DISTRIBUTION AGREEMENT FOR COMSTOCK FUNDS, INC.
Exhibit 28(e)(1)
FOR
▇▇▇▇▇▇▇▇ FUNDS, INC.
DISTRIBUTION AGREEMENT, dated August 1, 2011, between ▇▇▇▇▇▇▇▇ Funds, Inc., a Maryland
corporation (the “Company”), and G.distributors, LLC, a Delaware limited liability company (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 (the “Shares”) of ▇▇▇▇▇▇▇▇ Capital
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 ▇▇▇▇ ▇▇▇.
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.
Exhibit 28(e)(1)
3. The Distributor represents that it is a member in good standing of the Financial.
Industry Regulatory Authority, Inc. (“FINRA”) 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 FINRA, 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;
Exhibit 28(e)(1)
(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. 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
Plan 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
Exhibit 28(e)(1)
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
Exhibit 28(e)(1)
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(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.
Exhibit 28(e)(1)
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.
| ▇▇▇▇▇▇▇▇ FUNDS, INC. |
||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Title: | Executive Vice President | |||
| G.distributors, LLC |
||||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Title: | CEO | |||