EXHIBIT E
UNDERWRITING AGREEMENT
This Agreement made as of October 29, 1999 by and between The Xxxxxxxx
& Orkin Funds, Inc. (the "Company"), a Maryland corporation, C&O Funds Advisor,
Inc. (the "Manager") and CW Fund Distributors, Inc., a Delaware corporation
("Underwriter"). WHEREAS, the Company is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is employed by the Company to
provide it with investment advisory and management services; 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 Company and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of common
stock (the "Shares") of each series of shares of the Company (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
xxxxxxxx\xxxxxxxx.xxx
1. APPOINTMENT.
The Company 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 Company
shall not sell any Shares except on the terms set forth in this Agreement.
Notwithstanding any other provision hereof, the Company 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.
(a) Underwriter will have the right, as agent for the Company, 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 Company'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 Company.
(b) Underwriter will also have the right, as agent for the Company,
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
Company, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
-2-
(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 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 Company or by another entity on behalf of the Company.
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 Company 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 Company 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 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 Company under this Agreement.
-3-
(i) Underwriter, as agent of and for the account of the Company, 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 COMPANY.
The Company 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 approved by Underwriter 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.
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Company, undertakes to sell Shares on a best
efforts basis only against orders therefor.
5. RULES OF NASD, ETC.
(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 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.
-4-
(c) Underwriter agrees to furnish to the Company 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 Company 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 Company 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 Company to
Underwriter in reasonable quantities upon request.
6. RECORDS TO BE SUPPLIED BY COMPANY.
The Company 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 Company by independent
public accountants.
-5-
7. FEES AND EXPENSES.
For performing its services under this Agreement, Underwriter will
receive from the Manager a fee of $500 per month. Fees shall be paid monthly in
arrears. The Manager shall promptly reimburse Underwriter for any expenses which
are to be paid by the Manager 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 Manager as permitted by
applicable law, including the Act and rules and regulations promulgated
thereunder. These costs include, but are not limited to, licensing fees and
filing fees, and, subject to prior approval of the Manager, travel and such
other expenses as may be incurred by Underwriter on behalf of the Company and
the Manager.
8. INDEMNIFICATION OF COMPANY AND MANAGER.
Underwriter agrees to indemnify and hold harmless the Company, the
Manager and each person who has been, is, or may hereafter be a director,
officer, employee, shareholder or control person of the Company or the Manager,
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
-6-
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 Company or the Manager.
Underwriter likewise agrees to indemnify and hold harmless the Company, the
Manager and each such person against any loss, damage or expense (including the
reasonable costs of investigation) reasonably incurred by any of them 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 hereunder, including
services rendered in connection with investment, reinvestment, automatic
withdrawal and other plans for Shares. The Underwriter 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.
The term "expenses" for purposes of this paragraph includes amounts paid in
satisfaction of judgments or in settlements which are made with Underwriter's
consent. The foregoing rights of indemnification shall be in addition to any
other rights to which the Company, the Manager or each such person may be
entitled as a matter of law.
9. INDEMNIFICATION OF UNDERWRITER.
The Company 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 gross negligence on the
part of any of such persons in the performance of Underwriter's duties or from
the reckless
-7-
disregard by any of such persons of Underwriter's obligations and duties under
this Agreement. The Company 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. The term "expenses" for
purposes of this paragraph includes amounts paid in satisfaction of judgments or
in settlements which are made with Company's consent. The foregoing rights of
indemnification shall be in addition to any other rights to which the
Underwriter may be entitled as a matter of law. Any person employed by
Underwriter who may also be or become an officer or employee of the Company
shall be deemed, when acting within the scope of his employment by the Company,
to be acting in such employment solely for the Company and not as an employee or
agent of Underwriter.
10. TERMINATION AND AMENDMENT OF THIS AGREEMENT.
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 Directors of the Company or at a meeting of the Shareholders of the
Company by the affirmative vote of a majority of the outstanding Shares, and
(iii) by a majority of the Directors of the Company who are not interested
persons of the Company or of Underwriter by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Company or Underwriter may at any time terminate
this Agreement on one hundred twenty (120) days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party.
-8-
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 Directors of the Company or a vote of a majority of the
outstanding Shares, and (iii) by a majority of the Directors of the Company who
are not interested persons of the Company or of Underwriter by vote cast in
person at a meeting called for the purpose of voting on such approval.
12. NEW SERIES.
The terms and provisions of this Agreement shall become
automatically applicable to any additional series of the Company established
during the initial or renewal term of this Agreement.
13. SUCCESSOR INVESTMENT COMPANY.
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
Company as a result of reorganization, recapitalization or change of domicile.
14. SEVERABILITY.
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.
-9-
15. QUESTIONS OF INTERPRETATION.
(a) This Agreement shall be governed by the laws of the State of
Delaware.
(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.
16. NOTICES.
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 agreed that the address of the Company and the Manager
for this purpose shall be 0000 Xxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx
00000, and that the address of Underwriter for this purpose shall be 000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxx 00000.
-10-
IN WITNESS WHEREOF, the Company, the Manager 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 XXXXXXXX & ORKIN FUNDS, INC.
/S/ XXXXXX XXXXXX BY: /S/ XXXXXXX X. XXXXX
----------------- ------------------------
Xxxxxx Xxxxxx Xxxxxxx X. Xxxxx
Its: President
ATTEST: C&O FUNDS ADVISOR, INC.
/S/ XXXXXX XXXXXX BY: /S/ XXXXXXX X. XXXXX
----------------- ------------------------
Xxxxxx Xxxxxx Xxxxxxx X. Xxxxx
Its: President
ATTEST: CW FUND DISTRIBUTORS, INC.
/S/ XXXX X. XXXXXXX BY: /S/ XXXXXX X. XXXXXXX
------------------- -------------------------
Xxxxxx X. Xxxxxxx
Its: President
-11-
