Exhibit 10.34


 


 


UNDERWRITING AGREEMENT


 


THIS AGREEMENT, effective as of January 30,
2009, is entered into by and between Waddell & Reed Advisors Funds
(hereinafter the “Trust”), a Delaware statutory trust, and Waddell &
Reed, Inc. (hereinafter “W&R”), a Delaware corporation.


 


I.          REPRESENTATIONS


 


A.  The Trust
represents that


 


1)  it is a
registered open-end management investment company (mutual fund), and


 


2)  the shares
of each of its classes of shares (“Fund”) and of each sub-class thereof (“Class”),
if any, are, as of the date of the effectiveness of this Agreement as to each
such Fund or Class, registered with the Securities and Exchange Commission (“SEC”)
and qualified or otherwise authorized for sale in all states of the United
States as may be agreed upon.  (As to any
Fund or Class not registered with the SEC and qualified or otherwise
authorized for sale in all states of the United States as may be agreed upon,
this Agreement shall become effective as to such Fund or Class upon such
registration and qualification or authorization.)


 


B.  W&R
represents that


 


1)  it is a
broker-dealer registered with the SEC and is duly qualified to offer shares of
the Funds in all states in which the shares are currently qualified or
otherwise authorized for offer for sale;


 


2)  it is a
member of the Financial Industry Regulatory Authority (“FINRA”);


 


3)  it
maintains a retail securities and insurance sales organization consisting in
part of a number of representatives authorized under Federal and state
securities laws to solicit as representatives of W&R orders for Fund shares
and other securities;


 


4)  it
maintains and enforces procedures to enable it to supervise its representatives
and associated persons in accordance with applicable securities laws, rules and
regulations including the Rules of FINRA; and


 


5)  it
maintains and enforces procedures to review for compliance with applicable
securities laws, rules and regulations all sales literature and
promotional materials used by it and authorized to be used by its representatives
in solicitation of orders to buy Fund shares, and it files, when applicable,
such literature and materials with FINRA.


 


II.         APPOINTMENT
OF UNDERWRITER and OBLIGATIONS


 


 

















 


The Trust hereby appoints W&R and W&R agrees
to act as the Trust’s principal underwriter under the terms and provisions of
this Agreement.


 


A.        Trust
agrees


 


1)  to use its
best efforts to register from time to time under the Securities Act of 1933
(the “Securities Act”) adequate amounts of its shares for sale by W&R to
the public and to qualify or to permit W&R to qualify such shares for
offering to the public in such states as may from time to time be agreed upon;


 


2)  to
immediately advise W&R (i) when any post-effective amendment to its
registration statement or any further amendment or supplement thereto or any
further registration statement or amendment or supplement thereto becomes
effective, (ii) of any request by the SEC for amendments to the
registration statement(s) or any then effective prospectus or for
additional information, (iii) of the issuance by the SEC of any stop-order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose, and (iv) of the happening of any event
which makes untrue any material statement made in the registration statement or
any then effective prospectus or which, in the opinion of counsel for the
Trust, requires the making of a change in the registration statement or any
then effective prospectus in order to make the statements therein not
misleading; in case of the happening at any time of any event which materially
affects the Trust or its securities and which should be set forth in a
supplement to or an amendment of any then effective prospectus in order to make
the statements therein not misleading, to prepare and furnish to W&R such
amendment or amendments to that prospectus as will correct the prospectus so
that as corrected it will not contain, or such supplement or supplements to
that prospectus which when read in conjunction with that prospectus will make
the combined information not contain any untrue statement of a material fact or
any omission to state any material fact necessary in order to make the
statements in that prospectus not misleading; if any time the SEC shall issue any
stop-order suspending the effectiveness of the registration statement, to make
every reasonable effort to obtain the prompt lifting of such order; and, before
filing any amendment to the registration statement or to any then effective
prospectus, to furnish W&R with a copy of the proposed amendment;


 


3)  to advise
W&R of the net asset value of the shares of each of its Funds and Classes,
as applicable, as often as computed and to furnish to W&R as soon as
practical such information as may be reasonably requested by W&R in order
that it may know all of the facts necessary to sell shares of the Funds;


 


4)  to make
delivery of its shares subject to the provisions of its Trust Instrument and
Bylaws to W&R as ordered by W&R as soon as reasonably possible after
receipt of the orders and against payment of the consideration to be received
by the Trust therefor from W&R;


 


5)  to pay or
cause to be paid all expenses incident to the issuance, transfer, registration
and delivery of its shares, all taxes in connection therewith, costs and
expenses incident to preparing and filing any registration statements and
prospectuses and any


 


 


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amendments
or supplements to a registration statement or a prospectus, statutory fees
incidental to the registration of additional shares with the SEC, statutory
fees and expenses incurred in connection with any Blue Sky law qualifications
undertaken by or at the request of W&R, and the fees and expenses of the
Trust’s counsel, accountants or any other experts used in connection with the
foregoing; and


 


6)  not
without the consent of W&R to offer any of its shares for sale directly or
to any persons or corporations other than W&R, except only


 


a)  the
reinvestment of dividends and/or distributions or their declaration in shares
of the Funds, in optional form or otherwise;


 


b)  the
issuance of additional shares to stock splits or stock dividends;


 


c)  sale of
shares to another investment or securities holding company in the process of
purchasing all or a portion of its assets;


 


d)  in
connection with an exchange of shares of the Funds for shares in another
investment or securities holding company;


 


e)  the sale
of shares to registered unit investment trusts; or


 


f)  in
connection with the exchange of one Fund’s shares for shares of another Fund of
the Trust.


 


B.         W&R
agrees


 


1)  to offer
Fund shares in such states as may be agreed upon through its retail account
representatives and, at its sole discretion, through broker-dealers which are
members of FINRA on such terms as are not inconsistent with this Agreement;


 


2)  to order
shares from the Trust only after it has received a purchase order therefor;


 


3)  to pay to
the Trust the net asset value of shares sold within two business days after the
day payment is received by W&R at its principal place of business from the
investor or broker-dealer, or pay the Trust at such other time as may be agreed
upon hereafter by the Trust and W&R, or as may be prescribed by law or the Rules of
FINRA;


 


4)  in offering
shares to comply with the provisions of the Declaration of Trust and Bylaws of
the Trust and with the provisions stated in its applicable then current
prospectus(es);


 


 


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5)  to timely
inform the Trust of any action or proceeding to terminate, revoke or suspend
W&R’s registration as a broker-dealer with the SEC, membership in FINRA, or
authority with any state securities commission to offer Fund shares; and


 


6)  to pay the
cost of all sales literature, advertising and other materials which it may at
its discretion use in connection with the sale of Fund shares, including the
cost of reports to the shareholders of the Funds in excess of the cost of
reports to existing shareholders and the cost of printing the prospectus(es)
furnished to it by the Trust.


 


III.       TERMS
FOR SALE OF SHARES


 


A.        It is
mutually agreed that


 


1)  W&R
shall act as principal in all matters relating to promotion and sale of Fund
shares, including the preparation and use of all advertising, sales literature
and other promotional materials, and shall make and enter into all other
arrangements, agreements and contracts as principal on its own account and not
as agent for the Trust.  Title to shares issued
and sold by the Trust through W&R shall pass directly from the Trust to the
dealer or investor, or shall first pass to W&R as it may from time to time
be determined by W&R and the Trust; except provided, however, that W&R
may, if so agreed by W&R and the Trust, act as agent of the Trust without
commission on repurchase of shares of the Funds;


 


2) 
certificates for shares shall not be created or delivered by the Trust
in any case in which the purchase is pursuant to any provisions of the Funds
described in its applicable then current prospectus(es) under the terms of
which certificates are not to be issued to the shareholder.  Shares sold by W&R shall be registered in
such name or names and amounts as W&R may request from time to time, and
all shares when so paid for and issued shall be fully paid and non-assessable;


 


3)  the
offering price at which shares of the Funds may be sold by W&R shall
include such selling commission as may be applicable to that Class and as
may be fixed from time to time by W&R but shall not be in excess of the
maximum permitted under the rules and regulations of FINRA.  W&R shall retain any such sales
commission and may re-allow all or any part of the sales commission to its
account representatives and to selected brokers and dealers who sell shares of
the Funds; and


 


4)  W&R
may designate, reduce or eliminate its selling commissions in certain sales or
exchanges to the extent described in the applicable then current prospectus(es)
of the Funds and in accordance with Section 22(d) of the Investment
Company Act of 1940 and any rules, regulations or orders of the SEC thereunder.


 


IV.       ANTI-MONEY
LAUNDERING DELEGATION


 


The Bank Secrecy Act, as amended by the USA PATRIOT
ACT, requires the Fund to develop, implement and institute an anti-money
laundering program (“AML Program”), and the


 


 


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Fund
has adopted the AML Program set forth in Schedule 1 hereto; W&R processes
investor account applications, approves and qualifies prospective investors,
accepts investor funds, and/or services investor accounts, and the Fund wishes
to delegate certain aspects of the implementation and operation of the Fund’s
AML Program to W&R; and W&R desires to accept such delegation.


 


A.  Delegation.  The Fund hereby delegates to W&R, as
agent for the Fund, responsibility for the implementation and operation of the
following policies and procedures in connection with the Fund’s AML Program, as
applicable to W&R’s functions as defined in the Agreement:  (i) know-your-customer policies; (ii) monitoring
accounts and identifying high risk accounts; (iii) policies and procedures
for reliance on third parties; (iv) policies and procedures for
correspondent accounts for foreign financial institutions and for private
banking accounts for non-U.S. persons; (v) no cash policy; (vi) detecting
and reporting suspicious activity; and (vii) all related recordkeeping
requirements, and W&R accepts such delegation.  W&R further agrees to cooperate with the
Fund’s AML Compliance Officer in the performance of W&R’s responsibilities
under the AML Program.


 


B.  The AML
Program.  W&R hereby represents
and warrants that W&R has received a copy of the Fund’s AML Program and
undertakes to perform all responsibilities imposed on W&R as a “Service
Provider” thereunder.  The Fund hereby
agrees to provide to W&R any amendment(s) to the AML Program promptly
after adoption of any such amendment(s) by the Fund.


 


C.  Consent
to Examination.  W&R hereby
consents to:  (a) provide to federal
examination authorities information and records relating to the AML Program
maintained by W&R; and (b) the inspection of W&R by federal
examination authorities for purposes of the AML Program.


 


D.  Anti-Money
Laundering Program.  W&R hereby
represents and warrants that W&R has implemented and enforces an anti-money
laundering program (“AMLP”) reasonably designed to comply with laws,
regulations and regulatory guidance applicable to the Fund and W&R, and
includes, if applicable:


 


1) 
know-your-customer policies;


 


2)  due
diligence policies for correspondent accounts for foreign financial
institutions and for private banking accounts for non-U.S. persons;


 


3)  reasonable
internal procedures and controls to detect and report suspicious activities;


 


4)  monitoring
accounts and identifying high-risk accounts;


 


5)  a
compliance officer or committee with responsibility for the anti-money
laundering program;


 


 


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6)  employee
training, including that:  (i) new
employees receive AML training upon the commencement of their employment; and (ii) existing
employees receive AML training at the time such employees assume duties that
bring them into contact with possible money laundering activities;


 


7)  an
independent audit function; and


 


8) 
recordkeeping requirements.


 


E.  Delivery
of Documents.  W&R agrees to
furnish to the Fund the following documents:


 


1)  a copy of
W&R’s AMLP as in effect on the date hereof, and any material amendment
thereto promptly after the adoption of any such amendment;


 


2)  a copy of
any deficiency letter sent by federal examination authorities concerning
W&R’s AMLP; and


 


3)  no less
frequently than annually, a report on W&R’s anti-money laundering program
that includes a certification to the Fund concerning W&R’s implementation
of, and ongoing compliance with, its anti-money laundering program and a copy
of any audit report prepared with respect to W&R’s anti-money laundering
program.


 


F.  Reports.  W&R will provide periodic reports
concerning W&R’s compliance with W&R’s AMLP and/or the Fund’s AML Program
at such times as may be reasonably requested by the Fund’s Board of Trustees or
the Anti-Money Laundering Compliance Officer.


 


V.        THE
PLAN


 


A.  It is
mutually acknowledged that the Trust has adopted a plan pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (a “Plan”), which Plan is
applicable to certain shares and that the Trust may in the future adopt Plans
applicable to certain Funds and Classes, respectively.


 


B.  With
respect to any Fund or Class as to which the Trust has adopted a Plan,
pursuant to that Plan, each day the Trust shall pay to W&R a distribution
fee and/or a service fee at the maximum rates and under the terms and
conditions set forth in the applicable Plan, as amended from time to time, or
such lesser amount as the Trust and W&R may agree.


 


C.  The Trust
shall, after excluding from the redemption proceeds that portion represented by
the reinvestment of dividends and distributions and the appreciation of the
value of Fund shares being redeemed, promptly pay W&R an amount, if any,
equal to the percent of the amount invested as determined by W&R and as is
then stated in the Funds’ current prospectus applicable to the shares redeemed
(the “contingent deferred sales charge”). 
For purposes of


 


 


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determining
the applicable contingent deferred sales charge, if any:  the redemptions shall be deemed in order of
investment made when more than one investment has been made; and when the
shares being redeemed were acquired by exchange of shares of another Fund or Class of
the Trust, or corresponding class of another registered investment company for
which W&R or its affiliate serves as principal underwriter, the investment
shall be deemed as if it had been made when the Trust’s shares were first
purchased, and the applicable contingent deferred sales charges, if any, shall
be with respect to the amount originally invested in Trust shares; and provided
that any contingent deferred sales charge shall be determined in accordance with
and in the manner set forth in the applicable then current prospectus and any
applicable Order or Rule issued by the SEC.


 


D.  It is
contemplated that W&R may pay commissions to its field sales force at the
time of sale of the Funds’ shares and may incur other expenses substantially in
advance of receiving the distribution fee, if any, that may be applicable to
the payment of such commissions and expenses. 
W&R recognizes that such payments are at its risk and that this
Agreement may be terminated or not continued as hereinafter provided without
the payment to it of any further distribution fees or service fees whatsoever
and without the payment of any penalty. 
The contingent deferred sales charges, if any, shall, however, be
payable to W&R with respect to all subject sales made prior to the
termination of this Agreement.


 


E.  W&R
shall at least quarterly provide to the Trust’s board of trustees a written
report with respect to each Fund or Class, as applicable, of the amounts of the
distribution and/or service fees expended and the purposes for which these
expenditures were made.  W&R shall in
addition furnish to the board of trustees of the Trust such information as may
be requested or as may be necessary to an informed determination by the
trustees of whether or not the trustees should continue the Trust’s Plan(s) and
continue this Agreement and to determine whether there is reasonable likelihood
that the Plan(s) and this Agreement will benefit the Trust and its
shareholders affected by such Plan(s).


 


VI.       INDEMNIFICATION


 


A.  The Trust
agrees with W&R for the benefit of W&R and each person, if any, who
controls W&R within the meaning of Section 15 of the Securities Act
and each and all and any of them, to indemnify and hold harmless W&R and
any such controlling person from and against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Securities Act, under any other statute, at common law
or otherwise, and to reimburse the underwriter and such controlling persons, if
any, for any legal or other expenses (including the cost of any investigation
and preparation) reasonably incurred by them or any of them in connection with
any litigation whether or not resulting in any liability, insofar as such
losses, claims, damages, liabilities or litigation arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or any prospectus or any amendment
thereof or supplement thereto or arise out of or are based upon 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; provided, however,
that this indemnity agreement shall not apply to amounts paid in settlement of
any such litigation


 


 


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if
such settlement is effected without the consent of the Trust or to any such
losses, claims, damages, liabilities or litigation arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus or any amendment thereof or
supplement thereto, or arising out of or based upon 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, which statement or
omission was made in reliance upon information furnished in writing to the
Trust by W&R for inclusion in any registration statement or any prospectus
or any amendment thereof or supplement thereto. 
W&R and each such controlling person shall promptly, after the
complaint shall have been served upon W&R or such controlling person in any
litigation against W&R or such controlling person in respect of which
indemnity may be sought from the Trust on account of its agreement contained in
this paragraph, notify the Trust in writing of the commencement thereof.  The omission of W&R or such controlling
person so to notify the Trust of any such litigation shall relieve the Trust
from any liability which it may have to W&R or such controlling person on
account of the indemnity agreement contained in this paragraph but shall not
relieve the Trust  from any liability
which it may have to W&R or controlling person otherwise than on account of
the indemnity agreement contained in this paragraph.  In case any such litigation shall be brought
against W&R or any such controlling person and the underwriter or such
controlling person shall notify the Trust of the commencement thereof, the
Trust shall be entitled to participate in (and, to the extent that it shall
wish, to direct) the defense thereof at its own expense but such defense shall
be conducted by counsel of good standing and satisfactory to W&R or such
controlling person or persons, defendant or defendants in the litigation.  The indemnity agreement of the Trust
contained in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of W&R or any such
controlling person and shall survive any delivery of shares of the Trust.  The Trust agrees to notify W&R promptly
of the commencement of any litigation or proceeding against it or any of its
officers or directors of which it may be advised in connection with the issue
and sale of its shares.


 


B.  Anything
herein to the contrary notwithstanding, the agreement in Section A of this
article, insofar as it constitutes a basis for reimbursement by the Trust for
liabilities (other than payment by the Trust of expenses incurred or paid in
the successful defense of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any interest therein of any
person who is an underwriter or a partner or controlling person of an
underwriter within the meaning of Section 15 of the Securities Act or who,
at the date of this Agreement, is a director of the Trust, except to the extent
that an interest of such character shall have been determined by a court of appropriate
jurisdiction the question of whether or not such interest is against public
policy as expressed in the Securities Act.


 


C.  W&R
agrees to indemnify and hold harmless the Trust and its trustees and such
officers as shall have signed any registration statement from and against any
and all losses, claims, damages or liabilities, joint or several, to which the
Trust or such directors or officers may become subject under the Securities
Act, under any other statute, at common law or otherwise, and will reimburse
the Trust or such directors or officers for any legal or other expenses
(including the cost of any investigation and preparation) reasonably incurred
by it or them or any of them in connection with any litigation, whether or not
resulting in any liability


 


 


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insofar
as such losses, claims, damages, liabilities or litigation arise out of, or are
based upon, any untrue statement or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, which statement or omission was made in reliance upon
information furnished in writing to the Trust by W&R for inclusion in any
registration statement or any prospectus, or any amendment thereof or
supplement thereto, or which statement was made in, or the alleged omission was
from, any advertising or sales literature (including any reports to
shareholders used as such) which relate to the Trust.


 


W&R shall not be liable for amounts paid in
settlement of any such litigation if such settlement was effected without its
consent.  The Trust and its trustees and
such officers, defendant or defendants, in any such litigation shall, promptly
after the complaint shall have been served upon the Trustor any such trustee or
officer in any litigation against the Trust or any such trustee or officer in
respect of which indemnity may be sought from W&R on account of its
agreement contained in this paragraph, notify W&R in writing of the commencement
thereof.  The omission of the Trust or
such trustee or officer so to notify the underwriter of any such litigation
shall relieve W&R from any liability which it may have to the Trust or such
trustee or officer on account of the indemnity agreement contained in this
paragraph, but shall not relieve W&R from any liability which it may have
to the Trust or such trustee or officer otherwise than on account of the
indemnity agreement contained in this paragraph.  In case any such litigation shall be brought
against the Trust or any such officer or trustee and notice of the commencement
thereof shall have been so given to W&R, W&R shall be entitled to
participate in (and, to the extent that it shall wish, to direct) the defense
thereof at its own expense, but such defense shall be conducted by counsel of
good standing and satisfactory to the Trust. 
The indemnity agreement of W&R contained in this paragraph shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Trust and shall survive any delivery of shares of
the Trust.  W&R agrees to notify the
Trust promptly of the commencement of any litigation or proceeding against it
or any of its officers or trustees or against any such controlling person of
which it may be advised, in connection with the issue and sale of the Trust’s
shares.


 


D. 
Notwithstanding any provision contained in this Agreement, no party
hereto and no person or persons in control of any party hereto shall be
protected against any liability to the Trust or its security holders to which
they would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of their duties or by reason of their
reckless disregard of their obligations and duties under this Agreement.


 


VII.      OTHER
TERMS


 


A.  This
Agreement shall not be deemed to limit W&R from acting as underwriter
and/or dealer for any other mutual fund, from engaging in any other aspects of
the securities business, whether or not such may be deemed in competition with
the sale of shares of the Funds, and to carry on any other lawful business
whatsoever.


 


B.  Except as
expressly provided in Article VI and hereinabove, the agreements herein
set forth have been made and are made solely for the benefit of the Trust and
W&R, and the persons expressly provided for in Article VI, their
respective heirs and successors, personal


 


 


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representatives
and assigns, and except as so provided, nothing expressed or mentioned herein
is intended or shall be construed to give any person, firm or corporation other
than the Trust, W&R and the persons expressly provided for in Article VI
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any representation, warranty or agreement herein contained.  Except as so provided, the term “heirs,
successors, personal representatives and assigns” shall not include any
purchaser of shares merely because of such purchase.


 


C.  This
Agreement shall continue in effect as to each Fund, unless terminated as
hereinafter provided, for a period of one (1) year and thereafter only if
such continuance is specifically approved at least annually by the Board of
Trustees, including the vote of a majority of the trustees who are not parties
to the Agreement or “interested persons” (as defined in the Investment Company
Act of 1940) or any such party and who have no direct or indirect financial
interest in the operation of any Plan or any agreement relating to that Plan
(hereafter the “Plan directors”), cast in person at a meeting called for the
purpose of voting on such approval.  This
Agreement may be terminated as to a Fund by W&R at any time without penalty
upon giving the Trust sixty (60) days’ written notice (which notice may be
waived by the Trust) and may be terminated as to a Fund by the Trust at any
time without penalty upon giving W&R sixty (60) days’ written notice (which
notice may be waived by W&R), provided that such termination by the Trust
shall be directed or approved by the vote of a majority of the Plan trustees,
or by the vote of a majority of the outstanding voting securities (as defined
in the Investment Company Act of 1940) of the Fund.  This Agreement shall automatically terminate
in the event of its assignment, the term “assignment” for this purpose having
the meaning defined in Section 2(a)(4) of the Investment Company Act
of 1940.


 


D.  This
Agreement shall be governed and construed in accordance with the laws of
Kansas.


 


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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on January 15, 2009.


 


	
   

  	
   

  	
  WADDELL & REED ADVISORS

  
	
   

  	
   

  	
  FUNDS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: /s/ Henry J. Herrmann

  
	
   

  	
   

  	
  Henry J. Herrmann, President

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: /s/ Mara Herrington

  	
   

  	
   

  
	
  Mara D. Herrington,
  Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WADDELL & REED, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: /s/ Thomas W. Butch

  
	
   

  	
   

  	
  Thomas W. Butch, President

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:  /s/ Wendy J. Hills

  	
   

  	
   

  
	
  Wendy J. Hills, Secretary

  	
   

  	
   

  



 


 


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