UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT is made and entered into on April 7, 2005, by
and between KEELEY FUNDS, INC., a Maryland corporation (the "Corporation"), and
KEELEY INVESTMENT CORP., an Illinois corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Corporation is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act"), and proposes
to offer for sale to the public shares of its common stock, in the series set
forth on Exhibit A (the "Shares"); and
WHEREAS, to the extent set forth on Exhibit A, the Board of Directors of
the Corporation has adopted a Distribution Plan for certain of the series (each
a "Distribution Plan"), which to the extent so adopted is incorporated herein by
reference; and
WHEREAS, the Corporation wishes to engage the Distributor to provide
certain services with respect to the distribution of Shares, and Distributor is
willing to provide such services to the Corporation on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Corporation grants to the Distributor the right, as agent of the
Corporation, to sell Shares upon the terms hereinbelow set forth during the term
of this Agreement. While this Agreement is in force, the Distributor agrees to
use its best efforts to find purchasers for Shares. The Corporation hereby
acknowledges that the Distributor may render distribution and other services to
other parties, including other investment companies. The Distributor shall have
the right, as agent of the Corporation, to order from the Corporation the Shares
needed, but not more than the Shares needed (except for clerical errors and
errors of transmission), to fill unconditional orders for Shares placed with the
Distributor by any dealer, all such orders to be made in the manner set forth in
the Corporation's then-current registration statement ("Registration Statement")
filed by the Corporation with the Securities and Exchange Commission (the
"Commission") under the 1940 Act and the Securities Act of 1933 (the "1933 Act")
and the related then-current prospectus (the "Prospectus") and then-current
statement of additional information (the "Statement of Additional Information").
The price ("offering price") which shall be paid to the Corporation for the
Shares so purchased shall be the equal to (a) their net asset value (determined
in the manner set forth in Corporation's Registration Statement and Prospectus)
plus, except to those classes of persons set forth in the Prospectus, (b) a
sales charge which shall be the percentage of the offering price of such Shares
as set forth in the Corporation's Prospectus. The offering price, if not an
exact multiple of one cent, shall be adjusted to the nearest cent.
2. The Distributor may enter into selling agreements ("Broker/Dealer
Agreements") with qualified broker/dealers and other persons with respect to the
offering of Shares to the public, and in so doing, Distributor will act only on
its own behalf as principal. No broker/dealer or other person who enters into a
Broker/Dealer Agreement with the Distributor shall be authorized to act as agent
for the Corporation in connection with the offering or sale of Shares to the
public or otherwise. The Shares shall be sold at the offering price by the
Distributor on behalf of the Corporation to or through any broker/dealer or
other person having a Broker/Dealer Agreement; provided, however, that orders
may be placed directly by any such broker/dealer or other person directly with
the Transfer Agent of the Corporation. Distributor may allow such concessions or
reallowances to broker/dealers and other persons as it may from time to time
determine and as set forth in the Prospectus. The Distributor may also pay
commissions out of its own funds to broker/dealers and others in connection with
their effectuation of sales of Shares in such amounts and pursuant to such terms
and conditions as the Distributor may from time to time determine.
3. The Corporation shall have the right to suspend the sale of Shares if,
because of some extraordinary condition, the New York Stock Exchange shall be
closed, or if conditions existing during the hours when the Exchange is open
render such action advisable or for any other reason deemed adequate by the
Corporation.
4. If any Shares sold by the Corporation are redeemed or repurchased by
the Corporation or by Distributor as agent or are tendered for redemption within
seven business days after the date of confirmation of the original purchase of
such Shares, Distributor shall forfeit the amount above the net asset value
received by it in respect of such Shares, provided that the portion, if any, of
such amount reallowed by Distributor to broker/dealers or other persons shall be
repayable to the Corporation only to the extent recovered by Distributor from
the broker/dealer or other person concerned. Distributor shall include in the
forms of agreement with such broker/dealers and other persons a corresponding
provision for the forfeiture by them of their concession with respect to Shares
sold by them or their principals and redeemed or repurchased by the Corporation
or by Distributor as agent (or tendered for redemption) within seven business
days after the date of confirmation of such initial purchases.
5. The Corporation agrees that it will, from time to time, but subject to
the necessary approval, if any, of its stockholders, take all necessary action
to register such number of Shares under the Securities Act of 1933, as amended
(the "1933 Act"), as the Distributor may reasonably be expected to sell. The
Corporation shall 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 Corporation may approve, and, if necessary or
appropriate in connection therewith, to qualify and maintain the qualification
of the Corporation as a broker or dealer in such states; provided that the
Corporation shall not be required to amend its Articles of Incorporation or
By-Laws to comply with the laws of any state, to maintain an office in any
state, to change the terms of the offering of Shares in any state from the terms
set forth in the Registration Statement and Prospectus, to qualify as a foreign
corporation in any state or to consent to service of process in any state other
than with respect to claims arising out of the offering of the Shares. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Corporation in connection with
such qualifications. The Corporation shall furnish to Distributor from time to
time, for use in connection with the sale of Shares, such information with
respect to the Corporation and the Shares as Distributor may reasonably request,
and the Corporation warrants that the statements contained in any such
information, when so signed by the Corporation's officers, shall be true and
correct. The Corporation also shall furnish to Distributor upon request: (a)
annual audited reports of the Corporation's books and accounts, made by
independent public accountants regularly retained by Corporation, (b)
semi-annual reports with respect to the Corporation, prepared by the
Corporation, and (c) from time to time such additional information regarding the
Corporation's financial condition as Distributor may reasonable request.
6. The Corporation represents to Distributor that the Registration
Statements and Prospectus filed by the Corporation with the Commission under the
1940 Act and the 1933 Act have been prepared in conformity with the requirements
of the 1940 Act and the 1933 Act and rules and regulations of the Commission
thereunder. As used in this Section 6 and in Section 7, the terms "Registration
Statement" and "Prospectus" shall mean any Registration Statement and Prospectus
(together with the related Statement of Additional Information) filed by the
Corporation with the Commission and any amendments and supplements thereto which
at any time shall have been filed with the Commission. The Corporation
represents and warrants to Distributor that the Registration Statement and
Prospectus, when such Registration Statement becomes effective, will contain all
statements required to be stated therein in conformity with the Act and the
rules and regulations of the Commission; that all statements of fact contained
in the Registration Statement and Prospectus will be materially true and correct
when the Registration Statement becomes effective; and that neither the
Registration Statement nor the 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 Corporation (the "Indemnifying Party")
will indemnify and hold harmless the Distributor and each of its Directors and
officers and each person, if any, who controls the Distributor within the
meaning of Section 15 of the Act (the "Indemnified Parties") against all losses,
liabilities, damages or expenses (including the reasonable cost of investigating
or defending any alleged loss, liability, damages,
claim or expense and reasonable counsel fees incurred in connection therewith)
arising from any claim, demand, action or suit (collectively, "Claims"), arising
by reason of any person's acquiring any of the Shares through the Indemnified
Party, which may be based on the ground that the Registration Statement or
Prospectus includes or included an untrue statement of a material fact or omits
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, unless any such fact,
statement or omission was made in reliance upon information furnished by the
Distributor to the Corporation.
7. The Distributor covenants and agrees that, in selling Shares, it will
use its best efforts in all respects duly to conform with the requirements of
all state and federal laws and the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. ("NASD") relating to the sale of Shares,
and the Distributor (the "Indemnifying Party") will indemnify and hold harmless
the Corporation and each of its Directors and officers and each person, if any,
who controls the Corporation within the meaning of Section 15 of the 1933 Act
(the "Indemnified Parties") against all losses, liabilities, damages or expenses
(including the reasonable cost of investigating or defending any alleged loss,
liability, damages, claim or expense and reasonable counsel fees incurred in
connection therewith) arising from any claim, demand, action or suit
(collectively, "Claims"), arising by reason of any person's acquiring any of the
Shares through the Distributor, which may be based upon the 1933 Act or any
other statute or common law, on account of any wrongful act of the Distributor
or any of its employees (including any failure to conform with any requirement
of any state or federal law or the Rules of Fair Practice of the NASD relating
to the sale of Shares) or on the ground that the Registration Statement or
Prospectus includes or included an untrue statement of a material fact or omits
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, if and only if any such
fact, statement or omission was made in reliance upon information furnished by
the Distributor to the Corporation.
8. In no case is the indemnity of any Indemnifying Party in favor of any
Indemnified Party to be deemed to protect any such Indemnified Party against
liability to which such Indemnified Party would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
or his duties or by reason of its or his reckless disregard of its or his
obligations and duties under this Agreement, or is an Indemnifying Party to be
liable under its indemnity herein with respect to any Claim made against any
Indemnified Party unless such Indemnified Party shall have notified the
Indemnifying Party in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the Claim shall
have been served upon such Indemnified Party (or after such Indemnified Party
shall have received notice of such service on any designated agent), but failure
to notify an Indemnifying Party of any such Claim shall not relieve it from any
liability which it may have to any Indemnified Party otherwise than on account
of its indemnity herein. The Indemnifying Party 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 Claim, and, if the
Distributor elects to assume the defense, such defense shall be conducted by
counsel chosen by it and satisfactory to each Indemnified Party. In the event
that the Indemnifying Party elects to assume the defense of any such suit and
retain such counsel, each Indemnified Party shall bear the fees and expenses of
any additional counsel retained by its but, in case the Indemnifying Party does
not elect to assume the defense of any such suit, it shall reimburse the
Indemnified Parties for the reasonable fees and expenses of any counsel retained
by them. Except with the prior written consent of the Indemnifying Party, no
Indemnified Party shall confess any Claim or make any compromise in any case in
which the Indemnifying Party will be asked to indemnify such Indemnified Party.
Each Indemnifying Party agrees promptly to notify the Indemnified Party of the
commencement of any litigation or proceeding against it in connection with the
issuance and sale of any of the Shares.
9. The Corporation will pay, or cause to be paid:
(a) all costs and expenses of the Corporation, including fees and
disbursements of its counsel, in connection with the preparation and filing of
the Registration Statement, Prospectus and Statement of Additional Information
with respect to Shares, the registration of Shares under the 1933 Act and the
1940 Act, the qualification of Shares for sale in the various states and, if
necessary or advisable in connection therewith, of qualifying the Corporation as
a broker or dealer in any such state, and preparing and mailing to stockholders
Prospectuses, Statements of Additional Information, statements and
confirmations and periodic reports (including the expense of setting in type the
Registration Statement, Prospectus and Statement of Additional Information or
any periodic report with respect to Shares);
(b) 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 Corporation hereunder;
(c) the cost of preparing temporary or permanent certificates for
Shares, if any;
(d) the cost and expenses of delivering to the Distributor at its
office in Chicago, Illinois all Shares purchased through it as agent hereunder;
(e) a distribution fee at an annual rate of 0.25% of the Corporation's
average daily net assets for its then-current fiscal year in anticipation of, or
as reimbursement for, expenses incurred by the Distributor in connection with
the sale of Shares, subject to the Distribution Plan;
(f) all fees and disbursements of the Transfer Agent and Custodian;
(g) a fee to the Administrator of the Corporation (pursuant to the
Administration Agreement); and
(h) a fee to the Adviser of the Corporation (pursuant to the Investment
Advisory Agreement with such Adviser).
The Distributor agrees that, with respect to the sale of Shares, after
the Prospectus and Statement of Additional Information and periodic reports have
been set in type, it will bear the expense (other than the cost of mailing to
stockholders of the Corporation) of printing and distributing any copies thereof
which are to be used in connection with the offering or sale of Shares to any
dealer or prospective investor. The Distributor further agrees that it will bear
the expenses in preparing, printing and distributing any other literature used
by the Distributor or furnished by it for use by any dealer in connection with
the offering of the Shares for sale to the public and any expense of sending
confirmations and statements to any dealer having a Broker/Dealer Agreement with
the Distributor. The Distributor will also bear the cost of any compensation
paid to dealers in connection with the sale of Shares.
10. The Corporation may but shall not be obligated to propose from time to
time such amendment or amendments to the Registration Statement and such
supplement or supplements to the Prospectus as, in the light of future
developments, may, in the opinion of the Corporation's counsel, be necessary or
advisable. If the Corporation shall not propose such an amendment or amendments
and/or supplement or supplements within fifteen days after receipt by the
Corporation of a written request from Distributor to do so, Distributor may, at
its option, terminate this agreement. The Corporation shall not file any
amendment to the Registration Statement or supplement to the Prospectus without
giving Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this agreement shall in any way limit the Corporation's
right to file at any time such amendments to the Registration Statement and/or
supplements to the Prospectus, of whatever character, as the Corporation may
deem advisable, such right being in all respects absolute and unconditional.
11. If, at any time during the term of this Agreement, the Corporation
shall deem it necessary or advisable in the best interests of the Corporation
that any amendment to this Agreement be made in order to comply with any
recommendation or requirement of the Commission or other governmental authority
or to obtain any advantage under Maryland or federal tax laws, it shall notify
the Distributor of the form of amendment which it deems necessary or advisable
and the reasons therefor. If the Distributor declines to assent to such
amendment (after a reasonable time), the Corporation may terminate this
Agreement forthwith by written notice to the Distributor without payment of any
penalty. If, at any time during the term of this Agreement, the Distributor
requests the Corporation to make any change in its Articles of Incorporation and
Bylaws or in its methods of doing business which are necessary in order to
comply with any requirement of federal law or regulations of the Commission or
of a national securities
association of which the Distributor is or may become a member, relating to the
sale of Shares, and the Corporation fails (after a reasonable time to make any
such change as requested, the Distributor may terminate this Agreement forthwith
by written notice to the Corporation without payment of any penalty.
12. Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Corporation all records and
other information relative to the Corporation and prior, present or potential
stockholders of the Corporation and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Corporation,
which approval shall not be unreasonably withheld and may not be withheld where
Distributor may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Corporation.
13. The Distributor shall be an independent contractor and neither the
Distributor nor any of its Directors, officers or employees as such, is or shall
be an employee of the Corporation. It is understood that Directors, officers and
stockholders of the Corporation are or may become interested in the Distributor,
as Directors, officers, employees, or otherwise and that Directors, officers,
employees, or otherwise and that Directors, officers and employees of the
Distributor are or may become similarly interested in the Corporation and that
the Distributor may be or become interested in the Corporation as a stockholder
or otherwise. The Distributor is responsible for its own conduct and the
employment, control and conduct (but only with respect to the duties and
obligations of the Distributor hereunder) of its agents and employees and for
any injury to any of such agents or employees or to others through its agents or
employees. The Distributor assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all employer taxes
thereunder.
14. This Agreement shall become effective upon its execution and shall
continue in force until two years from such date, on which date it will
terminate unless its continuance thereafter is specifically approved at least
annually (i) by the vote of a majority of the Board of Directors of the
Corporation who are not "interested persons" of the Corporation or of the
Distributor at a meeting specifically called for the purpose of voting on such
approval, and (ii) by the Board of Directors of the Corporation, or by the "vote
of a majority of the outstanding voting securities" of the Corporation as to
which this Agreement is to continue. The aforesaid requirement that continuance
of this Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act. This Agreement may be
terminated at any time by either party without payment of any penalty on not
more than 60 days' notice nor less than 30 days' written notice to the other
party. This Agreement shall automatically terminate in the event of its
assignment.
15. No provision of this agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
16. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least annually"
shall have the respective meanings specified in, and shall be construed in a
manner consistent with, the 1940 Act, subject, however, to the exemptions as may
be granted by the Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
KEELEY INVESTMENT CORP. KEELEY FUNDS, INC.
By: /s/ XXXX X. XXXXXX, XX. By: /s/ XXXX X. XXXXXX, XX.
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Xxxx X. Xxxxxx, Xx., President Xxxx X. Xxxxxx, Xx., President
EXHIBIT A
Series Distribution Plan
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Keeley Mid Cap Value Fund Distribution Plan (12b-1 Plan)
adopted on April 7, 2005
