Exhibit (e)(1) Distribution Agreement between Aegis Value Fund, Inc. and
Xxxxxxxx Capital Markets, LLC
XXXXXXXX CAPITAL MARKETS, LLC
AEGIS VALUE FUND, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of October 31, 2007, by and among Aegis Value
Fund, Inc. (the "Fund"), a Maryland corporation, Xxxxxxxx Capital Markets, LLC
("RCM"), a limited liability company organized and existing under the laws of
the State of New York, and Aegis Financial Corporation (the "Adviser"), a
Delaware corporation, which is a party hereto with respect to Section 9 only.
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and has
registered one or more distinct classes of common shares ("Shares") for sale to
the public under the Securities Act of 1933, as amended ("1933 Act"), and has
qualified its shares for sale to the public under various state securities laws;
and
WHEREAS, RCM is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the
National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, the Adviser serves as the investment adviser to the Fund pursuant
to an investment advisory agreement with the Fund;
WHEREAS, the Fund desires to retain RCM as principal underwriter in
connection with the offer and sale of the Shares of each series listed on
Schedule A (as amended from time to time) to this Agreement; and
WHEREAS, this Agreement has been approved by a vote of the Fund's board of
directors ("Board"), including a majority of those directors who are not parties
to the Agreement or interested persons of any such party, in conformity with
Section 15(c) of the 1940 Act; and
WHEREAS, RCM is willing to act as principal underwriter for the Fund on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
The Fund hereby appoints RCM as its agent to be the principal
underwriter so as to hold itself out as available to receive and accept orders
for the purchase and redemption of the Shares on behalf of the Fund, subject to
the terms and for the period set forth in this Agreement. RCM hereby accepts
such appointment and agrees to act hereunder.
2. Services and Duties of RCM.
(a) RCM agrees to sell Shares on a best efforts basis from time to
time during the term of this Agreement as agent for the Fund and upon the terms
described in the Registration Statement. As used in this Agreement, the term
"Registration Statement" shall mean the currently effective registration
statement of the Fund, and any supplements thereto, under the 1933 Act and the
1940 Act. RCM shall not be obligated to sell any certain number of shares. RCM
shall in all cases receive the net asset value per share on all sales.
(b) RCM will hold itself available to receive purchase and redemption
orders satisfactory to RCM for Shares and will accept such orders on behalf of
the Fund. Such purchase orders shall be deemed effective at the time and in the
manner set forth in the Registration Statement.
(c) RCM, with the operational assistance of the Fund's transfer
agent, shall make Shares available through the National Securities Clearing
Corporation's Fund/SERV System.
(d) RCM shall provide to investors and potential investors only such
information regarding the Fund as the Fund shall provide or approve. RCM shall
review and file all proposed advertisements and sales literature with
appropriate regulators and consult with the Fund regarding any comments provided
by regulators with respect to such materials.
(e) RCM at its sole discretion may repurchase Shares offered for
sale by the shareholders. Repurchase of Shares by RCM shall be at the price
determined in accordance with, and in the manner set forth in, the most-current
Prospectus. At the end of each business day, RCM shall notify, by any
appropriate means, the Fund and its transfer agent of the orders for repurchase
of Shares received by RCM since the last report, the amount to be paid for such
Shares, and the identity of the shareholders offering Shares for repurchase. The
Fund reserves the right to suspend such repurchase right upon written notice to
RCM. RCM further agrees to act as agent for the Fund to receive and transmit
promptly to the Fund's transfer agent shareholder requests for redemption of
Shares.
(f) RCM shall prepare reports for the Board regarding its activities
under this Agreement as from time to time shall be reasonably requested by the
Board.
3. Duties of the Fund.
(a) The Fund shall keep RCM fully informed of the Fund's affairs and
shall provide to RCM from time to time copies of all information, financial
statements, and other papers that RCM may reasonably request for use in
connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Fund by its
independent public accountant and such reasonable number of copies of the most
current Prospectus, Statement of Additional Information ("SAI"), and annual and
interim reports as RCM may request, and the Fund shall fully cooperate in the
efforts of RCM to sell and arrange for the sale of Shares.
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(b) The Fund shall maintain a currently effective Registration
Statement on Form N-1A with the Securities and Exchange Commission (the "SEC"),
maintain qualification with applicable states and file such reports and other
documents as may be required under applicable federal and state laws. The Fund
shall notify RCM in writing of the states in which the Shares may be sold and
shall notify RCM in writing of any changes to such information. The Fund shall
bear all expenses related to preparing and typesetting such Prospectuses, SAIs
and other materials required by law and such other expenses, including printing
and mailing expenses, related to the Fund's communication with persons who are
shareholders.
(c) The Fund shall not use any advertisements or other sales
materials that have not been (i) submitted to RCM for its review and approval,
and (ii) filed with the appropriate regulators.
(d) The Fund shall make available to RCM, upon its reasonable
request, a statement of each computation of net asset value and the details of
entering into such computation.
4. Representations, Warranties and Covenants of the Parties.
(a) The Fund represents and warrants to RCM and agrees that:
(i) the Fund is duly organized and existing under the laws
of the jurisdiction of its organization, with full power
to carry on its business as now conducted, to enter into
this Agreement and to perform its obligations hereunder;
(ii) this Agreement has been duly authorized, executed and
delivered by the Fund in accordance with all requisite
action and constitutes a valid and legally binding
obligation of the Fund, enforceable 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;
(iii) the Fund is registered as an investment company under
the 1940 Act; and
(iv) the Fund's Registration Statement and any advertisements
and sales literature (excluding statements relating to
RCM and the services it provides that are based upon
written information furnished by RCM expressly for
inclusion therein) of the Fund shall not contain any
untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary
to make the statements therein not misleading, and that
all statements or information furnished to RCM, pursuant
to Section 3(a) hereof, shall be true and correct in all
material respects.
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(b) RCM represents and warrants to the Fund and agrees that:
(i) RCM is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to
carry on its business as now conducted, to enter into
this Agreement and to perform its obligations hereunder;
(ii) This Agreement has been duly authorized, executed and
delivered by RCM in accordance with all requisite action
and constitutes a valid and legally binding obligation
of RCM, enforceable 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;
(iii) RCM is registered as a broker-dealer under the 1934 Act
and is a member in good standing of the NASD;
(iv) RCM (A) has adopted an anti-money laundering compliance
program ("AML Program") that satisfies the requirements
of all applicable laws and regulations, (B) undertakes
to carry out its AML Program to the best of its ability,
(C) will promptly notify the Fund and the Adviser if an
inspection by the appropriate regulatory authorities of
its AML Program identifies any material deficiency, and
(D) will promptly remedy any material deficiency of
which it learns;
(v) RCM (A) has compliance policies and procedures
reasonably designed to ensure compliance with the
"federal securities laws" as that term is defined in
Rule 38a-1 under the 1940 Act, (B) will upon request
provide reports and certifications in a mutually agreed
upon form to the Fund's Chief Compliance Officer
regarding the foregoing, and (C) will maintain
appropriate records in accordance with Rule 38a-1;
(vi) To the extent RCM has access to the Fund's portfolio
holdings prior to the public dissemination of such
holdings, RCM will comply with the Fund's portfolio
holdings disclosure policy;
(vii) RCM will maintain a disaster recovery and business
continuity plan and adequate and reliable computer and
other telecommunications equipment as are required by
regulations applicable to broker-dealers registered with
the SEC and to members of the NASD and as are necessary
and appropriate for RCM to carry out its obligations
under this Agreement and, upon the Fund's reasonable
request, will provide supplemental information
concerning the aspects of RCM's disaster recovery and
business continuity plan that are relevant to the
services provided by RCM hereunder; and
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(viii) In connection with all matters relating to this
Agreement, RCM will comply with the requirements of the
1933 Act, the 1934 Act, the 1940 Act, the regulations of
the NASD and all other applicable federal or state laws
and regulations.
5. Other Broker-Dealers.
RCM in its discretion may enter into agreements with such qualified
broker-dealers or other parties as it may select in order that such parties may
sell Shares. Upon the Fund's request, RCM shall enter into agreements with such
qualified broker-dealers or other parties identified by the Fund to RCM in order
that such parties may also sell Shares. The form of any such agreement shall be
mutually agreed upon and approved by the Fund and RCM.
6. Withdrawal of Offering.
The Fund reserves the right at any time to withdraw all offerings of
any or all Shares by written notice to RCM at its principal office. No Shares
shall be offered by either RCM or the Fund under any provisions of this
Agreement and no orders for the purchase or Sale of Shares hereunder shall be
accepted by the Fund if and so long as effectiveness of the Registration
Statement then in effect or any necessary amendments thereto shall be suspended
under any of the provisions of the 1933 Act, or if and so long as a current
prospectus as required by Section 5(b)(2) of the 1933 Act is not on file with
the SEC.
7. Services Not Exclusive.
The services furnished by RCM hereunder are not to be deemed
exclusive and RCM shall be free to furnish similar services to others so long as
its services under this Agreement are not impaired thereby.
8. Expenses of the Fund.
The Fund shall bear all costs and expenses of registering the Shares
with the SEC and state and other regulatory bodies, and shall assume expenses
related to communications with shareholders of the Fund including, but not
limited to, (i) fees and disbursements of its counsel and independent public
accountant; (ii) the preparation, filing, and printing of Registration
Statements and/or Prospectuses or SAIs; (iii) the preparation and mailing of
annual and interim reports, Prospectuses, SAIs, and proxy materials to
shareholders; (iv) such other expenses related to the communications with
persons who are shareholders of the Fund; and (v) the qualifications of Shares
for sale under the securities laws of such jurisdictions as shall be selected by
the Fund pursuant to Paragraph 3(b) hereof, and the costs and expenses payable
to each such jurisdiction for continuing qualification therein. In addition, the
Fund shall bear all costs of preparing, printing, mailing and filing any
advertisements and sales literature. RCM does not assume responsibility for any
expenses not assumed hereunder.
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9. Compensation.
As compensation for the services performed by RCM under this
Agreement, the Adviser shall pay RCM, as promptly as possible after receipt of a
quarterly invoice, a fee for services as set forth in Schedule B to this
Agreement.
10. Share Certificates.
The Fund shall not issue certificates representing Shares unless
requested to do so by a shareholder. If such request is transmitted through RCM,
the Fund will cause certificates evidencing the Shares owned to be issued in
such names and denominations as RCM shall from time to time direct.
11. Status of RCM.
RCM is an independent contractor and shall be agent of the Fund only
with respect to the sale and redemption of Shares.
12. Indemnification.
(a) The Fund agrees to indemnify, defend, and hold RCM, its officers
and directors, and any person who controls RCM within the meaning of Section 15
of the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending such
claims, demands, or liabilities and any counsel fees incurred in connection
therewith) that RCM, its officers, directors, or any such controlling person may
incur under the 1933 Act, or under common law or otherwise, arising out of or
based upon any (i) alleged untrue statement of a material fact contained in the
Registration Statement, Prospectus, SAI or sales literature,(ii) alleged
omission to state a material fact required to be stated in the either thereof or
necessary to make the statements therein not misleading, or (iii) failure by the
Fund to comply with the terms of the Agreement; provided, that in no event shall
anything contained herein be so construed as to protect RCM against any
liability to the Fund or its shareholders to which RCM would otherwise be
subject by reason of 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.
(b) The Fund shall not be liable to RCM under this Agreement with
respect to any claim made against RCM on any person indemnified unless RCM or
other such person shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon RCM or such
other person (or after RCM or the person shall have received notice of service
on any designated agent). However, failure to notify the Fund of any claim shall
not relieve the Fund from any liability that it may have to RCM or any other
person against whom such action is brought otherwise than on account of this
Agreement.
(c) The Fund 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 claims subject to this Agreement. If the Fund elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Fund and satisfactory to indemnified defendants in the suit whose approval
shall not be unreasonably withheld. In the event that the Fund elects to assume
the defense of any suit and retain counsel, the indemnified defendants shall
bear the fees and expenses of any additional counsel by them. If the Fund does
not elect to assume the defense of a suit, it will reimburse the indemnified
defendants for the reasonable fees and expenses of any counsel retained by the
indemnified defendants. The Fund agrees to promptly notify RCM of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any of its Shares.
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(d) RCM agrees to indemnify, defend, and hold the Fund, its officers
and directors, and any person who controls the Fund within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of investigating
or defending against such claims, demands, or liabilities and any counsel fees
incurred in connection therewith) that the Fund, its directors or officers, or
any such controlling person may incur under the 1933 Act, or under common law or
otherwise, resulting from RCM's willful misfeasance, bad faith or gross
negligence in the performance of its obligations and duties under this
Agreement, or arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by RCM to the Fund
for use in the Registration Statement, Prospectus or SAI arising out of or based
upon any alleged omission to state a material fact in connection with such
information required to be stated in either thereof or necessary to make such
information not misleading.
(e) RCM 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 the claim, but if RCM elects to assume the defense, the defense shall be
conducted by counsel chosen by RCM and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event that
RCM elects to assume the defense of any suit and retain counsel, the defendants
in the suit shall bear the fees and expenses of any additional counsel retained
by them. If RCM does not elect to assume the defense of any suit, it will
reimburse the indemnified defendants in the suit for the reasonable fees and
expenses of any counsel retained by them.
13. Proprietary and Confidential Information.
RCM agrees on behalf of itself and its managers, officers, and
employees to treat confidentially and as proprietary information of the Fund,
all records and other information relative to the Fund and prior, present or
potential shareholders of the Fund (and clients of said shareholders), and not
to use such records and information for any purpose other than the performance
of its responsibilities and duties hereunder, except (i) after prior
notification to and approval in writing by the Fund, withheld and may not be
withheld where RCM may be exposed to civil or criminal contempt proceedings for
failure to comply, (ii) when requested to divulge such information by duly
constituted authorities, or (iii) when so requested by the Fund. Records and
other information which have become known to the public through no wrongful act
of RCM or any of its employees, agents or representatives, and information that
was already in the possession of RCM prior to receipt thereof from the Fund or
its agent, shall not be subject to this paragraph.
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Further, RCM will adhere to the privacy policies adopted by the Fund
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from time
to time. In this regard, RCM shall have in place and maintain physical,
electronic and procedural safeguards reasonably designed to protect the
security, confidentiality and integrity of, and to prevent unauthorized access
to or use of, records and information relating to the Fund and its shareholders.
14. Records.
RCM shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem advisable
and is agreeable to the Fund, but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the 1940 Act and the rules thereunder. RCM agrees that all such records prepared
or maintained by it relating to the services to be performed by it hereunder are
the property of the Fund and will be preserved, maintained, and made available
in accordance with such applicable sections and rules of the 1940 Act and will
be promptly surrendered to the Fund or its designee on and in accordance with
its request.
15. Duration and Termination.
(a) This Agreement shall become effective on the date first written
above or such later date as indicated in Schedule A and, unless sooner
terminated by as provided herein, will continue in effect for two years from the
above written date. Thereafter, if not terminated, this Agreement shall continue
in effect for successive annual periods; provided, that such continuance is
specifically approved at least annually by the Board or by a vote of a "majority
of the outstanding voting securities" of the Fund, and; provided, further, that
in either event, the continuance is also approved by a majority of the Fund's
directors who are not parties to the Agreement or "interested persons" of any
such party ("Qualified Directors"), by a vote cast in person at a meeting called
for the purpose of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be terminated
in its entirety at any time, without the payment of any penalty, by vote of the
Board, by vote of a majority of the Qualified Directors, or by vote of a
"majority of the outstanding voting securities" of the Fund on sixty days'
written notice to RCM or by RCM at any time, without the payment of any penalty,
on sixty days' written notice to the Fund.
(c) This Agreement will automatically terminate in the event of its
"assignment" or upon the termination (i) of RCM's registration as a
broker-dealer under the 1934 Act or (ii) of RCM's membership in the NASD.
(d) Sections 12 and 13 shall survive termination of this Agreement.
(e) In the event that, in connection with termination, a successor
to any of RCM's duties or obligations hereunder is designated by the Fund by
written notice to RCM, RCM will promptly, upon termination and at the expense of
the Fund, transfer to such successor all relevant books, records,
correspondence, and other data established or maintained by RCM under this
Agreement in a form reasonably acceptable to the Fund, and will cooperate in the
transfer of such duties and obligations. If no such successor is designated,
then such books, records and other data shall be returned to the Fund.
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16. Amendment of this Agreement.
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 enforcement of the change, waiver, discharge, or termination is
sought. This Agreement may be amended with the approval of the Board or of a
majority of the outstanding voting securities of the Fund; provided, that in
either case, such amendment also shall be approved by a majority of the
Qualified Directors.
17. Limitation of Liability.
The Board and shareholders of the Fund shall not be personally
liable for obligations of the Fund in connection with this Agreement.
18. Notice.
Any notice required or permitted to be given by either party to the
other shall be deemed sufficient upon receipt in writing at the other party's
principal offices.
19. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the 1940 Act. To the extent that the applicable laws of
the State of New York conflict with the applicable provisions of the 1940 Act,
the latter shall control.
20. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors.
(b) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby.
(c) As used in this Agreement, the terms "majority of the
outstanding voting securities", "interested person", and "assignment" shall have
the same meaning as such terms have in the 1940 Act.
(d) This Agreement may be executed in two or more counterparts, each
of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
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(e) The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: AEGIS VALUE FUND, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
Title: Secretary Title: President
ATTEST: XXXXXXXX CAPITAL MARKETS, LLC
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------- --------------------------------
Name: Xxxxxxx Xxxxxx Name: Xxxxxx X. Xxxxxxxxx
Title: Compliance Officer Title: President
ATTEST: AEGIS FINANCIAL CORPORATION
(with respect to Section 9 only)
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------------- --------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxx
Title: Managing Director Title: Managing Director
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SCHEDULE A
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Pursuant to Section 1 of the Distribution Agreement among Aegis Value
Fund, Inc. ("Fund"), Xxxxxxxx Capital Markets, LLC ("RCM") and Aegis Financial
Corporation, the Fund hereby appoints RCM as its agent to be the principal
underwriter of the Fund with respect to its following class of shares:
Aegis Value Fund, Inc.
Dated: October 31, 2007
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SCHEDULE B
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The service fee schedule for distribution services provided by Xxxxxxxx
Capital Markets, LLC ("RCM") to each registered investment company (or separate
series of such company) advised by Aegis Financial Corporation is:
o $15,000 per annum for the first registered investment company (or
separate series of such company) advised by Aegis Financial
Corporation; $3,000 per annum for each additional registered
investment company (or separate series).
o $150 per advertising piece for review and NASD filing plus pass
along of NASD filing fees.
o $1,000 per NASD registered representatives employed by the Fund
wherein RCM is asked to carry the NASD license.
o If applicable, RCM will pass-along any NSCC fees for Fund/SERV
processing required by the Fund.
All fees are billed and payable on a quarterly basis.
