DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 24th day of October, 2003, by and between
Lotsoff Capital Management Equity Trust, a Delaware statutory trust (the
"Trust"), and UMB Distribution Services, LLC, a Wisconsin limited liability
company (the "Distributor").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") and is authorized to
issue shares of beneficial interest in separate series with each such series
representing interests in a separate portfolio of securities and other assets;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and the Distributor desire to enter into an agreement
pursuant to which the Distributor shall be the distributor of the shares of the
Trust representing the investment portfolios described on Schedule A hereto and
any additional shares and/or investment portfolios the Trust and the Distributor
may agree upon and include on Schedule A as such Schedule may be amended from
time to time (such shares and any additional shares are referred to as the
"Shares" and such investment portfolios and any additional investment portfolios
are individually referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Appointment of the Distributor.
The Trust hereby appoints the Distributor as agent for the distribution of
the Shares, on the terms and for the period set forth in this Agreement. The
Distributor hereby accepts such appointment as agent for the distribution of the
Shares on the terms and for the period set forth in this Agreement.
2. Services and Duties of the Distributor.
2.1 The Distributor will act as agent for the distribution of Shares in
accordance with the instructions of the Trust's Board of Trustees and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended (the "1933 Act").
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2.2 The Distributor may incur expenses for appropriate distribution
activities which it deems reasonable which are primarily intended to result in
the sale of Shares, including, but not limited to, advertising, the printing and
mailing of prospectuses to other than current shareholders, and the printing and
mailing of sales literature. At the direction of the Trust, the Distributor may
enter into servicing and/or selling agreements with qualified broker/dealers and
other persons with respect to the offering of Shares to the public, and if it so
chooses the Distributor may act as principal. The Distributor shall not be
obligated to incur any specific expenses nor sell any certain number of Shares
of any Fund.
2.3 All Shares of the Funds offered for sale by the Distributor shall be
offered for sale to the public at a price per share (the "offering price")
provided in the Funds' then current prospectus. The Distributor shall have no
liability for the payment of the purchase price of the Shares sold pursuant to
this Agreement or with respect to redemptions or repurchases of Shares.
2.4 The Distributor shall act as distributor of the Shares in compliance
in all material respects with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to the 1940 Act, by the Securities and Exchange Commission (the
"Commission") and the NASD.
2.5 The Distributor shall not utilize any materials in connection with the
sales or offering of Shares except the Trust's prospectus and statement of
additional information and such other materials as the Trust shall provide or
approve. The Distributor agrees to provide compliance review of all sales
literature and marketing materials prepared for use by or on behalf of the Trust
in advance of the use of such materials. The Trust agrees to incorporate such
changes to such materials as the Distributor shall request. The Distributor will
file the materials as may be required with the NASD, SEC or state securities
commissioners. The Trust represents that it will not use or authorize the use of
any advertising or sales material unless and until such materials have been
approved and authorized for use by the Distributor.
3. Duties and Representations of the Trust.
3.1 The Trust represents that it is registered as an open-end management
investment company under the 1940 Act and that it has and will continue to act
in conformity with its Declaration of Trust, By-Laws, its registration statement
as may be amended from time to time and resolutions and other instructions of
its Board of Trustees and has and will continue to comply with all applicable
laws, rules and regulations including without limitation the 1933 Act, the 1934
Act, the 1940 Act, the laws of the states in which shares of the Funds are
offered and sold, and the rules and regulations thereunder.
3.2 The Trust shall take or cause to be taken all necessary action to
register and maintain the registration of the Shares under the 1933 Act for sale
as herein contemplated and shall pay all costs and expenses in connection with
the registration of Shares under the 1933 Act, and be responsible for all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Trust hereunder.
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3.3 The Trust shall execute any and all documents and furnish any and all
information and otherwise take all actions which may be reasonably necessary in
the discretion of the Trust's officers in connection with the qualification of
the Shares for sale in such states as the Distributor and the Trust may approve,
shall maintain the qualification of a sufficient number or amount of shares
thereunder, and shall pay all costs and expenses in connection with such
qualification. The Trust shall notify the Distributor, or cause it to be
notified, of the states in which the Shares may be sold and shall notify the
Distributor of any change to the information.
3.4 The Trust shall, at its expense, keep the Distributor fully informed
with regard to its affairs. In addition, the Trust shall furnish the Distributor
from time to time such information, documents and reports with respect to the
Trust and the Shares as the Distributor may reasonably request, and the Trust
warrants that the statements contained in any such information shall be true and
correct and fairly represent what they purport to represent.
3.5 The Trust represents to the Distributor that all registration
statements and prospectuses of the Trust filed or to be filed with the
Commission under the 1933 Act and 1940 Act with respect to the Shares have been
and will be prepared in conformity with the requirements of the 1933 Act, the
1940 Act, and the rules and regulations of the Commission thereunder. As used in
this Agreement the terms "registration statement" and "prospectus" shall mean
any registration statement and prospectus (together with the related statement
of additional information) at any time now or hereafter filed with the
Commission with respect to any of the Shares and any amendments and supplements
thereto which at any time shall have been or will be filed with said Commission.
The Trust represents and warrants to the Distributor that any registration
statement and prospectus, when such registration statement becomes effective,
will contain all statements required to be stated therein in conformity with the
1933 Act, the 1940 Act and the rules and regulations of the Commission; that all
information contained in the registration statement and prospectus will be true
and correct in all material respects when such registration statement becomes
effective; and that neither the registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Trust
agrees to file from time to time such amendments, supplements, reports and other
documents as may be necessary or required in order to comply with the 1933 Act
and the 1940 Act and in order that there may be no untrue statement of a
material fact in a registration statement or prospectus, or necessary or
required in order that there may be no omission to state a material fact in the
registration statement or prospectus which omission would make the statements
therein misleading. The Trust shall promptly notify the Distributor of any
advice given to it by counsel to the Trust regarding the necessity or
advisability of amending or supplementing the registration statement.
3.6 The Trust shall not file any amendment to the registration statement
or supplement to any prospectus without giving the Distributor reasonable notice
thereof in advance and if the Distributor declines to assent to such amendment
(after a reasonable time), the Trust may terminate this Agreement forthwith by
written notice to the Distributor without payment of any penalty. If the Trust
shall not propose an amendment or amendments and/or supplement or supplements
promptly after receipt by the Trust of a written request in good faith from the
Distributor to do so, the Distributor may, at its option, immediately terminate
this Agreement. In addition, if, at any time during the term of this Agreement,
the Distributor requests the Trust to make any change in its
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governing instruments or in its methods of doing business which are necessary in
order to comply with any requirement of applicable law or regulation, and the
Trust fails to make any such change as requested, the Distributor may terminate
this Agreement forthwith by written notice to the Trust without payment of any
penalty. Nothing contained in this Agreement shall in any way limit the Trust's
right or obligation to file at any time any amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Trust may deem advisable, with advice of its counsel, such right being in all
respects absolute and unconditional.
3.7 Whenever in its judgment such action is warranted by market, economic
or political conditions, or by circumstances of any kind, the Trust may decline
to accept any orders for, or make any sales of, any Shares until such time as it
deems it advisable to accept such orders and to make such sales and the Trust
shall advise the Distributor promptly of such determination.
3.8 The Trust agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the Commission
or its staff relating to the Funds including requests by the Commission for
amendments to the registration statement or prospectuses;
(ii) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or prospectuses
then in effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectuses or
which requires the making of a change in such registration statement or
prospectuses in order to make the statements therein not misleading; and
(iv) of all actions taken by the Commission with respect to any
amendments to any registration statement or prospectus which may from time
to time be filed with the Commission.
4. Indemnification.
4.1(a) The Trust authorizes the Distributor to use any prospectus or
statement of additional information, in the form furnished to the Distributor
from time to time, in connection with the sale of Shares. The Trust shall
indemnify, defend and hold the Distributor, and each of its present or former
directors, members, officers, employees, and any person who controls or
previously controlled the Distributor within the meaning of Section 15 of the
1933 Act ("Distributor Indemnitees"), free and harmless (a) from and against any
and all losses, claims, demands, liabilities, damages, charges, payments, costs
and expenses (including the costs of investigating or defending any alleged
losses, claims, demands, liabilities, damages, charges, payments, costs or
expenses and any counsel fees incurred in connection therewith) of any and every
nature ("Losses") which the Distributor and/or each of the Distributor
Indemnitees may incur under the 1933 Act, the 1934 Act, any other statute
(including Blue Sky laws) or any rule or regulation thereunder, or under common
law or otherwise, arising out of or based upon any untrue statement, or alleged
untrue statement, of a material fact
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contained in the registration statement or any prospectus, an annual or interim
report to shareholders or sales literature, or any amendments or supplements
thereto, or arising out of or based upon any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Trust's
obligation to indemnify the Distributor and any of the foregoing indemnitees
shall not be deemed to cover any Losses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with information relating to the Distributor and
furnished to the Trust or its counsel by the Distributor in writing for the
purpose of, and used in, the preparation thereof; (b) from and against any and
all Losses which the Distributor and/or each of the Distributor Indemnitees may
incur in connection with this Agreement or the Distributor's performance
hereunder, except to the extent the Losses result from the Distributor's willful
misfeasance, bad faith or negligence in the performance of its duties, or by
reason of its reckless disregard of its obligations and duties under this
Agreement, (c) from and against any and all Losses which the Distributor and/or
each of the Distributor Indemnitees may incur resulting from the actions or
inactions of any prior service provider to the Funds, or (d) from and against
any and all Losses which the Distributor and/or each of the Distributor
Indemnitees may incur when acting in accordance with instructions from the Trust
or its representatives. Promptly after receipt by the Distributor of notice of
the commencement of an investigation, action, claim or proceeding, the
Distributor shall, if a claim for indemnification in respect thereof is to made
under this section, notify the Trust in writing of the commencement thereof,
although the failure to do so shall not prevent recovery by the Distributor or
any Distributor Indemnitee.
4.1(b) The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Trust elects to assume the defense, such defense shall be conducted by counsel
chosen by the Trust and approved by the Distributor, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain such counsel and notifies the Distributor of such
election, the indemnified defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by them subsequent to the
receipt of the Trust's election. If the Trust does not elect to assume the
defense of any such suit, or in case the Distributor does not, in the exercise
of reasonable judgment, approve of counsel chosen by the Trust, or in case there
is a conflict of interest between the Trust and the Distributor or any of the
Distributor Indemnitees, the Trust will reimburse the indemnified person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by the Distributor and them. The Trust's indemnification
agreement contained in this Section 4.1 and the Trust's representations and
warranties in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Distributor and each
of the Distributor Indemnitees, and shall survive the delivery of any Shares and
the termination of this Agreement. This agreement of indemnity will inure
exclusively to the Distributor's benefit, to the benefit of each of the
Distributor Indemnitees, and their estates and successors. The Trust agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against the Trust, the Trust or any of its officers or trustees in
connection with the issue and sale of any of the Shares.
4.1(c) The Trust acknowledges and agrees that in the event the Distributor,
at the direction of the Trust, is required to give indemnification to any entity
selling Shares or providing shareholder
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services to shareholders or others and such entity shall make a claim for
indemnification against the Distributor, the Distributor shall make a similar
claim for indemnification against the Trust and shall be entitled to such
indemnification.
4.2(a) The Distributor shall indemnify, defend and hold the Trust, and each
of its present or former trustees, officers, employees, , and any person who
controls or previously controlled the Trust within the meaning of Section 15 of
the 1933 Act ("Trust Indemnitees"), free and harmless from and against any and
all Losses which the Trust, and each of its present or former trustees,
officers, employees, representatives, or any such controlling person, may incur
under the 1933 Act, the 1934 Act, any other statute (including Blue Sky laws) or
any rule or regulation thereunder, or under common law or otherwise, (a) arising
out of or based upon any untrue, or alleged untrue, statement of a material fact
contained in the Trust's registration statement or any prospectus, as from time
to time amended or supplemented, or the omission, or alleged omission, to state
therein a material fact required to be stated therein or necessary to make the
statement not misleading, but only if such statement or omission was made in
reliance upon, and in conformity with, information relating to the Distributor
and furnished in writing to the Trust or the Trust's counsel by the Distributor
for the purpose of, and used in, the preparation thereof, and (b) to the extent
any Losses arise out of or result from the Distributor's willful misfeasance,
bad faith or negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this Agreement; the
Distributor's agreement to indemnify The Trust and any of the The Trust
Indemnitees shall not be deemed to cover any Losses to the extent they arise out
of or result from the Trust's willful misfeasance, bad faith or negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement. Promptly after receipt by the
Trust of notice of the commencement of an investigation, action, claim or
proceeding, the Trust shall, if a claim for indemnification in respect thereof
is to made under this section, notify the Distributor in writing of the
commencement thereof, although the failure to do so shall not prevent recovery
by the Trust or any Trust Indemnitee.
4.2(b) The Distributor shall be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Distributor elects to assume the defense, such defense shall be conducted by
counsel chosen by the Distributor and approved by the Trust, which approval
shall not be unreasonably withheld. In the event the Distributor elects to
assume the defense of any such suit and retain such counsel and notifies the
Distributor of such election, the indemnified defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by them
subsequent to the receipt of the Distributor's election. If the Distributor does
not elect to assume the defense of any such suit, or in case the Trust does not,
in the exercise of reasonable judgment, approve of counsel chosen by the
Distributor, the Distributor will reimburse the indemnified person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by the Trust and them. The Distributor's indemnification
agreement contained in this Section 4.2 and the Distributor's representations
and warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Trust or any
of the Trust Indemnitees, and shall survive the delivery of any Shares and the
termination of this Agreement. This agreement of indemnity will inure
exclusively to the Trust's benefit, to the benefit of each of the Trust
Indemnitees and their estates and successors. The Distributor agrees promptly to
notify the Trust of the commencement of any litigation or proceedings against
the
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Distributor or any of its officers or members in connection with the issue and
sale of any of the Shares.
5. Offering of Shares.
No Shares shall be offered by either the Distributor or the Trust under any
of the provisions of this Agreement and no orders for the purchase or sale of
such Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act, or if and so long as the current prospectus as required by Section 10 of
the 1933 Act, as amended, is not on file with the Commission; provided, however,
that nothing contained in this paragraph 5 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the prospectus or
Declaration of Trust.
6. Limitation of Liability
6.1 The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of its obligations and duties under this Agreement, except a loss
resulting from the Distributor's willful misfeasance, bad faith or negligence in
the performance of such duties and obligations, or by reason of its reckless
disregard thereof. Furthermore, notwithstanding anything herein to the contrary,
the Distributor shall not be liable for any action taken or omitted to be taken
in accordance with instructions received by the Distributor from an officer or
representative of the Trust or for any action taken or omitted to be taken by
any prior service provider of the Funds.
6.2 The Distributor assumes no responsibility hereunder, and shall not be
liable, for any default, damage, loss of data, errors, delay or any other loss
whatsoever caused by events beyond its reasonable control. The Distributor will,
however, take all reasonable steps to minimize service interruptions for any
period that such interruption continues beyond its control. Notwithstanding
anything in this agreement to the contrary, in no event shall either party, its
affiliates or any of its or their trustees, members, officers, employees, agents
or subcontractors, be liable for lost profits or consequential damages.
7. Term.
7.1 This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. Unless sooner terminated as provided herein,
this Agreement shall continue in effect with respect to each Fund until October
24, 2004. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trust's
Board of Trustees or (ii) the vote of a majority (as defined in the 1940 Act and
Rule 18f-2 thereunder) of the outstanding voting securities of a Fund, and
provided that in
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either event the continuance is also approved by a majority of the Trust's Board
of Trustees who are not "interested persons" (as defined in the 0000 Xxx) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval.
7.2 This Agreement may be terminated without penalty with respect to a
particular Fund (1) through a failure to renew this Agreement at the end of a
term, (2) upon mutual consent of the parties, or (3) on no less than thirty (30)
days' written notice, by the Trust's Board of Trustees, by vote of a majority
(as defined with respect to voting securities in the 1940 Act and Rule 18f-2
thereunder) of the outstanding voting securities of a Fund, or by the
Distributor (which notice may be waived by the party entitled to such notice).
The terms of this Agreement shall not be waived, altered, modified, amended or
supplemented in any manner whatsoever except by a written instrument signed by
the Distributor and the Trust. This Agreement will also terminate automatically
in the event of its assignment (as defined in the 1940 Act).
7.3 In the event of termination of this Agreement, all reasonable expenses
associated with movement of records and materials and conversion thereof shall
be borne by the Funds.
8. Miscellaneous.
8.1 The services of the Distributor rendered to the Funds are not deemed
to be exclusive. The Distributor may render such services and any other services
to others, including other investment companies. The Trust recognizes that from
time to time members, officers, and employees of the Distributor may serve as
directors, trustees, officers and employees of other entities (including other
investment companies), that such other entities may include the name of the
Distributor as part of their name and that the Distributor or its affiliates may
enter into distribution, administration, fund accounting, transfer agent or
other agreements with such other entities.
8.2 The Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds' shareholders, not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder, and
not to disclose such information except where the Distributor may be exposed to
civil or criminal proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities or court process, when subject
to governmental or regulatory audit or investigation, or when so requested by
the Trust. In case of any requests or demands for inspection of the records of
the Funds, the Distributor will endeavor to notify the Trust promptly and to
secure instructions from a representative of the Trust as to such inspection.
Records and information which have become known to the public through no
wrongful act of the Distributor or any of its employees, agents or
representatives, and information which was already in the possession of the
Distributor prior to receipt thereof, shall not be subject to this paragraph.
8.3 This Agreement shall be governed by Wisconsin law, excluding the laws
on conflicts of laws. To the extent that the applicable laws of the State of
Wisconsin, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or order of
the Commission thereunder. Any provision of this Agreement which may be
determined by competent
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authority to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. In such case, the
parties shall in good faith modify or substitute such provision consistent with
the original intent of the parties.
8.4 Any notice required or to be permitted to be given by either party to
the other shall be in writing and shall be deemed to have been given when sent
by registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Distributor shall be sent to UMB Distribution Services,
LLC, 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx X, Xxxxxxxxx, XX, 00000, Attention: Xxxxx
Xxxxxxx, and notice to the Trust shall be sent to Lotsoff Capital Management
Equity Trust, 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, XX, 00000 Attention: Xxxxxxx X.
Xxxxxxx.
8.5 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
8.6 The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise effect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
LOTSOFF CAPITAL MANAGEMENT EQUITY TRUST
(the "Trust")
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
UMB DISTRIBUTION SERVICES, LLC
(the "Distributor")
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
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Schedule A
to the
Distribution Agreement
by and between
Lotsoff Capital Management Equity Trust
and
UMB Distribution Services, LLC
Name of Funds
Fund Effective Date
---- --------------
Lotsoff Capital Management Micro Cap Fund
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