DISTRIBUTION AGREEMENT
----------------------
This Agreement made as of August 1, 1999 by and between Regional
Opportunity Fund (the "Trust"), an Ohio business trust and an open-end
registered investment company, and Unified Management Corporation, an Indiana
corporation ("Distributor").
WHEREAS, the Trust is 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 Trust 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 of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
------------
The Trust 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
Trust shall not sell any Shares except on the terms set forth in this
Agreement. Notwithstanding any other provision hereof, the Trust 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 Trust, 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 Trust'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 Trust.
(b) Distributor will also have the right, as agent for the Trust, 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 Trust,
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 Trust or by another entity on behalf
of the Trust. 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 Trust 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 Trust 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 Trust under this Agreement.
(i) Distributor, as agent of and for the account of the Trust, 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 Trust.
----------------------------
The Trust 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 Trust, 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 Trust 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 Trust 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 Trust 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 Trust to Distributor in reasonable
quantities upon request.
2
6. Records to be Supplied by Trust.
--------------------------------
The Trust 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 Trust by
independent public accountants.
7. Fees and Expenses.
------------------
For performing its services under this Agreement, Distributor will receive
a fee from the Trust. The fee is based upon total assets sold. The fee is
equal to ten (10) basis points of the total assets sold per month, if any,
and shall be paid on a monthly basis. The Trust shall promptly reimburse
Distributor for any expenses that are to be paid by the Trust in accordance
with the following paragraph.
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 its
relationships with the dealers selling the Shares. All other costs in
connection with the offering of the Shares will be paid by the Trust in
accordance with agreements between them as permitted by applicable laws,
including the Act and rules and regulations promulgated thereunder. These
costs include, but are not limited to, licensing fees, filing fees
(including NASD), sales literature review fees ($50.00 per hour), travel
and such other expenses as may be incurred by Distributor on behalf of the
Trust.
8. Indemnification of Trust.
-------------------------
Distributor agrees to indemnify and hold harmless the Trust and each person
who has been, is, or may hereafter be a trustee, director, officer,
employee, shareholder or control person of the Trust against any loss,
damage or expense (including the reasonable costs of investigation) and
reasonable attorney's fees 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
Trust. Distributor likewise agrees to indemnify and hold harmless the Trust
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
Distributor 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. 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 Trust or each such person may be
entitled as a matter of law.
9. Indemnification of Distributor.
-------------------------------
The Trust 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 Trust. The Trust 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.
3
In order that the indemnification provisions contained in this Paragraph 9
shall apply, it is understood that if in any case the Trust may be asked to
indemnify Distributor or any other person or hold Distributor or any other
person harmless, the Trust 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 Trust promptly concerning any situation which presents or
appears likely to present the probability of such a claim for
indemnification against the Trust. The Trust 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 Trust so elects
it will so notify Distributor, and thereupon the Trust 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
Trust will be asked to indemnify Distributor or any such person except with
the Trust'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 Trust 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. Year 2000.
----------
Unified covenants and agrees that it will use reasonable commercial efforts
to not allow a Year 2000 problem in its computer systems, software or
equipment owned, leased or licensed by it or its affiliates to interfere
with its performance under this Agreement. Each of Unified and the Fund
will use reasonable commercial efforts to cooperate and share information
to further comply with this Section 10, and to minimize the impact of any
Year 2000 problem of such party on the performance of this Agreement. Each
of Unified and the Fund will inform the other party of any circumstance
indicating a possible obstacle to such compliance, and the steps being
taken to avoid or overcome the obstacle. A "Year 2000 problem" means a
date-handling problem relating to the Year 2000 date change that would
cause a computer system, software or equipment to fail to correctly
perform, process or handle date-related data for the dates within and
between the 20th and 21st centuries and all other centuries. Any
modification of a defect to Unified's computer systems, software or
equipment necessary to solve a Year 2000 problem shall be at no additional
charge to the Fund.
11. 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 Trustees of the Trust or at a meeting of the Shareholders of
the Trust by the affirmative vote of a majority of the outstanding Shares,
and (iii) by a majority of the Trustees of the Trust who are not interested
persons of the Trust or of Distributor by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Trust 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.
12. 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 Trustees of the Trust or a vote of a
majority of the outstanding Shares, and (iii) by a majority of the Trustees
of the Trust who are not interested persons of the Trust or of Distributor
by vote cast in person at a meeting called for the purpose of voting on
such approval.
4
13. New Series.
-----------
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Trust established during the
initial or renewal term of this Agreement.
14. Successor Investment Trust.
---------------------------
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 Trust as a
result of reorganization, recapitalization or change of domicile.
15. Limitation of Liability.
------------------------
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of the Trust and signed by an officer of
the Trust, acting as such, and neither such authorization by such Trustees
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 Trust.
16. 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.
17. 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.
18. 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 the
Trust for this purpose shall be 000 X. Xxxx Xxxx Xxx, Xxxxx #000,
Xxxxxxxxxx, Xxxx 00000 and that the address of Distributor for this purpose
shall be 000 X. Xxxxxxxxxxxx Xx., Xxxxxxxxxxxx, Xxxxxxx 00000.
19. 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.
5
IN WITNESS WHEREOF, the Trust 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.
ATTEST: REGIONAL OPPORTUNITY FUND
_______________________________ By: ______________________________
Name:
Its: President
ATTEST: UNIFIED MANAGEMENT CORPORATION
________________________________ By: ______________________________
Name:
Its: President
By: ______________________________
Name:
Its:
