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EXHIBIT NO. EX-99.e.2
FIRST AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
FOR CLASS B SHARES
THIS AGREEMENT, made as of the 1st day of May, 2000 by and between GAM
FUNDS, INC. a Maryland corporation (the "Fund"), and GAM SERVICES INC., a
Delaware corporation ("GAM Services").
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, in accordance with the Fund's plan pursuant to Rule 12b-1 under
the 1940 Act with respect to its Class B Shares (the "Plan"), the Fund and GAM
Services entered into an agreement, dated May 1, 1998, to provide distribution
Services for the Fund's Class B Shares on the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. APPOINTMENT. The Fund hereby appoints GAM Services as distributor of the
Class B Shares of the Fund for the period and on the terms set forth in this
Agreement. GAM Services accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Fund has furnished GAM Services with true and
correct copies of each of the following:
(a) the Fund's Certificate of Incorporation and all amendments thereto
(such Certificate of Incorporation, as presently in effect and as it shall
from time to time be amended, is herein called the "Certificate");
(b) the Fund's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
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(c) the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and under the 1940 Act
as filed with the Securities and Exchange Commission (the "SEC") relating
to the shares of the Fund and all amendments thereto;
(d) the Fund's most recent prospectus and statement of additional
information (such prospectus and statement of additional information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus" and "SAI", respectively); and
(e) the Plan.
The Fund will furnish GAM Services from time to time with copies of all
amendments or supplements to the foregoing, if any.
3. DUTIES AS DISTRIBUTOR. GAM Services shall give the Fund the benefit of
its best judgment, efforts and facilities in rendering its services as
distributor of the Fund's Class B Shares. In carrying out its obligations
hereunder, GAM Services shall:
(a) receive orders for the purchase of the Fund's Class B Shares,
accept or reject such orders on behalf of the Fund in accordance with the
Fund's currently effective Prospectus and SAI and transmit such orders as
are so accepted to the Fund's transfer agent as promptly as possible;
(b) receive requests for redemption from holders of the Fund's Class B
Shares and transmit such redemption requests to the Fund's transfer agent
as promptly as possible; and
(c) respond to inquiries from the Fund's Class B shareholders
concerning the status of their accounts with the Fund.
4. DISTRIBUTION OF CLASS B SHARES. GAM Services shall be exclusive
distributor of the Fund's Class B Shares. It is mutually understood and agreed
that GAM Services does not undertake to sell all or any specific portion of the
Class B Shares of the Fund. The Fund shall not sell any of its Class B Shares
through any securities dealer other than GAM Services. Notwithstanding the
provisions of the foregoing sentence:
(a) the Fund may issue its Class B Shares to any other investment
company or personal holding company, or to the shareholders thereof, in
exchange for all or a majority of the shares or assets of any such company;
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(b) the Fund may issue its Class B Shares at their net asset value to
any shareholder of the Fund purchasing such shares with dividends or other
cash distributions received from the Fund pursuant to an offer made to all
shareholders;
(c) GAM Services may enter into shareholder processing and servicing
agreements in accordance with Section 7 hereof;
(d) GAM Services may, and when requested by the Fund shall, suspend
its efforts to effectuate sales of the Class B Shares of the Fund at any
time when in the opinion of GAM Services or of the Fund no sales should be
made because of market or other economic considerations or abnormal
circumstances of any kind;
(e) the Fund may withdraw the offering of its Class B Shares (i) at
any time with the consent of GAM Services, or (ii) without such consent
when so required by the provisions of any statute or of any order, rule or
regulation of any governmental body having jurisdiction; and
(f) the price at which the Class B Shares may be sold (the "offering
price") shall be the net asset value per Class B Share plus any applicable
sales load as determined in the manner established from time to time by the
Fund's Board of Directors and as set forth in the Fund's then current
Prospectus and SAI.
5. CONTROL BY BOARD OF DIRECTORS. Any distribution activities undertaken by
GAM Services pursuant to this Agreement, as well as any other activities
undertaken by GAM Services on behalf of the Fund pursuant thereto, shall at all
times be subject to any applicable directives of the Board of Directors of the
Fund.
6. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its obligations
under this Agreement, GAM Services shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund under the
1933 Act and the 1940 Act;
(c) the provisions of the Certificate of the Fund;
(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National Association of
Securities Dealers,
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Inc. ("NASD") and all other self-regulatory organizations applicable to the
sale of investment company shares; and
(f) any other applicable provision of state and Federal law.
7. DEALER AND SHAREHOLDER SERVICE AGREEMENTS. GAM Services may enter into
dealer and shareholder service agreements (the "Dealer Agreements") with any
securities dealer ("Securities Dealer") who is registered under the Securities
Exchange Act of 1934 (the "1934 Act") and a member in good standing of the NASD
(or who is not required to be so registered or a member of the NASD because such
Securities Dealer does not have any customers in the United States), who may
wish to establish accounts or sub-accounts on behalf of such Securities Dealer's
customers. GAM Services may enter into Dealer Agreements and shareholder
processing and service agreements ("Shareholder Service Agreements") with
persons other than Securities Dealers ("Shareholder Service Agents") who are not
required to be registered under the 1934 Act or members in good standing of the
NASD, who are exempt from registration as a broker or a dealer under the 1934
Act or who may otherwise lawfully furnish services to Fund shareholders without
registration under the 1934 Act and in accord with applicable United States
banking regulation or other such applicable regulation. GAM Services will
supervise the Fund's relations with Securities Dealers and Shareholder Service
Agents. GAM Services will make payments to Securities Dealers and Shareholder
Service Agents in such amounts as GAM Services may determine from time to time
in its discretion.
8. EXPENSES. The expenses connected with the Fund shall be allocable
between the Fund and GAM Services as follows:
(a) GAM Services shall furnish, at its expense and without cost to the
Fund, the services of personnel to the extent that such services are
required to carry out its obligations under this Agreement.
(b) GAM Services shall bear the fees payable to Securities Dealers and
Shareholder Service Agents as set forth in Section 7 above, except that the
Fund may pay fees to Securities Dealers and Shareholders Service Agents in
an amount not to exceed an annual rate of 0.25% of the daily net asset
value of the Class B Shares of the Fund owned by shareholders with whom
such Securities Dealer or Shareholder Service Agent has a servicing
relationship in exchange for administrative services provided to such
shareholders as described in the Prospectus and SAI.
(c) The expenses of printing and distributing Prospectuses and SAI
(other than those Prospectuses and SAI distributed to shareholders of the
Fund) and any other promotional or sales literature used by GAM Services or
furnished by GAM Services to investors, Securities Dealers or Shareholder
Service Agents in connection with the public
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offering of the Fund's Class B Shares, and other advertising or promotional
expenses incurred in connection with such public offering, shall be paid by
GAM Services.
(d) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund (other than those expressly assumed by the Fund's
investment advisors), including, without limitation: the fees of the Fund's
investment advisors; the charges and expenses of any registrar, any
custodian or depository appointed by the Fund for the safekeeping of its
cash, portfolio securities and other property, and any transfer, dividend
or accounting agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio securities transactions
to which the Fund is a party; all taxes, including securities issuance and
transfer taxes, and fees payable by the Fund to Federal, state or other
governmental agencies; the costs and expenses of engraving or printing of
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the
Fund and its shares with the SEC and various states and other jurisdictions
(including filing fees, legal fees and disbursements of counsel); the costs
and expenses of printing, including typesetting, and distributing the
Prospectuses and SAI of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of directors or members of any
advisory board or committee; all expenses incident to the payment of any
dividend, distribution, withdrawal or redemption, whether in shares or in
cash; charges and expenses of any outside service used for pricing of the
Fund's shares; fees and expenses of legal counsel and of independent
accountants, in connection with any matter relating to the Fund; membership
dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers
and directors) of the Fund; extraordinary expenses (including, but not
limited to, legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
9. COMPENSATION. The Fund shall pay or cause to be paid to GAM Services:
(i) any contingent deferred sales charge ("CDSC") received by the Fund with
respect to the sale of its Class B Shares in accordance with the Prospectus and
SAI, (ii) compensation at the annual rate of 0.75% of the average daily net
assets of each series of the Fund attributable to the Class B Shares (the
"Distribution Fee"), and (iii) compensation at the annual rate of 0.25% of the
average daily net assets of each series of the Fund attributable to the Class B
Shares (the "Service Fee"), which shall be calculated and accrued daily and paid
monthly or at such other intervals as the Board of Directors and GAM Services
shall mutually agree. GAM Services will be deemed to earn the Service Fee as it
accrues on a daily basis; provided, that if, in lieu of allowing a portion of
the Service Fee relating to a particular Class B Share to a Shareholder Service
Agent, GAM Services pays such Shareholder Service Agent a lump sum at the time
of the closing of the sale of such
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Class B Share in consideration of such Shareholder Service Agent's commitment to
render shareholder services in respect of such Class B Share for the first
twelve months following the issuance thereof, then the portion of the Service
Fee (the "Earned Service Fee") allocable to such Class B Share which accrues
during such twelve month period shall be deemed to have been fully earned by GAM
Services on the date GAM Services makes the payment to such securities dealer,
and GAM Service's entitlement to such Earned Service Fee shall be identical in
all respects to its entitlement to the Distribution Fee as set forth hereinafter
and shall be assignable as contemplated hereby. With respect to the CDSC and
Distribution Fee, the Fund and GAM Services agree as follows: (i) GAM Services
will be deemed to have performed all services required to be performed in order
to be entitled to receive its Allocable Portion of the Distribution Fee and
Earned Service Fee payable in respect of the Class B Shares of the Fund upon the
settlement date of each sale of a "Commission Share" (as defined in Schedule A
attached hereto) of such class taken into account in determining GAM Services'
Allocable Portion of such Distribution Fee in respect of such class; (ii)
notwithstanding anything to the contrary set forth in this Agreement or the
Plan, the Fund's obligation to pay to GAM Services its Allocable Portion of the
Distribution Fee and Earned Service Fee payable in respect of the Class B Shares
shall not be terminated or modified for any reason (including a termination of
this Agreement) except to the extent required by a change in the 1940 Act, the
rules thereunder or the Conduct Rules of the NASD, in each case enacted after
the adoption of the Plan, or in connection with a "Complete Termination" (as
hereinafter defined) of the Plan in respect of the Class B Shares of the Fund;
(iii) the Fund will not take any action to waive or change any CDSC in respect
of the Class B Shares of the Fund, except as provided in the Prospectus or SAI,
without the consent of GAM Services or its assigns; (iv) notwithstanding
anything to the contrary set forth in this Agreement or the Plan, neither the
termination of GAM Services' role as principal distributor of the Class B Shares
of the Fund, nor the termination of this Agreement nor the termination of the
Plan will terminate GAM Services' right to the CDSCs; and (v) notwithstanding
anything to the contrary set forth in this Agreement or the Plan, GAM Services
may assign, sell or pledge (collectively, "Transfer") its rights to the Earned
Service Fees, and its Allocable Portion of the Distribution Fees and CDSCs (but
not its obligations to the Fund under this Agreement) to raise funds to make the
expenditures related to the distribution of Class B Shares of the Fund, and in
connection therewith, upon receipt of notice of such Transfer, the Fund shall
pay to the assignee, purchaser or pledgee (collectively with their subsequent
transferees, "Transferees"), as third party beneficiaries, such portion of the
Earned Service Fees and Allocable Portion of the Distribution Fees or CDSCs in
respect of the Class B Shares of such Fund so Transferred. Notwithstanding
anything to the contrary set forth in this Agreement, to the extent GAM Services
has Transferred its rights to any portion of the Distribution Fees, Earned
Service Fees and CDSCs, the Fund's obligation to pay such portion of the
Distribution Fees, Earned Service Fees and CDSCs payable in respect of the Class
B Shares shall be absolute and unconditional (except as set forth in clause (ii)
above) and shall not be subject to dispute, set-offs, counterclaim or any
defense whatsoever, at law or equity, including, without limitation, any of the
foregoing based on the insolvency or bankruptcy of GAM Services (it being
understood that such provision is not a waiver of the Fund's right to pursue GAM
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Services and enforce such claims against the assets of GAM Services other than
its right to the Distribution Fees, Service Fees and CDSCs in respect of the
Class B Shares of the Fund transferred in connection with such Transfer). For
purposes of this Plan, the term "Allocable Portion" of Distribution Fees, CDSCs
or Earned Service Fees payable in respect of the Class B Shares of the Fund as
applied to any Distribution Fees, CDSCs or Earned Service Fees payable to GAM
Services in respect of the Class B Shares of the Fund shall mean the portion of
Distribution Fees, CDSCs or Earned Service Fees payable in respect of the Fund
allocated to GAM Services in accordance with the Allocation Schedule attached
hereto as Schedule A. For purposes of this Agreement, the term "Complete
Termination" of the Plan means a termination of the Plan involving the complete
cessation of the payment of Distribution Fees in respect of all Class B Shares
of the Fund, and the termination of the distribution plans and the complete
cessation of the payment of distribution fees pursuant to every other
Distribution Plan pursuant to Rule 12b-1 in respect of the Class B Shares of the
Fund and for every future class of shares which has substantially similar
characteristics to the Class B Shares of the Fund taking into account the manner
of payment and amount of sales charge, contingent deferred sales charge or other
similar charges borne directly or indirectly by the holders of such shares.
10. NON-EXCLUSIVITY. The services of GAM Services to the Fund are not to be
deemed to be exclusive, and GAM Services and its officers and directors shall be
free to render distribution or other services to others (including other
investment companies) and to engage in other activities.
11. TERM. This Agreement shall become effective on the date hereof and
shall continue in force and effect, subject to Section 13 hereof, until the
first anniversary of the date hereof.
12. RENEWAL. Following the expiration of its initial one-year term, this
Agreement shall continue in force and effect, subject to Section 13 hereof,
provided that such continuance is specifically approved at least annually:
(a) by the Fund's Board of Directors; and
(b) by the affirmative vote of a majority of the Directors who are not
parties to this Agreement or "interested persons" (as defined by the 0000
Xxx) of any such party and have no direct or indirect financial interest in
the operation of this Agreement or any agreement related to this Agreement,
by votes cast in person at a meeting specifically called for the purpose of
voting on such approval.
13. TERMINATION. This Agreement may be terminated at any time, without the
payment of any penalty, (i) by vote of the Fund's Board of Directors, (ii) by
vote of a majority of the members of the Board of Directors of the Fund who are
not "interested persons" of the Fund
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and have no direct or indirect financial interest in the operation of this
Agreement or in any agreement related to this Agreement, (iii) with respect to
any Series of the Fund, by vote of a majority of the outstanding Class B Shares
of such Series (as defined in Section 2(a)(42) of the 1940 Act), or (iv) by GAM
Services, on sixty (60) days' written notice to the other party. The notice
provided for herein may be waived by either party. This Agreement shall
automatically terminate in the event of its "assignment" as defined in Section
2(a)(4) of the 1940 Act; provided, however, that GAM Services may Transfer its
rights to the Distribution Fees, Earned Service Fees and CDSCs as provided in
Section 9.
14. AMENDMENTS.
(a) This Agreement may be amended by the parties hereto only if such
amendment is specifically approved (i) by the Board of Directors of the
Fund and (ii) by a majority of those Directors who are not parties to this
Agreement or "interested persons" of any such party, which vote must be
cast in person at a meeting called for the purpose of voting on such
approval.
(b) In the event that this Agreement is proposed to be amended to
increase materially the amount to be spent by the Fund for distribution,
such amendment will not be effected with respect to any Series without the
approval of the holders of Class B Shares of such Series.
15. LIABILITY OF THE DISTRIBUTOR. In the performance of its duties
hereunder, GAM Services shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but GAM Services
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of GAM Services or
reckless disregard by GAM Services of its duties under this Agreement.
16. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend and hold GAM Services, its
officers and directors and any person who controls GAM Services 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) which GAM Services, its
officers, directors or any such controlling person may incur arising out of
or based upon any untrue statement of a material fact contained in the
Registration Statement, Prospectus or SAI 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
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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 GAM Services to the
Fund for use in the Registration Statement, Prospectus or SAI; provided,
however, that this indemnity agreement, to the extent that it might require
indemnity of any person who is also an officer or director of the Fund or
who controls the Fund within the meaning of Section 15 of the 1933 Act,
shall not inure to the benefit of such officer, director or controlling
person unless a court of competent jurisdiction shall determine, or it
shall have been determined by controlling precedent, that such result would
not be against public policy as expressed in the 1933 Act; and further
provided, that in no event shall anything contained herein be so construed
as to protect GAM Services against any liability to the Fund or to its
security holders to which GAM Services 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. In the event that GAM Services becomes a party to any
action or proceeding in respect of which indemnification may be sought
hereunder, GAM Services shall promptly notify the Fund thereof. Following
such notice, the Fund shall be entitled to participate therein, and to the
extent that it may wish, to assume the defense thereof with counsel
reasonably satisfactory to GAM Services. After notice from the Fund to GAM
Services of an election so to assume the defense thereof, the Fund shall
not be liable to GAM Services hereunder for any legal or other expenses
subsequently incurred by GAM Services in connection with the defense
thereof other than reasonable costs of investigation.
(b) GAM Services agrees to indemnify, defend and hold the Fund, its
officers and directors and any person who controls the Fund, if any, 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 costs of investigating or defending against such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
the Fund, its directors or officers or any such controlling person may
incur, but only to the extent that such liability or expense incurred by
the Fund, its directors or officers or such controlling person resulting
from such claims or demands shall arise out of or be based upon any alleged
untrue statement of a material fact contained in information furnished in
writing by GAM Services to the Fund for use in the Registration Statement,
Prospectus or SAI or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information
required to be stated in the Registration Statement, Prospectus or SAI or
necessary to make such information not misleading.
(c) Neither party to this Agreement shall be liable under this Section
16 for any settlement of any action or claim effected without its prior
written consent.
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17. REPORTS. GAM Services shall provide to the Board of Directors of the
Fund, and the Board of Directors shall review, at least quarterly, a written
report of the amounts expended pursuant to this Agreement and the purposes for
which such expenditures were made, including, without limitation, commissions,
advertising, printing, interest, carrying charges and allocated overhead
expenses. GAM Services shall also provide the Board of Directors of the Fund
with such other information regarding the implementation of this Agreement as
the Board of Directors may reasonably request from time to time.
18. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of each party
for this purpose shall be 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
19. INTERPRETATION. This Agreement shall be implemented and construed in a
manner consistent with the provisions of the 1940 Act. 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
interpretations 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 issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first above written.
GAM FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxx
Title: Treasurer
GAM SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Secretary
