EXHIBIT 22(E)
UNDERWRITING AGREEMENT
BETWEEN
CLIPPER FUNDS TRUST
AND
XXXXX DISTRIBUTORS, LLC
THIS UNDERWRITING AGREEMENT, made as of the 19th day of December 2005, by and
Clipper Funds Trust, an open-end, management investment company organized as a
statutory trust under the laws of the State of Delaware (hereinafter called the
"Trust"), 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 Trust 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 Trust 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 TRUST DOCUMENTS. The Trust has furnished Distributor with copies,
properly certified or authenticated, of each of the following:
(a) the Trust's Declaration of Trust; and
(b) Resolutions of the trustees of the Trust selecting Distributor as principal
underwriter and approving this form of agreement.
The Trust 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 Trust 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 Trust`s prospectus, the Distributor is authorized to sell, as agent on
behalf of the Trust, 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
Trust 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 Trust 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 TRUST. The rights granted to the Distributor shall be
nonexclusive in that the Trust reserves the right to sell its Shares to
investors pursuant to applications received and accepted by the Trust or its
transfer agent. Further, the Trust 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 Trust or the Trust`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 Trust
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 Trust
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 Trust to
shareholders by virtue of their being shareholders of the Trust.
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 Trust, including redeemed or repurchased Shares if and to the extent that
they may be legally sold and if, but only if, the Trust 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 Trust'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 Trust 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 Trust reserves the right to suspend sales and
Distributor's authority to accept orders for Shares on behalf of the Trust if,
in the judgment of the Trustees of the Trust, it is in the best interests of the
Trust to do so, such suspension to continue for such period as may be determined
by the Trustees of the Trust; and in that event, no orders to purchase Shares
shall be processed or accepted by the Distributor on behalf of the Trust 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 Trustees of the Trust.
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 Trust 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 Trust shall make available to the Distributor at the
expense of the Distributor such number of copies of the Trust's currently
effective prospectus as the Distributor may reasonably request. The Trust 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 Trust 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 Trust to give on behalf of the Trust 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 Trust. 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 Trust.
9. REGISTRATION AND SALE OF ADDITIONAL SHARES. The Trust will take all action
necessary to register an indefinite number of Shares pursuant to Rule 24f-2
under 1940 Act, as amended. The Trust 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 Trust, and to maintain
such qualification.
10. EXPENSES. The Trust 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 Trust 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 Trust 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, trustees 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, trustees, employees, or
representatives is or shall be an employee of the Trust 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 Trust and each of its trustees, officers, employees, and
representatives and each person, if any, who controls the Trust 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 Trust or such
of its trustees, 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
trustees, 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 Trust 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 Trust by Distributor. In no case (i) is
Distributor's indemnity in favor of the Trust, or any person indemnified to be
deemed to protect the Trust or such indemnified person against any liability to
which the Trust 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 Trust or
any person indemnified unless the Trust 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 Trust or upon such person
(or after the Trust 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 Trust 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 Trust, to its trustees, 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 Trust, its trustees,
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 Trust, such trustees,
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 Trust of the
commencement of any litigation or proceedings against it or any of its trustees,
officers, employees or representatives in connection with the issue or sale of
any Shares.
(b) Trust The Trust agrees to indemnify and hold harmless Distributor and each
of its trustees, 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 trustees, 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 Trust or any of the Trust's trustees, 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 Trust 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 Trust. In no case (i) is the Trust'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 Trust 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 Trust 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 Trust of any
such claim shall not relieve the Trust from any liability which the Trust may
have to Distributor or any person against whom such action is brought otherwise
than on account of the Trust's indemnity agreement contained in this Paragraph.
The Trust'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 trustees,
officers, employees, representatives or controlling persons and their
successors.
The Trust shall be entitled to participate, at its own expense, in the defense,
or, if the Trust so elects, to assume the defense of any suit brought to enforce
any such claim, but, if the Trust elects to assume the defense, such defense
shall be conducted by legal counsel chosen by the Trust and satisfactory to
Distributor, to its trustees, officers, employees or representatives, or to any
controlling person or persons, defendant or defendants in the suit. In the event
that the Trust elects to assume the defense of any such suit and retain such
legal counsel, Distributor, its trustees, 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 Trust does not elect to assume the defense of any such suit, the Trust will
reimburse Distributor, such trustees, 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 Trust
agrees to promptly notify Distributor of the commencement of any litigation or
proceedings against it or any of its trustees, 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 Trust, the Distributor will supply the
Trust 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 Trust may reasonably request from time to
time.
16. CONFIDENTIAL INFORMATION. The Distributor, its officers, trustees, employees
and agents will treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and to prior or present
shareholders or to those persons or entities who respond to the Distributor's
inquiries concerning investment in the Trust, 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 Trust with prompt
written notice of any such request or requirement so that the Trust 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 trustees of the Trust who are
not interested persons of Distributor or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval, and by vote of the
trustees of the Trust or of a majority of the outstanding voting securities of
the Trust. 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
trustees of the Trust who are not interested persons of Distributor or the
Trust, by a vote of a majority of the outstanding voting securities of the
Trust, 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 Trust should at any time deem it necessary or
advisable in the best interests of the Trust 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 Trust may terminate this Agreement forthwith. If Distributor
should at any time request that a change be made in the Trust's Declaration of
Trust 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 Trust 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 Trust, nor the trustees of the Trust 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. LIMITATION OF LIABILITY. The Distributor agrees that the obligations assumed
by the Trust under this contract with respect to any Portfolio shall be limited
in all cases to the Portfolio and its assets. The Distributor agrees that it
shall not seek satisfaction of any such obligation from any other Portfolio,
from the shareholders or any individual shareholder of the Portfolio or the
Trust or the Trustees, officers or any individual Trustee or officer of the
Trust. The Distributor understands and acknowledges that the rights and
obligations of each Portfolio of the Trust under the Trust's Declaration of
Trust are separate and distinct from those of any and all other Portfolios.
Any obligations of the Trust entered into in the name or on behalf thereof by
any of its Trustees or officers, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees or officers, shareholders, representatives or agents of the Trust
personally, but bind only the Trust property, and all persons dealing with any
Portfolio of the Trust must look solely to the Trust property belonging to such
Portfolio for the enforcement of any claims against the Trust.
22. 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
Trust, 0000 X. Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000, and if to the Distributor,
at 0000 X. Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000.
CLIPPER FUNDS TRUST
By:
--------------------------
Xxxxxxx Xxxx
Principal Executive Officer
XXXXX DISTRIBUTORS, LLC
By:
--------------------------
Xxxxxx Xxxx
Vice President
