Exhibit (e)(3)
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated December 31, 2002, between
Gabelli Equity Series 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 of The Gabelli Woodland
Small Cap 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 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 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, Class C and Class AAA 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. In addition to sales charges described in the Prospectus,
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 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 Director Approval and Disinterested
Director Approval (as such terms are defined in such Plan).
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. 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 EQUITY SERIES FUNDS, INC.
By: /S/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
GABELLI & COMPANY, INC.
By: /S/ XXXXXX XXXXXXX
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Name: Xxxxxx Xxxxxxx
Title: Vice President
