UNDERWRITING AGREEMENT
----------------------
This Agreement made as of May 20, 1998 by and between The Xxxxx
Advantage Funds (the "Trust"), an Ohio business trust and an open-end registered
investment company, and CW Fund Distributors, Inc., a Delaware corporation
("Underwriter").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Trust Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the
Securities and Exchange Commission and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of each series of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and
agreements of the parties contained herein, the parties agree as
follows:
1. APPOINTMENT.
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The Trust hereby appoints Underwriter as its exclusive agent
for the distribution of the Shares, and Underwriter hereby accepts such
appointment under the terms of this Agreement. While this Agreement is in force,
the Trust shall not sell any Shares except on the terms set forth in this
Agreement. Notwithstanding any other provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares whenever, in its sole discretion, it
deems such action to be desirable.
2. SALE AND REPURCHASE OF SHARES.
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(a) Underwriter will have the right, as agent for the
Trust, to enter into dealer agreements with responsible investment dealers, and
to sell Shares to such investment dealers against orders therefor at the public
offering price (as defined in subparagraph 2(d) hereof) stated in the Trust's
effective Registration Statement on Form N-1A under the Securities Act of 1933,
as amended, including the then current prospectus and statement of additional
information (the "Registration Statement"). Upon receipt of an order to purchase
Shares from a dealer with whom Underwriter has a dealer agreement, Underwriter
will promptly cause such order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the
Trust, to sell such Shares to the public against orders therefor at the public
offering price.
(c) Underwriter will also have the right to take, as agent for
the Trust, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series
shall be the respective net asset value of the Shares of that Series then in
effect, plus any applicable sales charge determined in the manner set forth in
the Registration Statement or as permitted by the Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder. In
no
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event shall any applicable sales charge exceed the maximum sales charge
permitted by the Rules of the NASD.
(e) The net asset value of the Shares of each Series shall be
determined in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each Series shall
be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
(f) On every sale, the Trust shall receive the applicable net
asset value of the Shares promptly, but in no event later than the third
business day following the date on which Underwriter shall have received an
order for the purchase of the Shares.
(g) Upon receipt of purchase instructions, Underwriter will
transmit such instructions to the Trust or its transfer agent for registration
of the Shares purchased.
(h) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of
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others for whom it or they may be acting; provided, however, that Underwriter
expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Trust
under this Agreement.
(i) Underwriter, as agent of and for the account of the Trust,
may repurchase the Shares at such prices and upon such terms and conditions as
shall be specified in the Registration Statement.
3. SALE OF SHARES BY THE TRUST.
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The Trust reserves the right to issue any Shares at any time
directly to the holders of Shares ("Shareholders"), to sell Shares to its
Shareholders or to other persons at not less than net asset value and to issue
Shares in exchange for substantially all the assets of any corporation or trust
or for the shares of any corporation or trust.
4. BASIS OF SALE OF SHARES.
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Underwriter does not agree to sell any specific number of
Shares. Underwriter, as agent for the Trust, undertakes to sell Shares on a best
efforts basis only against orders therefor.
5. RULES OF NASD, ETC.
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(a) Underwriter will conform to the Rules of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any Shares.
(b) Underwriter will require each dealer with whom Underwriter
has a dealer agreement to conform to the applicable
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provisions hereof and the Registration Statement with respect to the public
offering price of the Shares, and neither Underwriter nor any such dealers shall
withhold the placing of purchase orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient
copies of any agreements, plans or other materials it intends to use in
connection with any sales of Shares in adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not to
use them until so filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or
broker, or otherwise, under all applicable state or federal laws required in
order that Shares may be sold in such States as may be mutually agreed upon by
the parties.
(e) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those contained
in the then current prospectus and statement of additional information covering
the Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
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6. RECORDS TO BE SUPPLIED BY TRUST.
-------------------------------
The Trust shall furnish to Underwriter copies of all
information, financial statements and other papers which Underwriter may
reasonably request for use in connection with the distribution of the Shares,
and this shall include, but shall not be limited to, one certified copy, upon
request by Underwriter, of all financial statements prepared for the Trust by
independent public accountants.
7. FEES AND EXPENSES.
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For performing its services under this Agreement, Underwriter
will receive from the Trust a fee of $5,000 per year. Fees shall be paid monthly
in arrears. The Trust shall promptly reimburse Underwriter for any expenses
which are to be paid by the Trust in accordance with the following paragraph.
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Trust in accordance with
agreements between them as permitted by applicable law, including the Act and
rules and regulations promulgated thereunder. These costs include, but are not
limited to, licensing fees, filing fees, travel and such other expenses as may
be incurred by Underwriter on behalf of the Trust.
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8. INDEMNIFICATION OF TRUST.
------------------------
Underwriter agrees to indemnify and hold harmless the Trust
and each person who has been, is, or may hereafter be a trustee, director,
officer, employee, shareholder or control person of the Trust against any loss,
damage or expense (including the reasonable costs of investigation) reasonably
incurred by any of them in connection with any claim or in connection with any
action, suit or proceeding to which any of them may be a party, which arises out
of or is alleged to arise out of or is based upon any untrue statement or
alleged untrue statement of a material fact, or the omission or alleged omission
to state a material fact necessary to make the statements not misleading, on the
part of Underwriter or any agent or employee of Underwriter or any other person
for whose acts Underwriter is responsible, unless such statement or omission was
made in reliance upon written information furnished by the Trust. Underwriter
likewise agrees to indemnify and hold harmless the Trust and each such person in
connection with any claim or in connection with any action, suit or proceeding
which arises out of or is alleged to arise out of Underwriter's failure to
exercise reasonable care and diligence with respect to its services, if any,
rendered in connection with investment, reinvestment, automatic withdrawal and
other plans for Shares. The term "expenses" for purposes of this and the next
paragraph includes amounts paid in satisfaction of judgments or in
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settlements which are made with Underwriter's consent. The foregoing rights of
indemnification shall be in addition to any other rights to which the Trust or
each such person may be entitled as a matter of law.
9. INDEMNIFICATION OF UNDERWRITER.
------------------------------
The Trust agrees to indemnify and hold harmless Underwriter
and each person who has been, is, or may hereafter be a director, officer,
employee, shareholder or control person of Underwriter against any loss, damage
or expense (including the reasonable costs of investigation) reasonably incurred
by any of them in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or negligence,
including clerical errors and mechanical failures, on the part of any of such
persons in the performance of Underwriter's duties or from the reckless
disregard by any of such persons of Underwriter's obligations and duties under
this Agreement, for all of which exceptions Underwriter shall be liable to the
Trust. The Trust will advance attorneys' fees or other expenses incurred by any
such person in defending a proceeding, upon the undertaking by or on behalf of
such person to repay the advance if it is ultimately determined that such person
is not entitled to indemnification.
In order that the indemnification provisions contained in this
Paragraph 9 shall apply, it is understood that if in any case the Trust may be
asked to indemnify Underwriter or any other person or hold Underwriter or any
other person harmless, the
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Trust shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that Underwriter will use
all reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the Trust. The Trust shall have the option to
defend Underwriter and any such person against any claim which may be the
subject of this indemnification, and in the event that the Trust so elects it
will so notify Underwriter, and thereupon the Trust shall take over complete
defense of the claim, and neither Underwriter nor any such person shall in such
situation initiate further legal or other expenses for which it shall seek
indemnification under this Paragraph 9. Underwriter shall in no case confess any
claim or make any compromise in any case in which the Trust will be asked to
indemnify Underwriter or any such person except with the Trust's written
consent.
Notwithstanding any other provision of this Agreement,
Underwriter shall be entitled to receive and act upon advice of counsel (who may
be counsel for the Trust or its own counsel) and shall be without liability for
any action reasonably taken or thing reasonably done pursuant to such advice,
provided that such action is not in violation of applicable federal or state
laws or regulations.
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10. TERMINATION AND AMENDMENT OF THIS AGREEMENT.
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This Agreement shall automatically terminate, without the
payment of any penalty, in the event of its assignment. This Agreement may be
amended only if such amendment is approved (i) by Underwriter, (ii) either by
action of the Board of Trustees of the Trust or at a meeting of the Shareholders
of the Trust by the affirmative vote of a majority of the outstanding Shares,
and (iii) by a majority of the Trustees of the Trust who are not interested
persons of the Trust or of Underwriter by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. EFFECTIVE PERIOD OF THIS AGREEMENT.
----------------------------------
This Agreement shall take effect upon its execution and shall
remain in full force and effect for a period of two (2) years from the date of
its execution (unless terminated automatically as set forth in Section 10), and
from year to year thereafter, subject to annual approval (i) by Underwriter,
(ii) by the Board of Trustees of the Trust or a vote of a majority of the
outstanding Shares, and (iii) by a majority of the Trustees of the Trust who are
not interested persons of the Trust or of
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Underwriter by vote cast in person at a meeting called for the purpose of voting
on such approval.
12. NEW SERIES.
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The terms and provisions of this Agreement shall become
automatically applicable to any additional series of the Trust established
during the initial or renewal term of this Agreement.
13. SUCCESSOR INVESTMENT TRUST.
--------------------------
Unless this Agreement has been terminated in accordance with
Paragraph 10, the terms and provisions of this Agreement shall become
automatically applicable to any investment company which is a successor to the
Trust as a result of reorganization, recapitalization or change of domicile.
14. LIMITATION OF LIABILITY.
-----------------------
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
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15. SEVERABILITY.
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In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
16. QUESTIONS OF INTERPRETATION.
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(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) 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 Act shall be resolved by reference to such term or provision of
the Act and to interpretation 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 Securities and Exchange Commission issued pursuant to said Act.
In addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. NOTICES.
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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
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agreed that the address of the Trust for this purpose shall be 0000 Xxxxxxxxxx
Xxxx, Xxxxxxxxxxx, Xxxx 00000, and that the address of Underwriter for this
purpose shall be 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000.
18. COUNTERPARTS.
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This Agreement may be executed in one or more counterparts,
and by the parties hereto on separate counterparts, each of which shall be
deemed an original but all of which together shall constitute but one and the
same instrument.
IN WITNESS WHEREOF, the Trust and Underwriter have each caused
this Agreement to be signed in duplicate on their behalf, all as of the day and
year first above written.
ATTEST: THE XXXXX ADVANTAGE FUNDS
/S/ XXXXXX X. XXXXXX By: /S/ XXXXX X. XXXXX
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Its:President
ATTEST: CW FUND DISTRIBUTORS, INC.
/S/ XXXX X. XXXXXX By: /S/ XXXXXX X. XXXXXX
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Its:President
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