
Distributor nor any such dealers shall withhold the placing of purchase orders
so as to make a profit thereby.
(c) Distributor agrees to furnish to the Fund sufficient copies of any
agreements, plans or other materials it intends to use in connection with any
sales of Shares in reasonably adequate time for the Distributor, on behalf of
the Fund, to file and clear them with the proper authorities before they are
put in use, and not to use them until so filed and cleared.
(d) Distributor, at its own expense, will qualify as dealer or broker, or
otherwise, under all applicable state or federal laws required in order that
Shares may be sold in such States as may be mutually agreed upon by the parties.
(e) Distributor shall not make, or permit any representative, broker or dealer
to make, in connection with any sale or solicitation of a sale of the Shares,
any representations concerning the Shares except those contained in the then
current prospectus and statement of additional information covering the Shares
and in printed information approved by the Fund as information supplemental to
such prospectus and statement of additional information. Copies of the then
effective prospectus and statement of additional information and any such
printed supplemental information will be supplied by the Fund to Distributor
in reasonable quantities upon request.
6. Records to be Supplied by Fund.
The Fund shall furnish to Distributor copies of all information, financial
statements and other papers which Distributor may reasonably request for use
in connection with the distribution of the Shares, and this shall include, but
shall not be limited to, one certified copy, upon request by Distributor, of
all financial statements prepared for the Fund by independent public
accountants.
7. Fees and Expenses.
(a) As compensation for the services rendered to the Fund pursuant to this
Agreement the Fund shall pay Distributor fees determined as set forth on
Exhibit A to this Agreement. Such fees are to be billed monthly and shall be
due and payable upon receipt of the invoice. Upon any termination of this
Agreement and before the end of any month, the fee for the part of the month
before such termination shall be equal to the fee normally due for the full
monthly period and shall be payable upon the date of termination of this
Agreement.
(b) In the performance of its obligations under this Agreement, Distributor
will pay only the costs incurred in qualifying as a broker or dealer under
state and federal laws and in establishing and maintaining relationships with
the dealers selling the Shares. All other costs in connection with the
offering of the Shares will be paid by the Fund in accordance with agreements
between the Fund and Distributor as permitted by applicable laws, including
the Act and rules and regulations promulgated thereunder.
(c) Distributor may from time to time employ or associate with such person
or persons as may be appropriate to assist Distributor in the performance of
this Agreement. Such person or persons may be officers and employees who are
employed or designated as officers by both Distributor and the Fund.
Distributor shall pay the compensation of such person or persons for such
employment and no obligation will be incurred by or on behalf of the Fund
in such respect.
(d) Distributor will render, after the close of each month in which services
have been furnished, a statement reflecting all of the charges for such month.
Charges remaining unpaid after thirty (30) days shall bear interest in finance
charges equivalent to, in the aggregate, the Prime Rate (as publicly announced
by Firstar Bank, N.A., from time to time) plus 2.00% per year and all costs and
expenses of effecting collection of any such sums, including reasonable
attorney's fees, shall be paid by the Fund to Distributor.
8. Indemnification of Fund.
Distributor agrees to indemnify and hold harmless the Fund and each person who
has been, is, or may hereafter be a trustee, director, officer, employee,
shareholder or control person of the Fund against any loss, damage or
expense (including the reasonable costs of investigation) reasonably incurred
by any of them in connection with any claim or in connection with any action,
suit or proceeding to which any of them may be a party, which arises out of or
is alleged to arise out of or is based upon any untrue statement or alleged
untrue statement of a material fact, or the omission or alleged omission to
state a material fact necessary to make the statements not misleading, on the
part of Distributor or any agent or employee of Distributor or any other person
for whose acts Distributor is responsible, unless such statement or omission
was made in reliance upon written information furnished by the Fund.
Distributor likewise agrees to indemnify and hold harmless the Fund and each
such person in connection with any claim or in connection with any action,
suit or proceeding which arises out of or is alleged to arise out of
Distributor's failure to exercise reasonable care and diligence with respect
to its services, if any, rendered in connection with investment, reinvestment,
automatic withdrawal and other plans for Shares. The term "expenses" for
purposes of this and the next paragraph includes amounts paid in satisfaction
of judgments or in settlements which are made with Distributor's consent.
The foregoing rights of indemnification shall be in addition to any other
rights to which the Fund or each such person may be entitled as a matter
of law.
9. Indemnification of Distributor.
The Fund agrees to indemnify and hold harmless Distributor and each person who
has been, is, or may hereafter be a director, officer, employee, shareholder or
control person of Distributor against any loss, damage or expense (including
the reasonable costs of investigation) reasonably incurred by any of them in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or negligence, including clerical
errors and mechanical failures, on the part of any of such persons in the
performance of Distributor's duties or from the reckless disregard by any of
such persons of Distributor's obligations and duties under this Agreement, for
all of which exceptions Distributor shall be liable to the Fund. The Fund will
advance attorneys' fees or other expenses incurred by any such person in
defending a proceeding, upon the undertaking by or on behalf of such person to
repay the advance if it is ultimately determined that such person is not
entitled to indemnification.
In order that the indemnification provisions contained in this Paragraph 9
shall apply, it is understood that if in any case the Fund may be asked to
indemnify Distributor or any other person or hold Distributor or any other
person harmless, the Fund shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further understood that
Distributor will use all reasonable care to identify and notify the Fund
promptly concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the Fund. The
Fund shall have the option to defend Distributor and any such person against
any claim which may be the subject of this indemnification, and in the event
that the Fund so elects it will so notify Distributor, and thereupon the Fund
shall take over complete defense of the claim, and neither Distributor nor any
such person shall in such situation initiate further legal or other expenses
for which it shall seek indemnification under this Paragraph 9. Distributor
shall in no case confess any claim or make any compromise in any case in which
the Fund will be asked to indemnify Distributor or any such person except
with the Fund's written consent.
Notwithstanding any other provision of this Agreement, Distributor shall be
entitled to receive and act upon advice of counsel (who may be counsel for
the Fund or its own counsel) and shall be without liability for any
action reasonably taken or thing reasonably done pursuant to such advice,
provided that such action is not in violation of applicable federal or state
laws or regulations.
10. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Distributor, (ii) either by action of the
Board of Directors of the Fund or at a meeting of the Shareholders of the Fund
by the affirmative vote of a majority of the outstanding Shares, and (iii) by a
majority of the Directors of the Fund who are not interested persons of the
Fund or of Distributor by vote cast in person at a meeting called for the
purpose of voting on such approval.
Either the Fund or Distributor may at any time terminate this Agreement on
sixty (60) days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party.
11. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and shall remain in full
force and effect for a period of one (1) year from the date of its execution
(unless terminated automatically as set forth in Section 11), and from
year to year thereafter, subject to annual approval (i) by Distributor,
(ii) by the Board of Directors of the Fund or a vote of a majority of the
outstanding Shares, and (iii) by a majority of the Directors of the Fund who
are not interested persons of the Fund or of Distributor by vote cast in person
at a meeting called for the purpose of voting on such approval.
12. New Series.
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Fund established during the
initial or renewal term of this Agreement.
13. Successor Investment Fund.
Unless this Agreement has been terminated in accordance with Paragraph 11,
the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Fund
as a result of reorganization, recapitalization or change of domicile.
14. Limitation of Liability.
It is expressly agreed that the obligations of the Fund hereunder shall not be
binding upon any of the Directors, shareholders, nominees, officers, agents or
employees of the Fund, personally, but bind only the trust property
of the Fund. The execution and delivery of this Agreement have been authorized
by the Directors of the Fund and signed by an officer of the Fund, acting as
such, and neither such authorization by such Directors nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Fund.
15. Severability.
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
16. Questions of Interpretation.
(a) This Agreement shall be governed by the laws of the State of Indiana.
(b) Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
Act shall be resolved by reference to such term or provision of the Act and to
interpretation thereof, if any, by the United States courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. Notices.
Any notices under this Agreement shall be in writing, addressed and delivered
or mailed postage paid to the other party, with a copy to the Fund's counsel,
at such address as such other party may designate for the receipt of such
notice. Such notice will be effective upon receipt. Until further notice
to the other party, it is agreed that the address of each party for this
purpose shall be:
(a) If to the Fund, to:
The Forester Fund, Inc.
c/o Forester Capital Management, Ltd.
000 Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attn: President
(b) If to Unified, to:
Unified Financial Securities, Inc.
000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: President
18. Execution
This Agreement may be executed by one or more counterparts, each of which
shall be deemed an original, but all of which together will constitute
one in the same instrument.
IN WITNESS WHEREOF, the Fund and Distributor have each caused this Agreement
to be signed in duplicate on their behalf, all as of the day and year
first above written.
THE FORESTER FUND, INC.
By: Date________________
Print Name:
Title:
Attest:
UNIFIED FINANCIAL SECURITIES, INC.
By: Date________________
Print Name:
Title:
Attest:
EXHIBIT A
to
Distribution Agreement
DISTRIBUTION FEE SCHEDULE
The prices contained herein are effective for twelve months from the
execution date of the Distribution Agreement.
All fees are billed monthly and are payable upon receipt.
I Standard Fees
0.01% of average daily Fund net assets subject to an annual minimum
fee of $6,000 per Trust from $0 to $5 million in average net assets per
month, and $12,000 when average net assets per month are in excess of $5
million. Fees are billed on a monthly basis.
II Additional Services
? Sales literature and document review (including websites)
- $75 per hour, plus NASD filing fees.
? NASD and other filing fees
- Pass thru
? Annual Licensing and Compliance Fees
(of pre-approved RR's)
- $500 per Registered Representative
(Site visits charged as out-of-pocket
expenses)
? Travel Expenses and Out-of-Pockets
- Pass thru
? Other duties as agreed upon
- Negotiable
NOTE: The Standard Fees in Section I above will be reduced by fifty
percent (50%) through May 31, 2003.
1
Unified Financial Securities, Inc. 11/07/2002 The Forester Funds, Inc. - 3
Unified Financial Securities, Inc. 11/07/2002 The Forester Funds, Inc. - 1
