DISTRIBUTION AGREEMENT
This Agreement made effective as of September 1, 2006 by and between
Surgeons Diversified Investment Fund (the "Trust"), an Ohio business trust, and
Ultimus Fund Distributors, LLC, an Ohio limited liability company
("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 (the "SEC") 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 listed on Schedule
A attached hereto (the "Series"), as such Schedule A may be amended from time to
time;
NOW, THEREFORE, in consideration of the premises 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 or other
financial intermediaries, and to sell Shares to such investment
dealers against orders therefor at the public offering price (as
defined in subsection 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.
(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 have any liability with respect
to, 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 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.
3. Other Services Provided By Distributor.
--------------------------------------
The Distributor shall review any and all marketing or sales materials
utilized by the Trust as it relates to any applicable rules and regulations
and shall cause all such materials to be filed with the NASD as required.
The Distributor shall also license those individuals retained by the Trust
to sell Shares. The Trust or its investment manager shall be responsible
for all costs of filing marketing materials and licensing registered
representatives pursuant to Section 8, below.
4. 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.
5. 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.
6. Rules of NASD, etc.
-------------------
(a) Distributor and its agents and employees 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 and the Trust each agree to furnish the other party
sufficient copies of any agreements, plans or other materials either
intends to use in connection with any sales of Shares in reasonably
adequate time for the Distributor to review the materials as required
under Section 3 above and to
2
cause the Trust to file and clear them with the proper authorities
before they are put in use, and the Distributor and Trust both agree
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.
7. 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 the
Trust's registered independent public accountants.
8. Fees and Expenses.
------------------
For performing its services under this Agreement, Distributor will receive
a fee from the Trust or its investment adviser in accordance with
agreements between them as permitted by applicable laws, including the Act
and rules and regulations promulgated thereunder. The fee is $6,000 per
annum, and shall be paid on a monthly basis. The Trust or its investment
adviser 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, the services of personnel to the extent such
services are required to carry out Distributor's obligations under this
Agreement 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 or its investment adviser 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), travel and such other expenses as may be incurred by
Distributor on behalf of the Trust.
9. 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, officer, employee,
shareholder or control person of the Trust against any loss, damage or
expense (including the reasonable costs of investigation) and reasonable
attorneys' 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: (i) any wrongful act of Distributor or its employees; or
(ii) 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
3
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.
10. 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 arising by reason of any person acquiring Shares
based upon the ground that the Registration Statement included an untrue
statement of material fact , 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.
In order that the indemnification provisions contained in this Section 10
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 Section 10. 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.
11. Representations of the Parties.
-------------------------------
(a) The Trust certifies to Distributor that: (1) as of the date of the
execution of this Agreement, each Series that is in existence as of
such date has authorized unlimited shares, and (2) this Agreement has
been duly authorized by the Trust and, when executed and delivered by
the Trust, will constitute a legal, valid and binding obligation of
the Trust, enforceable against the Trust in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and remedies of
creditors and secured parties.
4
(b) Distributor represents and warrants that: (1) the various procedures
and systems which Ultimus has implemented with regard to safeguarding
from loss or damage attributable to fire, theft, or any other cause
the records and other data of the Trust and Distributor's records,
data, equipment facilities and other property used in the performance
of its obligations hereunder are adequate and that it will make such
changes therein from time to time as are required for the secure
performance of its obligations hereunder, (2) this Agreement has been
duly authorized by Distributor and, when executed and delivered by
Distributor, will constitute a legal, valid and binding obligation of
Distributor, enforceable against Distributor in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and
remedies of creditors and secured parties; and (3) it is a member firm
of the NASD and agrees to notify the Trust immediately of the event of
its expulsion or suspension from the NASD.
12. Termination and Amendment of this Agreement.
--------------------------------------------
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment or the expulsion of the Distributor
as a member of the NASD. 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.
13. 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 two (2) years from the date of its
execution (unless terminated automatically as set forth in Section 12), 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.
14. Successor Investment Company.
-----------------------------
Unless this Agreement has been terminated in accordance with Section 12,
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.
5
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. Confidential Information.
-------------------------
(a) Distributor agrees that any books or records relating to the Trust
shall be the property of the Trust and Distributor will only make such
books and records available for inspection as requested by the SEC, or
other proper authority. Distributor agrees to otherwise keep
confidential any books and records and other information relative to
the Trust and its shareholders; except when requested to divulge such
information by duly-constituted authorities or court process. If
Distributor is requested or required to disclose any confidential
information supplied to it by the Trust, Distributor shall, unless
prohibited by law, promptly notify the Trust of such request(s) so
that the Trust may seek an appropriate protective order.
(b) Distributor further agrees that it shall not use the name of the Trust
without prior approval of the Trust, except that Distributor may
disclose the fact that the Trust is a client of the Distributor, and
certain other information about the Trust (such as total assets and
number of shareholders) in connection with approval or renewal of
distribution agreements with other client, or as otherwise required to
be disclosed by the SEC, state or federal securities laws, or any
other applicable law.
18. Questions of Interpretation.
----------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio.
(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 SEC 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 SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
19. 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
Trust'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 Surgeons Asset Management, LLC, ▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇; and that the
address of Distributor for this purpose shall be ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
20. 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.
6
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: SURGEONS DIVERSIFIED INVESTMENT FUND
By:
-------------------------- -------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
Its: President
ATTEST: ULTIMUS FUND DISTRIBUTORS, LLC
By:
---------------------------- --------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
7
SCHEDULE A
TO THE DISTRIBUTION AGREEMENT BETWEEN
SURGEONS DIVERSIFIED INVESTMENT FUND
AND
ULTIMUS FUND DISTRIBUTORS, LLC
FUND PORTFOLIOS
---------------
SURGEONS DIVERSIFIED INVESTMENT FUND
8