Exhibit (e)(1)
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated March 25, 2003, between Xxx Xxxxx
Research Funds, a Delaware Statutory Trust (the "Trust"), and Gabelli &
Company Inc., a New York corporation (the "Distributor"). The Trust is
registered as an open-end investment company under the Investment Company Act
of 1940 (the "1940 Act"), and an indefinite number of shares of The Xxx Xxxxx
Research Asset Allocation Fund, (the "Fund"), par value $.001 per share (the
"Shares"), have been registered with 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
Trust's Registration Statement on Form N-1A as such documents may be amended
from time to time.
In this connection, the Trust desires that the Distributor act as its
exclusive sales agent and distributor for the sale and distribution of Shares.
The Distributor has advised the Trust that it is willing to act in such
capacities, and it is accordingly agreed between them as follows:
1. The Trust 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 Trust 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 Trust 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 Trust at any time for any reason the Distributor will suspend such
efforts. The Trust 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 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 Trust by its
actions, conduct or contracts except that it is authorized to accept orders
for the purchase or repurchase of Shares as the Trust's agent and subject to
its approval. The Trust 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 Trust, 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 Trust or otherwise act as the Trust'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 Trust 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 Trust's Board of Trustees or directly to prospective
purchasers. To facilitate sales, the Trust will furnish the Distributor with
the net asset value of its Shares promptly after each calculation thereof.
5. The Trust 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 Trust 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 Trust 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 Trust 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 Trust 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 Trust 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 1933 Act, 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 Trust; 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, Class C
and Class AAA, 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 Trust will pay its legal and auditing expenses and the cost of
composition of any prospectuses of annual or interim reports of the Fund.
9. In addition to sales charges described in the Prospectus, the
Trust 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 the Plans; provided, however, that no payments
shall be due or paid to the Distributor hereunder unless and until this
Agreement shall have been approved by Board Approval and Disinterested Trustee
Approval (as such terms are defined in such Plan).
10. The Trust agrees to indemnify, defend and hold the Distributor,
its officers, trustees, 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 Trust expressly for use in any such Prospectus; provided,
however, that (1) no indemnitee shall be indemnified hereunder against any
liability to the Trust 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 Trust 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 Trust 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 Trust and did not
involve disabling conduct by such indemnitee. Notwithstanding the foregoing
the Trust shall not be obligated to provide any such indemnification to the
extent such provision would waive any right which the Trust cannot lawfully
waive.
The Distributor agrees to indemnify, defend and hold the Trust, its
Trustees, officers, employees and agents and any person who controls the Trust
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 Trust 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 Trust shall make advance payments in connection with the expenses
of defending any action with respect to which indemnification might be sought
hereunder if the Trust 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 Trust unless it is
subsequently determined that he is entitled to such indemnification and if the
trustees of the Trust 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 Trust shall be insured against losses arising by reason
of any lawful advances, or (C) a majority of a quorum of trustees of the Trust
who are neither "interested persons" of the Trust (as defined in Section
2(a)(19) of the Act) nor parties to the proceeding ("Disinterested Non-Party
Trustees") 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 Trustees of the
Trust, 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) Trustee 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 Trustee 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 Trust
which notice may be waived by the Trust; or (b) by the Trust 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 Trust 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. 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.
XXX XXXXX RESEARCH FUNDS
By: /s/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: President
GABELLI & COMPANY, INC.
By: /s/ XXXXX X. XXXXX
Name: Xxxxx X. XxXxx
Title: Secretary
