EXHIBIT E(2)
DISTRIBUTION AGREEMENT
FOR
GABELLI XXXXXXXX FUNDS, INC.
DISTRIBUTION AGREEMENT, dated May 22, 2000, between Gabelli Xxxxxxxx
Funds, Inc., a Maryland corporation (the "Company"), and Gabelli & Company,
Inc., a New York corporation (the "Distributor"). The Company is registered as
an investment company under the Investment Company Act of 1940 (the "1940 Act"),
and an indefinite number of shares (the "Shares") of Gabelli Xxxxxxxx Capital
Value Fund, (the "Fund"), par value $.001 per share (the "Shares"), have been
registered under the Securities Act of 1933 (the "1933 Act") to be offered for
sale to the public in a continuous public offering in accordance with terms and
conditions set forth in the Prospectus and Statement of Additional Information
(the "Prospectus")of the Fund included in the Company's Registration Statement
on Form N-1A as such documents may be amended from time to time.
In this connection, the Company desires that the Distributor act as
its exclusive sales agent and distributor for the sale and distribution of
Shares. The Distributor has advised the Company that it is willing to act in
such capacities, and it is accordingly agreed between them as follows:
1. The Company hereby appoints the Distributor as exclusive sales
agent and distributor for the sale and distribution of Shares pursuant to the
aforesaid continuous public offering of Shares, and the Company further agrees
from and after the commencement of such continuous public offering that it will
not, without the Distributor's consent, sell or agree to sell any Shares
otherwise than through the Distributor, except the Company may issue Shares in
connection with a merger, consolidation or acquisition of assets on such basis
as may be authorized or permitted under the 0000 Xxx.
2. The Distributor hereby accepts such appointment and agrees to use
its best efforts to sell such Shares; provided, however, that when requested by
the Fund at any time for any reason the Distributor will suspend such efforts.
The Company may also withdraw the offering of Shares at any time when required
by the provisions of any statute, order, rule or regulation of any governmental
body having jurisdiction. It is understood that the Distributor does not
undertake to sell all or any specific portion of the Shares of the Fund. The
Fund acknowledges that the Distributor will enter into sales or servicing
agreements with registered securities brokers and banks and into servicing
agreements with financial institutions and other industry professionals, such as
investment advisers, accountants and estate planning firms. In entering into
such agreements, the Distributor shall act only on its own behalf as principal
underwriter and distributor. The Distributor shall not be responsible for making
any distribution plan or service fee payments pursuant to any plans the Fund may
adopt or agreements it may enter into.
3. The Distributor represents that it is a member in good standing of
the National Association of Dealers, Inc. and agrees that it will use all
reasonable efforts to maintain such status and to abide by the Rules of Fair
Practice, the Constitution and the Bylaws of the National Association of
Securities Dealers, Inc., and all other rules and regulations that are now or
may become applicable to its performance hereunder. The Distributor will
undertake and discharge its obligations hereunder as an independent contractor
and it shall have no authority or power to obligate or bind the Company by its
actions, conduct or contracts except that it is authorized to accept orders for
the purchase or repurchase of Shares as the Company's agent and subject to its
approval. The Company reserves the right to reject any order in whole or in
part. The Distributor may appoint sub-agents or distribute through dealers or
otherwise as it may determine from time to time pursuant to agreements approved
by the Company, but this Agreement shall not be construed as authorizing any
dealer or other person to accept orders for sale or repurchase of Shares on
behalf of the Company or otherwise act as the Company's agent for any purpose.
The Distributor shall not utilize any materials in connection with the sale or
offering of Shares except the then current Prospectus and such other materials
as the Company shall provide or approve in writing.
4. Shares may be sold by the Distributor only at prices and terms
described in the then current Prospectus relating to the Shares and may be sold
either through persons with whom it has selling agreements in a form approved by
the Company's Board of Directors or directly to prospective purchasers.
To facilitate sales, the Company will furnish the Distributor with the net asset
value of its Shares promptly after each calculation thereof.
5. The Company has delivered to the Distributor a copy of the current
Prospectus for the Fund. It agrees that it will use its best efforts to continue
the effectiveness of its Registration Statement filed under the 1933 Act and the
1940 Act. The Company further agrees to prepare and file any amendments to its
Registration Statement as may be necessary and any supplemental data in order to
comply with such Acts. The Company will furnish the Distributor at the
Distributor's expense with a reasonable number of copies of the Prospectus and
any amended Prospectus for use in connection with the sale of Shares.
6. At the Distributor's request, the Company will take such steps at
its own expense as may be necessary and feasible to qualify Shares for sale in
states, territories or dependencies of the United States of America and in the
District of Columbia in accordance with the laws thereof, and to renew or extend
any such qualification; provided, however, that the Company shall not be
required to qualify Shares or to maintain the qualification of Shares in any
state, territory, dependency or district where it shall deem such qualification
disadvantageous to the Fund.
7. The Distributor agrees that:
(a) It will furnish to the Company any pertinent information
required to be inserted with respect to the Distributor as exclusive
sales agent and distributor within the purview of Federal and state
securities laws in any reports or registrations required to be filed
with any government authority;
(b) It will not make any representations inconsistent with the
information contained in the Registration Statement or Prospectus
filed under the Securities Act of 1933, as in effect from time to
time;
(c) It will not use or distribute or authorize the use or
distribution of any statements other than those contained in the
Fund's then current Prospectus or in such supplemental literature or
advertising as may be authorized in writing by the Company; and
(d) Subject to Paragraph 9 below, the Distributor will bear
the costs and expenses of printing and distributing any copies of any
prospectuses and annual and interim reports of the Fund (after such
items have been prepared and set in type) which are used in connection
with the offering of Shares, and the costs and expenses of preparing,
printing and distributing any other literature used by the Distributor
or furnished by the Distributor for use in connection with the
offering of the Shares and the costs and expenses incurred by the
Distributor in advertising, promoting and selling Shares of the Fund
to the public. The Fund has adopted a separate plan of distribution
(collectively, the "Plan") pursuant to the provisions of rule 12b-1 of
the 1940 Act on behalf of its Class A, Class B and Class C shares,
respectively, each of which provides for the payment of administrative
and sales related expenses in connection with the distribution of Fund
shares and the Distributor agrees to take no action inconsistent with
said Plan.
8. The Company will pay its legal and auditing expenses and the cost
of composition of any prospectuses of annual or interim reports of the Fund.
9. The Company will pay the Distributor for costs and expenses
incurred by the Distributor in connection with distribution of Shares by the
Distributor in accordance with the terms of a Plan of Distribution (the "Plan")
adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as such Plan may
be in effect from time to time; provided, however, that no payments shall be due
or paid to the Distributor hereunder unless and until this Agreement shall have
been approved by Director Approval and Disinterested Director Approval (as such
terms are defined in such Plan). The Company reserves the right to modify or
terminate such Plan at any time as specified in the Plan and Rule 12b-1, and
this Section 9 shall thereupon be modified or terminated to the same extent
without further action of the parties. The persons authorized to direct the
payment of funds pursuant to this Agreement and the Plan shall provide to the
Company's Board of Directors, and the Directors shall review, at least quarterly
a written report of the amounts so paid and the purposes for which such
expenditures were made.
10. The Company agrees to indemnify, defend and hold the Distributor,
its officers, directors, employees and agents and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act (each, an
"indemnitee"), free and harmless from any and all liabilities and expenses,
including costs of investigation or defense (including reasonable counsel fees)
incurred by such indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, in which such
indemnitee may be or may have been involved as a party or otherwise or with
which he may be or may have been threatened, while the Distributor was active in
such capacity or by reason of the Distributor having acted in any such capacity
or arising out of or based upon any untrue statement of a material fact
contained in the then-current Prospectus relating to the Shares or arising out
of or based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such claims, demands, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Distributor to the Company expressly for use in any such
Prospectus; provided, however, that (1) no indemnitee shall be indemnified
hereunder against any liability to the Company or the shareholders of the Fund
or any expense of such indemnitee with respect to any matter as to which such
indemnitee shall have been adjudicated not to have acted in good faith in the
reasonable belief that its action was in the best interest of the Company or
arising by reason of such indemnitee's willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations under this Agreement ("disabling conduct"), or (2)
as to any matter disposed of by settlement or a compromise payment by such
indemnitee, no indemnification shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of the
Company and that such indemnitee appears to have acted in good faith in the
reasonable belief that its action was in the best interest of the Company and
did not involve disabling conduct by such indemnitee. Notwithstanding the
foregoing the Company shall not be obligated to provide any such indemnification
to the extent such provision would waive any right which the Company cannot
lawfully waive.
The Distributor agrees to indemnify, defend and hold the Company, its
Directors, officers, employees and agents and any person who controls the
Company within the meaning of Section 15 of the 1933 Act (each, an
"indemnitee"), free and harmless from and against any and all liabilities and
expenses, including costs of investigation or defense (including reasonable
counsel fees) incurred by such indemnitee, but only to the extent that such
liability or expense shall arise out of or be based upon any untrue or alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor of the Company expressly for use in a Prospectus or
any alleged omission to state a material fact in connection with such
information required to be stated therein or necessary to make such information
not misleading or arising by reason of disabling conduct by such indemnitee or
any person selling Shares pursuant to an agreement with the Distributor.
The Company shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Company receives a written affirmation of the
indemnitee's good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to reimburse the Company
unless it is subsequently determined that he is entitled to such indemnification
and if the directors of the Company determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the indemnitee shall provide a security for his
undertaking, (B) the Company shall be insured against losses arising by reason
of any lawful advances, or (C) a majority of a quorum of directors of the
Company who are neither "interested persons" of the Company (as defined in
Section 2(a)(19) of the Act) nor parties to the proceeding ("Disinterested
Non-Party Directors") or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification.
All determinations with respect to indemnification hereunder shall be
made (1) by a final decision on the merits by a court or other body before whom
the proceeding was brought that such indemnitee is not liable by reason of
disabling conduct or, (2) in the absence of such a decision, by (i) a majority
vote of a quorum of the Disinterested Non-party Directors of the Company, or
(ii) if such a quorum is not obtainable or even, if obtainable, if a majority
vote of such quorum so directs, independent legal counsel in a written opinion.
11. This Agreement shall become effective on the date first set forth
above and shall remain in effect for up to two years from such date (one year in
the case of Section 9 and thereafter from year to year
provided such continuance is specifically approved at least annually prior to
each anniversary of such date by (a) Director Approval or by vote at a meeting
of shareholders of the Fund of the lesser of (i) 67 per cent of the Shares
present or represented by proxy and (ii) 50 per cent of the outstanding Shares
and (b) by Disinterested Director Approval.
12. This Agreement may be terminated (a) by the Distributor at any
time without penalty by giving sixty (60) days' written notice to the Company
which notice may be waived by the Company; or (b) by the Company at any time
without penalty upon sixty (60) days' written notice to the Distributor (which
notice may be waived by the Distributor); provided, however, that any such
termination by the Company shall be directed or approved in the same manner as
required for continuance of this Agreement by Section 11(a) (or, in the case of
termination of Section 9, by Section 11(b)).
13. This Agreement may not be amended or changed except in writing
signed by each of the parties hereto and approved in the same manner as provided
for continuance of this Agreement in Section 11(a) (or, in the case of amendment
of Section 9, by Section 11(b)). Any such amendment or change shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors, but this Agreement shall not be assigned by either party and shall
automatically terminate upon assignment (as such term is defined in the 1940 Act
and the rules thereunder).
14. This Agreement shall be construed in accordance with the laws of
the State of New York applicable to agreements to be performed entirely therein
and in accordance with applicable provisions of the 1940 Act.
15. If any provision of this Agreement shall be held or made invalid
or unenforceable by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
GABELLI XXXXXXXX FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
GABELLI & COMPANY, INC.
By: /s/ Xxxxx X. XxXxx
Name: Xxxxx X. XxXxx
Title: Secretary
