DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated October 6, 1994, between THE WESTWOOD FUNDS
(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 of the Company, 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 Company 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
Company 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.
3. The Distributor represents that it is a member in good standing of the
National Association of Securities 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 its current
Prospectus. 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
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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 Company.
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 Company'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 Company (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
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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 Company to the public.
8. The Company will pay its legal and auditing expenses and the cost of
composition of any prospectuses and annual or interim reports of the Company.
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
Company 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
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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 its shareholders 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 interest 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
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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 (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 Company
of the lesser or (i) 67 percent of the Shares present or represented by proxy
and (ii) 50 percent of
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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.
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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.
THE WESTWOOD FUNDS
By:_______________________________
Name:
Title:
GABELLI & COMPANY, INC.
By:_______________________________
Name:
Title:
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