UNDERWRITING AGREEMENT
BETWEEN
THE CANANDAIGUA FUNDS
AND
ORBITEX FUNDS DISTRIBUTOR, INC.
UNDERWRITING AGREEMENT
AGREEMENT made as of this ____ day of _____, 2002 by and between The Canandaigua
Funds, (the "Trust"), and Orbitex Funds Distributor, Inc. (the "Underwriter").
BACKGROUND
WHEREAS, the Trust is offering shares of beneficial interest (the "Shares") in
an investment portfolio known as the "Canandaigua Equity Fund" and the
"Canandaigua Bond Fund" which are a series of the Trust (the "Funds"); and
WHEREAS, the Trust is a non-diversified open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Underwriter is a corporation experienced in providing distribution
services to mutual funds and possesses facilities sufficient to provide such
services; and
WHEREAS, the Trust desires to avail itself of the experience, assistance and
facilities of the Underwriter and to have the Underwriter perform for the Trust
certain services appropriate to the operations of the Funds and the Underwriter
is willing to furnish such services in accordance with the terms hereinafter set
forth, the Trust and the Underwriter agree to the following terms.
TERMS
A: DISTRIBUTION ACTIVITIES:
1. The Underwriter will receive orders from purchasers for, and the Funds
will sell, issue and deliver from time to time to such purchasers, such
part of the authorized shares of capital stock of the Funds remaining
un-issued as from time to time shall be effectively registered under the
Securities Act of 1933, as amended (the "1933 Act"), at prices determined
as hereinafter provided and on the terms hereinafter set forth, all
subject to applicable Federal and State laws and regulations and to the
Declaration of Trust of the Trust.
2. The Underwriter shall present all orders received by it for Shares to the
Funds by telegraphic or written purchase orders and each such order shall
be subject to the acceptance or rejection by the Funds in the Funds' sole
discretion.
2.1 Notwithstanding any other provision hereof, whenever in the judgment of
the Funds such action is warranted by market, economic or political
conditions or by abnormal circumstances of any kind, the Funds may suspend
the offer of Shares in effect and may, without liability under any
provision of this Agreement, decline to accept or confirm any orders or
make any sales of Shares under this Agreement until such time as the Funds
shall deem it advisable to resume the offering of such Shares, provided
that as soon as practicable after the taking of any such action a special
meeting of the Board of Trustees of the Trust shall be called to be held as
soon as practicable thereafter to determine whether or not such action
shall then continue to be effective, and the period during, or the
circumstance under, which such action shall continue or cease to be
effective. During any period during which the offer of Shares shall be
suspended or the Funds shall decline to accept or confirm any such orders
or make any such sales, the Funds shall be under no obligation to confirm
or accept any such orders or make any such sale at any price.
2.2 The Funds will use their best efforts to keep effectively registered
under the 1933 Act for sale as herein contemplated such Shares as the
Underwriter shall reasonably request and as the Securities and Exchange
Commission (the "SEC") shall permit to be so registered.
3. Sales by the Underwriter shall be made as agent for the Funds and all such
sales shall be made to or through qualified dealers or others in such
manner, not inconsistent with the provisions hereof and the then effective
registration statement of the Funds under the 1933 Act, (and related
prospectus), as the Underwriter may determine from time to time.
4. All Shares offered for sale or sold by the Underwriter shall be so offered
or sold at a price per share (the "Offering Price") equal to the net asset
value per Share (determined as authorized from time to time by the Board
of Trustees of the Trust pursuant to its charter).
4.1 For the purpose of determining the Offering Price, the net asset value
of any such Shares shall be so determined in accordance with the then
current offering prospectus. The Funds, or the Funds' authorized agent,
will promptly furnish to the Underwriter a statement of the Offering Price
as often as such net asset value is determined and such statement shall, at
the request of the Underwriter, show the basis of computation of the
Offering Price.
4.2 Orders presented by the Underwriter for Shares, if accepted by the
Funds, shall be accepted and confirmed by the Funds or the Funds' duly
authorized agent at the Offering Price in effect at the time of receipt of
such order at the principal office of the Funds.
4.3 The Underwriter will not in any event (a) offer for sale or sell Shares
of capital stock in excess of the number then effectively registered under
the1933 Act, and available for sale, or (b) offer for sale or sell any
Shares in violation of any applicable Federal or State law, rule or
regulation.
5. The Funds will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of the Shares of capital stock in such states as the
Underwriter may reasonably request (it being understood that the Funds
shall not be required without the Funds' consent to qualify to do business
in any jurisdiction or to comply with any requirement which, in the Funds'
opinion, is unduly burdensome). The Underwriter, at its own expense, will
effect all qualifications as dealer or broker.
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6. The Funds will furnish to the Underwriter from time to time such
information with respect to the Shares as the Underwriter may reasonably
request for use in connection with the sale of Shares. The Underwriter
will not use, distribute, disseminate or authorize the use or distribution
or dissemination by its dealers or others in connection with such sale of
any literature, advertising or selling aids in any form or through any
medium, written or oral, without prior written specific approval thereof
by the Funds.
7. Nothing herein contained shall limit the right of the Funds, in their
absolute discretion, to issue or sell Shares for such other considerations
(whether in connection with the acquisition of assets or shares or
securities of another corporation or entity or with the merger or
consolidation of any other corporation into or with the Funds, or
otherwise) as and to the extent permitted by the Funds' charter and any
applicable laws, or to issue or sell any such Shares directly to the
shareholders of the Funds, upon such terms and conditions and for such
consideration, if any, as may be determined by the Board of Trustees,
whether pursuant to the distribution of subscription or purchase rights to
such holders or by way of dividends or otherwise.
8. At the request of the Funds, the Underwriter agrees to act as agent for
the Funds for the repurchase or redemption of Shares of the Funds at such
prices as the Funds from time to time shall prescribe.
9. In selling or reacquiring Shares, the Underwriter agrees to conform to the
requirements of all state and Federal laws relating to such sale or
reacquisition, as the case may be, and will indemnify and hold the Funds
harmless from any damage or expense on account of any wrongful act by the
Underwriter or any employee, representative or agent of the Underwriter.
The Underwriter will observe and be bound by all the provisions of the
charter of the Trust and any fundamental policies adopted by the Funds
pursuant to the 1940 Act, or otherwise, notice of which has been given to
the Underwriter.
10. Neither the Underwriter, any dealer nor any other person is authorized by
the Funds to give any information or to make any representation other than
those contained (a) in the latest effective registration statement (and
related prospectus) filed with the SEC under the 1933 Act as such
registration statement (and prospectus) may be amended from time to time,
or (b) in any statement expressly authorized by the Funds for use in
connection with any sale or reacquisition of Shares for the account of the
Funds.
B. COMPENSATION AND OTHER:
1. In consideration of the agreements on the part of the Underwriter herein
contained, the Underwriter shall receive payment in the amount of $22,750
per annum billed monthly, plus reimbursement of all reasonable
out-of-pocket expenses incurred at the request of the Funds in fulfillment
of its responsibilities in this Agreement.
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2. This Agreement shall continue in effect until such time as there remains
no unsold balance of Shares effectively registered under the 1933 Act;
provided, however, that (a) this Agreement shall continue in effect for a
period more than one year from the date hereof only so long as such
continuance is specifically approved at least annually by the Board
including by a majority of the "disinterested Trustees" or a majority of
the outstanding voting securities of the Funds, and (b) either party
hereto may terminate this Agreement on any date by giving the other party
at least ninety (90) days prior written notice of such termination
specifying the date fixed therefor.
2.1 This Agreement shall automatically terminate in the event of its
assignment by the Underwriter, the term "assignment" having the meaning
defined in Section 2(a)(4) of the 1940 Act.
3. Any notice under this Agreement shall be in writing addressed and
delivered by mail, postage prepaid, to the party to whom addressed at the
address given below, or at such other address as such party shall
theretofore have designated (by notice given to the other party as herein
provided) in writing for the receipt of such notice:
TO THE FUNDS: TO THE UNDERWRITER:
The Canandaigua Funds Xx. Xxx Xxxxx
00 Xxxxx Xxxx Xxxxxx Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000 Orbitex Funds Distributor, Inc.
Attn: Xxxxxx Xxxxxx 00000 Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
IN WITNESS WHEREOF, the Trust and the Underwriter have each caused this
Agreement to be executed on its behalf by an officer thereunto duly authorized
on the day and year first above written.
The Canandaigua Funds Orbitex Funds Distributor, Inc.
By: _________________________ By: ___________________________
Xxxxxx Xxxxxx, Xxx Xxxxx, Compliance Officer
Chairman
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