Exhibit 23(e)
UNDERWRITING AGREEMENT
BETWEEN
CLIPPER FUND, INC.
AND
XXXXX DISTRIBUTORS, LLC
THIS UNDERWRITING AGREEMENT, made as of the 19th day of December 2005, by and
between CLIPPER FUND, INC., a corporation organized and existing under the laws
of the State of California (hereinafter called the "Fund"), and XXXXX
DISTRIBUTORS, LLC, a limited liability company organized and existing under the
laws of the State of Delaware (hereinafter called the "Distributor").
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end management investment
company and is registered as such under the federal Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Distributor is engaged principally in the business of distributing
shares of the investment companies sponsored and managed by Xxxxx Selected
Advisers, L.P. and is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended, ("1934 Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Fund desires the Distributor to act as the distributor in the
public offering of its shares of common stock, no par value ("Shares");
NOW, THEREFORE, in consideration of the premises and the mutual promises
hereinafter set forth, the parties hereto agree as follows:
1. DELIVERY OF FUND DOCUMENTS. The Fund has furnished Distributor with copies,
properly certified or authenticated, of each of the following:
(a) the Fund's Articles of Incorporation dated December 1, 1983 (the
"Articles"), as amended on February 16, 1984, February 27, 1984, March 30, 1984,
and May 2, 1984, as certified by an officer of the Fund as being true and
complete and in effect on the date hereof;
(b) the Bylaws of the Fund dated January 27, 1984, as amended and in effect on
the date hereof; and
(c) Resolutions of the Board of Directors of the Fund selecting Distributor as
principal underwriter and approving this form of agreement.
The Fund shall furnish the Distributor from time to time with copies, properly
certified or authenticated, of all the amendments of, or supplements to, the
foregoing, if any.
The Fund shall furnish Distributor promptly with properly certified or
authenticated copies of any registration statements filed by it with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as
amended ("1933 Act") or 1940 Act, together with any financial statements and
exhibits included therein, and all amendments or supplements thereto hereafter
filed.
2. SALE OF SHARES. Subject to the provisions of this Agreement and to such
minimum purchase requirements as may from time to time be currently indicated in
the Fund`s prospectus, the Distributor is authorized to sell, as agent on behalf
of the Fund, Shares authorized for issuance and registered under the 1933 Act
and under the laws governing the sale of securities in the various states ("Blue
Sky Laws"). Distributor may also purchase as principal such Shares for resale to
the public. Such sale will be made by Distributor on behalf of the Fund by
accepting unconditional orders to purchase the Shares placed with Distributor by
investors or by selected dealers and such purchases will be made by Distributor
only after acceptance by Distributor of such orders. The sales price to the
public of such Shares shall be the public offering price as defined in Paragraph
5 hereof. The Distributor shall have the right to enter into selected dealer
agreements with registered and qualified securities dealers and other financial
institutions of its choice for the sale of Shares, provided that the Fund shall
approve the forms of such agreements. Within the United States, the Distributor
shall offer and sell Shares only to such selected dealers as are members in good
standing of the NASD or are institutions exempt from registration under
applicable federal securities laws. Shares sold to selected dealers shall be for
resale by such dealers only at the public offering price as defined in Paragraph
5 hereof.
3. SALE OF SHARES BY THE FUND. The rights granted to the Distributor shall be
nonexclusive in that the Fund reserves the right to sell its Shares to investors
pursuant to applications received and accepted by the Fund or its transfer
agent. Further, the Fund reserves the right to issue Shares in connection with
the merger or consolidation of any other investment company, trust or personal
holding company with the Fund or the Fund`s acquisition, by the purchase or
otherwise, of all or substantially all of the assets of an investment company,
trust or personal holding company, or substantially all of the outstanding
shares or interests of any such entity. Any right granted to Distributor to
accept orders for Shares, or to make sales on behalf of the Fund or to purchase
Shares for resale, will not apply to Shares issued in connection with the merger
or consolidation of any other investment company with the Fund or its
acquisition, by purchase or otherwise, of all or substantially all of the assets
of any investment company, trust or personal holding company, or substantially
all of the outstanding shares or interests of any such
entity, and such right shall not apply to Shares that may be offered by the Fund
to shareholders by virtue of their being shareholders of the Fund.
4. SHARES COVERED BY THIS AGREEMENT. This Agreement relates to the issuance and
sale of Shares that are duly authorized, registered, and available for sale by
the Fund, including redeemed or repurchased Shares if and to the extent that
they may be legally sold and if, but only if, the Fund authorizes the
Distributor to sell them.
5. PUBLIC OFFERING PRICE. All Shares sold by the Distributor pursuant to this
Agreement shall be sold at the public offering price. The public offering price
for all accepted subscriptions will be the net asset value per share, as
described in the Fund's current Prospectus and/or Statement of Additional
Information, next determined after the order is accepted by the Distributor. The
Distributor will process orders submitted by brokers for the sale of Shares at
the public offering price exclusive of any commission charged by such broker to
his customer.
6. SUSPENSION OF SALES. If and whenever the determination of net asset value per
Share of the Fund is suspended and until such suspension is terminated, no
further orders for Shares shall be accepted by the Distributor except such
unconditional orders placed with the Distributor before it had knowledge of the
suspension. In addition, the Fund reserves the right to suspend sales and
Distributor's authority to accept orders for Shares on behalf of the Fund if, in
the judgment of the Board of Directors of the Fund, it is in the best interests
of the Fund to do so, such suspension to continue for such period as may be
determined by the Board of Directors of the Fund; and in that event, no orders
to purchase Shares shall be processed or accepted by the Distributor on behalf
of the Fund while such suspension remains in effect except for Shares necessary
to cover unconditional orders accepted by Distributor before it had knowledge of
the suspension, unless otherwise directed by the Board of Directors of the Fund.
7. SOLICITATION OF ORDERS. In consideration of the rights granted to the
Distributor under this Agreement, Distributor will use all reasonable efforts,
consistent with its other business, to obtain from investors unconditional
orders for Shares authorized for issuance by the Fund and registered under 1933
Act, provided that Distributor may in its discretion reject any order to
purchase Shares. This does not obligate the Distributor to register or maintain
its registration as a broker or dealer under the state securities laws of any
jurisdiction if, in the discretion of the Distributor, such registration is not
practical or feasible. The Fund shall make available to the Distributor at the
expense of the Distributor such number of copies of the Fund's currently
effective prospectus as the Distributor may reasonably request. The Fund shall
furnish to the Distributor copies of all information, financial statements and
other papers which the Distributor may reasonably request for use in connection
with the distribution of Shares.
8. AUTHORIZED REPRESENTATIONS. The Fund is not authorized by the Distributor to
give, on behalf of the Distributor, any information or to make any
representations other than the information and representations contained in a
registration statement or prospectus
filed with the SEC under 1933 Act and/or 1940 Act, covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time.
Neither Distributor nor any selected dealer nor any other person is authorized
by the Fund to give on behalf of the Fund any information or to make any
representations in connection with the sale of Shares other than the information
and representations contained in a registration statement or prospectus filed
with the SEC under the 1933 Act and/or 1940 Act, covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time, or contained in shareholder reports or other material that may be
prepared by or on behalf of the Fund. This shall not be construed to prevent the
Distributor from preparing and distributing tombstone ads and sales literature
or other material as it may deem appropriate. No person other than Distributor
is authorized to act as principal underwriter (as such term is defined in the
1940 Act, for the Fund.
9. REGISTRATION AND SALE OF ADDITIONAL SHARES. The Fund will take all action
necessary to register an indefinite number of Shares pursuant to Rule 24f-2
under 1940 Act, as amended. The Fund will, in cooperation with the Distributor,
take such action as may be necessary from time to time to qualify such Shares,
in any state mutually agreeable to the Distributor and the Fund, and to maintain
such qualification.
10. EXPENSES. The Fund shall pay all fees and expenses:
a. in connection with the preparation, setting in type and filing of any
registration statement and prospectus under 1933 Act and/or 1940 Act, and
any amendments or supplements that may be made from time to time;
b. in connection with the registration and qualification of Shares for
sale in the various states in which the Fund shall determine it advisable
to qualify such Shares for sale;
c. of preparing, setting in type, printing and mailing any report or other
communication to existing shareholders of the Fund in their capacity as
such;
d. of preparing, setting in type, printing and mailing prospectuses
annually to existing shareholders;
e. in connection with the issue and transfer of Shares resulting from the
acceptance by Distributor of orders to purchase Shares placed with the
Distributor by investors, including the expenses of confirming such
purchase orders; and
f. of any issue taxes or (in the case of Shares redeemed) any initial
transfer taxes.
The Distributor shall pay (or will enter into arrangements providing that
persons other than Distributor shall pay) all fees and expenses:
a. of printing and distributing any prospectuses or reports prepared for
its use in connection with the distribution of Shares to the public;
b. of preparing, setting in type, printing and mailing any other
literature used by the Distributor in connection with the distribution of
the Shares to the public;
c. of advertising in connection with the distribution of such Shares to
the public; and
d. incurred in connection with its registration as a broker or dealer or
the registration or qualification of its officers, directors or
representatives under federal and state laws.
11. CONFORMITY WITH LAW. Distributor agrees that in selling Shares it shall duly
conform in all respects with the laws of the United States and any state in
which such Shares may be offered for sale by Distributor pursuant to this
Agreement and to the rules and regulations of the NASD.
12. INDEPENDENT CONTRACTOR. Distributor shall be an independent contractor and
neither Distributor, nor any of its officers, directors, employees, or
representatives is or shall be an employee of the Fund in the performance of
Distributor's duties hereunder. Distributor shall be responsible for its own
conduct and the employment, control, and conduct of its agents and employees and
for injury to such agents or employees or to others through its agents or
employees. Distributor assumes full responsibility for its agents and employees
under applicable statutes and agrees to pay all employee taxes thereunder.
13. INDEMNIFICATION. (a) Distributor Distributor agrees to indemnify and hold
harmless the Fund and each of its directors, officers, employees, and
representatives and each person, if any, who controls the Fund within the
meaning of Section 15 of the 1933 Act against any and all losses, liabilities,
damages, claims or expenses (including the reasonable costs of investigating or
defending any alleged loss, liability, damage, claim or expense and reasonable
legal counsel fees incurred in connection therewith) to which the Fund or such
of its directors, officers, employees, representatives or controlling persons
may become subject under 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by Distributor or any of Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if such statement or omission was made in reliance upon
information furnished to the Fund by Distributor. In no case (i) is
Distributor's indemnity in favor of the Fund, or any person indemnified to be
deemed to protect the Fund or such indemnified person against any liability to
which the Fund or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement or (ii) is Distributor to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made against the Fund or
any person indemnified unless the Fund or such person, as the case may be, shall
have notified Distributor in writing of the claim within a reasonable time after
the summons or other first written notification giving information of the nature
of the claim shall have been served upon the Fund or upon such person (or after
the Fund or such person shall have received notice of such service on any
designated agent). However, failure to notify Distributor of any such claim
shall not relieve Distributor from any
liability which Distributor may have to the Fund or any person against whom such
action is brought otherwise than on account of Distributor's indemnity agreement
contained in this Paragraph.
Distributor shall be entitled to participate, at its own expense, in the
defense, or, if Distributor so elects, to assume the defense of any suit brought
to enforce any such claim, but, if Distributor elects to assume the defense,
such defense shall be conducted by legal counsel chosen by Distributor and
satisfactory to the Fund, to its directors, officers, employees or
representatives, or to any controlling person or persons, defendant or
defendants, in the suit. In the event that Distributor elects to assume the
defense of any such suit and retain such legal counsel, the Fund, its directors,
officers, employees, representatives or controlling person or persons, defendant
or defendants in the suit, shall bear the fees and expenses of any additional
legal counsel retained by them. If Distributor does not elect to assume the
defense of any such suit, Distributor will reimburse the Fund, such directors,
officers, employees, representatives or controlling person or persons, defendant
or defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them. Distributor agrees to promptly notify the Fund of the
commencement of any litigation or proceedings against it or any of its
directors, officers, employees or representatives in connection with the issue
or sale of any Shares.
(b) Fund The Fund agrees to indemnify and hold harmless Distributor and each of
its directors, officers, employees, and representatives and each person, if any,
who controls Distributor within the meaning of Section 15 of the 1933 Act
against any and all losses, liabilities, damages, claims or expenses (including
the reasonable costs of investigating or defending any alleged loss, liability,
damage, claim or expense and reasonable legal counsel fees incurred in
connection therewith) to which Distributor or such of its directors, officers,
employees, representatives or controlling persons may become subject under the
1933 Act, under any other statute, at common law, or otherwise, arising out of
the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Fund or any of the Fund's directors, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, shareholder report or other information covering Shares filed or
made public by the Fund or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon information furnished to
Distributor by the Fund. In no case (i) is the Fund's indemnity in favor of the
Distributor, or any person indemnified to be deemed to protect the Distributor
or such indemnified person against any liability to which the Distributor or
such person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of his duties or by reason of his
reckless disregard of his obligations and duties under this Agreement, or (ii)
is the Fund to be liable under its indemnity agreement contained in this
Paragraph with respect to any claim made against Distributor, or any person
indemnified unless Distributor, or such person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have
been served upon Distributor or upon such person (or after Distributor or such
person shall have received notice of such service on any designated agent).
However, failure to notify the Fund of any such claim shall not relieve the Fund
from any liability which the Fund may have to Distributor or any person against
whom such action is brought otherwise than on account of the Fund's indemnity
agreement contained in this Paragraph. The Fund's indemnification agreement
contained in this Section shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Distributor and each
of its then-present or former directors, officers, employees, representatives or
controlling persons and their successors.
The Fund shall be entitled to participate, at its own expense, in the defense,
or, if the Fund so elects, to assume the defense of any suit brought to enforce
any such claim, but, if the Fund elects to assume the defense, such defense
shall be conducted by legal counsel chosen by the Fund and satisfactory to
Distributor, to its directors, officers, employees or representatives, or to any
controlling person or persons, defendant or defendants, in the suit. In the
event that the Fund elects to assume the defense of any such suit and retain
such legal counsel, Distributor, its directors, officers, employees,
representatives or controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional legal counsel retained
by them. If the Fund does not elect to assume the defense of any such suit, the
Fund will reimburse Distributor, such directors, officers, employees,
representatives or controlling person or persons, defendant or defendants in
such suit, for the reasonable fees and expenses of any legal counsel retained by
them. The Fund agrees to promptly notify Distributor of the commencement of any
litigation or proceedings against it or any of its directors, officers,
employees, or representatives in connection with the issue or sale of any
Shares.
14. INSURANCE The Distributor agrees to maintain fidelity bond and liability
insurance coverages relating to the Trust which are, in scope and amount,
consistent with coverages customary for distribution activities relating to
open-end registered investment companies. The Distributor shall notify the Trust
upon receipt of any notice of material, adverse change in the terms or
provisions of its insurance coverage. Such notification shall include the date
of change and the reason or reasons therefor. The Distributor shall notify the
Trust of any material claims against it, whether or not covered by insurance,
and shall notify the Trust from time to time as may be appropriate of the total
outstanding claims made by it under its insurance coverage.
15. ANTI-MONEY LAUNDERING The Distributor agrees to maintain an anti-money
laundering program in compliance with Title III of the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (the "USA Patriot Act") and all applicable laws and
regulations promulgated thereunder. The Distributor confirms that, as soon as
possible following the request from the Fund, the Distributor will supply the
Fund with copies of the Distributor's anti-money laundering policy and
procedures, and such other relevant certifications and representations regarding
such policy and procedures as the Fund may reasonably request from time to time.
16. CONFIDENTIAL INFORMATION The/ Distributor, its officers, directors,
employees and agents will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and to prior or
present shareholders or to those persons or entities who respond to the
Distributor's inquiries concerning investment in the Fund, and will not use such
records and information for any purposes other than performance of the
Distributor's responsibilities and duties hereunder. If the Distributor is
requested or required to disclose any such information by law, statute,
regulation, writ, decree or the like, including but not limited to depositions,
interrogatories, requests for information or documents, subpoena, civil
investigation, demand or other action, proceeding or process, the Distributor
will provide the Fund with prompt written notice of any such request or
requirement so that the Fund may seek an appropriate protective order or other
appropriate remedy and/or waive compliance with this provision. If such order or
other remedy is not sought, or obtained, or waiver not received within a
reasonable period following such notice, then the Distributor may without
liability hereunder, disclose to the person, entity or agency requesting or
requiring the information, that portion of the information that is legally
required in the reasonable opinion of the Distributor's counsel.
17. DISTRIBUTOR PROPERLY REGISTERED. - The Distributor represents and warrants
that it is duly organized and in good standing under the law of its jurisdiction
of organization, is registered as a broker-dealer under the Exchange Act, and is
a member in good standing of the NASD.
18. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective upon its execution ("effective date") and, unless terminated as
provided, shall remain in effect through December 19, 2007 and from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by the vote of a majority of the directors of the Fund who are
not interested persons of Distributor or of the Fund, cast in person at a
meeting called for the purpose of voting on such approval, and by vote of the
directors of the Fund or of a majority of the outstanding voting securities of
the Fund. This Agreement may, on 60 days` written notice, be terminated at any
time, without the payment of any penalty, by the vote of a majority of the
directors of the Fund who are not interested persons of Distributor or the Fund,
by a vote of a majority of the outstanding voting securities of the Fund, or by
Distributor. This Agreement will automatically terminate in the event of its
assignment. In interpreting the provisions of this Paragraph, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"interested person," "assignment," and "majority of the outstanding securities")
shall be applied. The provisions of Sections 13, 16, 20 and 21 hereof shall
survive the termination of this Agreement.
19. AMENDMENT OF THIS AGREEMENT. No provisions of this Agreement may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge,
or termination is sought. If the Fund should at any time deem it necessary or
advisable in the best interests of the Fund that any amendment of this Agreement
be made in order to comply with the recommendations or requirements of the SEC
or other governmental authority or to obtain any advantage under state or
federal tax laws and notifies Distributor of the form of such amendment, and the
reasons therefore, and if Distributor should decline to assent to such
amendment, the Fund may terminate this Agreement
forthwith. If Distributor should at any time request that a change be made in
the Fund's Articles of Incorporation or By-Laws or in its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the SEC, or of a national securities association of which Distributor is or
may be a member relating to the sale of Shares, and the Fund should not make
such necessary change within a reasonable time, Distributor may terminate this
Agreement forthwith.
20. MISCELLANEOUS. It is understood and expressly stipulated that neither the
shareholders of the Fund, nor the directors of the Fund shall be personally
liable hereunder. This Agreement shall be construed, interpreted, and enforced
in accordance with and governed by the laws of the State of Delaware. The
captions in this Agreement are included for convenience of reference only, and
in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. NOTICE. Any notice required or permitted to be given by either party to the
other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
last address furnished by the other party to the party giving notice: if to the
Fund, 0000 X. Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000, and if to the Distributor, at
0000 X. Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000.
CLIPPER FUND, INC.
By:___________________________
Xxxxxxx Xxxx
Principal Executive Officer
XXXXX DISTRIBUTORS, LLC
By:___________________________
Xxxxxx Xxxx
Vice President
