SUB-DISTRIBUTION AGREEMENT
This Agreement made this 17th day of December, 2001, by and among THE GKM
FUNDS, an Ohio business trust (the "Trust"), ULTIMUS FUND DISTRIBUTORS, LLC, an
Ohio limited liability company (the "Distributor"), and QUASAR DISTRIBUTORS,
LLC, a Delaware limited liability company (the "Sub-Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940 (the "1940 Act");
and
WHEREAS, the Trust's Agreement and Declaration of Trust permits the Board
of Trustees to divide the Trust's shares of beneficial interest ("Shares") into
separate series and it is in the interest of the Trust to offer the Shares for
sale continuously; and
WHEREAS, the Distributor has been appointed as the Trust's principal
underwriter pursuant to an Underwriting Agreement between the Trust and the
Distributor; and
WHEREAS, the Distributor and the Sub-Distributor are each registered as a
broker-dealer under the Securities Exchange Act of 1934 (the "1934 Act") and are
each a member in good standing of NASD Regulation, Inc. (the "NASD"); and
WHEREAS, the Distributor wishes to enter into an agreement with the
Sub-Distributor with respect to the continuous offering of the Shares of the
series of the Trust set forth on Appendix A (the "Funds"), as such Appendix may
be amended from time to time;
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Sub-Distributor. The Distributor hereby appoints the
Sub-Distributor as its agent to sell and to arrange for the sale of the Shares,
on the terms and for the period set forth in this Agreement, and the
Sub-Distributor hereby accepts such appointment and agrees to act hereunder
directly and/or through the Funds' transfer agent in the manner set forth in the
Prospectus (as defined below). It is understood and agreed that the services of
the Sub-Distributor hereunder are not exclusive, and the Distributor may act as
underwriter or distributor for the shares of any other registered investment
company.
2. Services and Duties of the Sub-Distributor.
(a) The Sub-Distributor agrees to sell the Shares, as agent for the
Distributor, from time to time during the term of this Agreement upon the terms
described in the Prospectus. As used in this Agreement, the term "Prospectus"
shall mean the prospectus and statement of additional information with respect
to the Funds included as part of the Trust's Registration Statement, as such
prospectus and statement of additional information may be amended or
supplemented from time to time, and the term "Registration Statement" shall mean
the Registration Statement most recently filed from time to time by the Trust
with the Securities and Exchange Commission ("SEC") and effective under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act, as such Registration
Statement is amended by any amendments thereto at the time in effect. The
Sub-Distributor shall not be obligated to sell any certain number of Shares.
(b) The Sub-Distributor will hold itself available to receive orders,
satisfactory to the Sub-Distributor, for the purchase of the Shares and will
accept such orders and will transmit such orders and funds received by it in
payment for such Shares as are so accepted to the Funds' transfer agent or
custodian, as appropriate, as promptly as practicable. Purchase orders shall be
deemed accepted and shall be effective at the time and in the manner set forth
in the Funds' Prospectus. The Sub-Distributor shall not make any short sales of
Shares.
(c) The offering price of the Shares shall be the net asset value per share
of the Shares,
plus the sales charge, if any (determined as set forth in the Prospectus). The
Distributor shall furnish the Sub-Distributor, with all possible promptness, an
advice of each computation of net asset value and offering price.
(d) The Sub-Distributor shall have the right to enter into selected dealer
agreements with securities dealers of its choice ("selected dealers") for the
sale of Shares. Shares sold to selected dealers shall be for resale by such
dealers only at the offering price of the Shares as set forth in the Prospectus.
The Sub- Distributor shall offer and sell Shares only to such selected dealers
as are members in good standing of the NASD.
(e) Fund/SERV Transactions. The Sub-Distributor agrees to process and
transmit through the mutual fund service division of National Securities
Clearing Corporation ("NSCC") all purchases, redemptions and other transactions
in the Shares. The Trust will be bound by all transactions entered into NSCC by
the Sub-Distributor. The Sub-Distributor will utilize the services of NSCC for
any other purpose as it deems to be appropriate or necessary relative to the
processing or transmittal of transactions in the Shares. The authority of the
Sub-Distributor under this paragraph shall continue in effect until such time as
NSCC is otherwise notified by the Sub-Distributor.
3. Duties of the Trust.
(a) Maintenance of Federal Registration. The Trust shall, at its expense,
take, from time to time, all necessary action and such steps, including payment
of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The Trust
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a Registration Statement or Prospectus, or necessary 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.
(b) Maintenance of "Blue Sky" Qualifications. The Trust shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
as the Distributor and the Trust may approve. The Trust will advise the
Sub-Distributor in writing of the states and jurisdictions in which the shares
of each Fund are qualified for sale under, or exempt from the requirements of,
applicable law. The Sub-Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the Trust
or the Funds in connection with such qualifications.
(c) Copies of Reports and Prospectuses. The Trust shall, at its expense,
keep the Sub-Distributor fully informed with regard to its affairs and in
connection therewith shall furnish to the Sub-Distributor copies of all
information, financial statements and other papers which the Sub-Distributor may
reasonably request for use in connection with the distribution of Shares,
including such
reasonable number of copies of Prospectuses and annual and interim reports as
the Sub-Distributor may request and shall cooperate fully in the efforts of the
Sub-Distributor to sell and arrange for the sale of the Shares and in the
performance of the Sub-Distributor under this Agreement.
4. Conformity with Applicable Law and Rules. The Sub-Distributor agrees
that in selling Shares hereunder it shall conform in all respects with the laws
of the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder, the Sub-
Distributor shall be an independent contractor and neither the Sub-Distributor,
nor any of its officers, directors, employees or representatives is or shall be
an employee of the Trust in the performance of the Sub-Distributor's duties
hereunder. The Sub-Distributor shall be responsible for its own conduct and the
employment, control, and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or employees. The
Sub-Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employee taxes thereunder.
6. Indemnification. The Distributor agrees to indemnify and hold
harmless the Sub-Distributor and each of its present or former directors,
officers, employees, representatives, agents, affiliates and stockholders
against any and all losses, liabilities, damages, claims or expenses (including
the reasonable costs of investigating or defending any alleged loss, liability,
damage, claim or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Sub-Distributor or any such person may become
subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of this Agreement.
The Distributor shall be entitled to participate, at its own expense, in
the defense, or, if the Distributor so elects, to assume the defense of any suit
brought against the Sub-Distributor and/or the other indemnified persons, but if
the Distributor elects to assume the defense, such defense shall be conducted by
legal counsel chosen by the Distributor and satisfactory to the Sub-Distributor
and to the persons indemnified as defendant or defendants, in the suit. In the
event that the Distributor elects to assume the defense of any such suit and
retain such legal counsel, the Sub-Distributor and the persons indemnified as
defendant or defendants in the suit shall bear the fees and expenses of any
additional legal counsel retained by them. If the Distributor does not elect to
assume the defense of any such suit, the Distributor will reimburse the
Sub-Distributor and the persons indemnified as defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel retained by them.
The Distributor agrees to promptly notify the Sub-Distributor of the
commencement of any litigation or proceedings against it or any of its
directors, officers, employees or representatives in connection with the issue
or sale of any Shares.
7. Authorized Representations. The Sub-Distributor is not authorized by the
Trust or the Distributor to give on behalf of the Trust any information or to
make any representations in connection with the sale of Shares other than the
information and representations contained in a Registration Statement or
Prospectus filed with the SEC under the 1933 Act and/or the 1940 Act, covering
Shares, as such Registration Statement and Prospectus may be amended or
supplemented from time to time, or contained in shareholder reports or other
material that may be prepared by or on behalf of the Trust for the
Sub-Distributor's use.
8. Term of Agreement. The term of this Agreement shall begin on the date
first above written, and unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect for a period of two years from the date first
above written. Thereafter, this Agreement shall continue in effect from year to
year, subject to the termination provisions and all other terms and conditions
thereof, so long as such continuation shall be specifically approved at least
annually by (i) the Board of Trustees or by vote of a majority of the
outstanding voting securities of each Fund and, (ii) by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party. The Sub-Distributor shall furnish to the Trust,
promptly upon its request, such information as may reasonably be necessary to
evaluate the terms of this Agreement or any extension, renewal or amendment
hereof.
9. Amendment or Assignment of Agreement. This Agreement may not be amended
or assigned except as permitted by the 1940 Act, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
10. Termination of Agreement. This Agreement may be terminated by any party
hereto, without the payment of any penalty, on not more than upon 60 days' nor
less than 30 days' prior notice in writing to the other party; provided, that in
the case of termination by the Trust such action shall have been authorized by
resolution of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, or by vote of a majority
of the outstanding voting securities of each Fund.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Trust to take any
action contrary to its Agreement and Declaration of Trust or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or by
which it is bound, or to relieve or deprive the Board of Trustees of the Trust
of responsibility for and control of the conduct of the affairs of the Trust.
12. Definition of Terms. 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 1940 Act shall be resolved by reference to such term or
provision of the 1940 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 validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment," and "affiliated person," as
used in Paragraphs 8, 9 and 10 hereof, shall have the meanings assigned to them
by Section 2(a) of the 1940 Act. In addition, where the effect of a requirement
of the 1940 Act reflected in any provision of this Agreement is relaxed by a
rule, regulation or order of the SEC, whether of special or of general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
13. Compliance with Securities Laws. The Trust represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all the provisions of the 1940 Act and of the
rules and regulations thereunder. The parties agree to comply with all of the
applicable terms and provisions of the 1940 Act, the 1933 Act and, subject to
the provisions of
Section 4(d), all applicable "Blue Sky" laws. The Distributor and the
Sub-Distributor each agree to comply with all of the applicable terms and
provisions of the 1934 Act.
14. 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 Funds. 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 Funds.
15. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, to the Trust at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, or to the Distributor at 000 Xxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxx 00000, or to the Sub-Distributor at 000 Xxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000.
16. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Wisconsin, without regard to conflicts of law principles.
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
later shall control, and nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or order of the SEC thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the date first written above.
THE GKM FUNDS
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: President
ULTIMUS FUND DISTRIBUTORS, LLC
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
QUASAR DISTRIBUTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
APPENDIX A
TO THE SUB-DISTRIBUTION AGREEMENT AMONG
THE GKM FUNDS
ULTIMUS FUND DISTRIBUTORS, LLC
AND
QUASAR DISTRIBUTORS, LLC
FUNDS SUBJECT TO THIS AGREEMENT
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The GKM Growth Fund
