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EXHIBIT (C)(8)
DISTRIBUTION CONTRACT
THIS DISTRIBUTION CONTRACT (this "Agreement"), dated this ____ day of
March, 1998, between WM Prime Income Fund, formerly known as Sierra Prime Income
Fund, a Massachusetts business trust (the "Trust"), and WM Funds Distributor,
Inc., formerly known as Composite Funds Distributor, Inc., a Washington
corporation doing business at Seattle, Washington, herein sometimes referred to
as the "Distributor."
RECITALS
WHEREAS, the Trust is registered as a closed-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Trust and the Distributor desire to enter into an
agreement that sets forth standard terms and conditions for the distribution of
the classes of common shares of beneficial interest of the Trust (the "Shares");
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT. The Trust hereby affirms the appointment of WM Funds
Distributor, Inc. as the agent for distribution of the Shares covered by the
Trust's registration statement (as hereinafter defined) and grants Distributor
the right to sell Shares on behalf of the Trust and on the terms set forth in
this Agreement. The Distributor agrees to use its best efforts to solicit orders
for the sale of such Shares, at such Shares' public offering price, as
determined in accordance with the Registration Statement. The Distributor shall
have the right to order from the Trust the Shares needed, but not more than
needed (correcting for any clerical errors or errors of transmission), to fill
such orders as are unconditional.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Distributor
with copies of:
(a) Agreement and Declaration of Trust and all amendments
thereto for the Trust (as amended from time to time, the "Declaration of
Trust");
(b) Bylaws and all amendments thereto for the Trust (as amended
from time to time, the "Bylaws"); and
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(c) The Trust's registration statement, prospectus,
statement of additional information, and any amendments and
supplements thereto, then in effect (the "Registration Statement")
under the Securities Act of 1933, as amended (the "1933 Act") and the
1940 Act.
From time to time, the Trust will furnish the Distributor with
current copies of all amendments or supplements to the foregoing, if any, and
all documents, notices and reports filed with the Securities and Exchange
Commission (the "SEC") and will make available, upon request, evidence of
payment of registration fees imposed from time to time by the States in which
Shares are sold by the Distributor.
3. DUTIES OF THE DISTRIBUTOR. The Distributor shall provide each Fund
with the benefit of its best judgment, efforts and facilities in rendering its
services as Distributor. The Distributor will act as the exclusive Distributor
of the Shares, subject to the supervision of the Trust's Board of Trustees and
the following understandings: (i) the Trust's Board of Trustees shall be
responsible for and control the conduct of the Trust's affairs; (ii) in all
matters relating to the performance of this Agreement, the Distributor will act
in conformity with the Declaration of Trust, Bylaws and Registration Statement
of the Trust and with the instructions and directions of the Trust's Board of
Trustees; (iii) the Distributor will conform to and comply with applicable
requirements of the 1940 Act, the 1933 Act and all other applicable federal or
state laws and regulations.
4. DISTRIBUTION OF SHARES. It is mutually understood and agreed that
the Distributor does not undertake to sell all or any specific portion of the
Shares. The Trust shall not sell any of its Shares except through the
Distributor. The Distributor may, as principal and on its own behalf, enter into
agreements ("Dealer Agreements"), on such terms and conditions as the
Distributor determines are not inconsistent with this Agreement, with (a) any
broker-dealer who is (i) registered under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), (ii) registered as required under applicable state
securities or blue sky laws, and (iii) a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD"); and (b) any other person (as
such term is defined in the 0000 Xxx) that is not required, for purposes of
effecting transactions in securities, to be registered under the 1934 Act, but
is registered as required under applicable state securities or blue sky laws,
authorizing such broker-dealers and other persons (collectively, "Brokers") to
act as agents in connection with the sale of Shares of the Trust (which may
include accepting orders for the purchase or redemption of Shares, responding to
inquiries regarding the Trust or the Funds, and performing other related
functions). Expulsion or suspension from the NASD of any Broker required to be
registered under the 1934 Act shall automatically terminate such Broker's Dealer
Agreement with the Distributor for sales of Shares as of the effective date of
such expulsion or suspension. Notwithstanding the provisions of the foregoing
sentence:
(a) The Distributor may, and when requested by the Trust,
shall, suspend its efforts to effectuate sales of the Trust shares at
any time when in the opinion of the Distributor or of the Trust no
sales should be made because of a need to revise a Registration
Statement, or because of market or other economic considerations or
abnormal
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circumstances of any kind. Either party in its sole discretion may
reject orders for the purchase of such shares;
(b) The Trust may withdraw the offering of its shares (i)
at any time with the consent of the Distributor or (ii) without such
consent when so required by the provisions of any statute (including
the 1933 Act and the 0000 Xxx) or of any order, rule or regulation of
any governmental body having jurisdiction;
(c) The Distributor is not authorized by the Trust to
provide any information or to make any representations other than
those contained in the appropriate Registration Statements, or
contained in shareholder reports or other material that may be
prepared by or on behalf of the Trust for Distributor's use. This
shall not be construed to prevent the Distributor from preparing and
distributing sales literature or other material as it may deem
appropriate.
5. COMPENSATION. The Trust shall not pay any compensation to the
Distributor for services as principal underwriter herein, nor shall the Trust
reimburse the Distributor for any expenses related to such services.
A. Early Withdrawal Charges. The Trust shall cause its transfer agent
(the "Transfer Agent") to withhold, from repurchase proceeds payable to holders
of Shares, all early withdrawal sales charges properly payable by such holders
in accordance with the terms of the Prospectuses relating to such Shares
("EWCs") and shall cause the Transfer Agent to pay such amounts over as promptly
as possible after the settlement date for each repurchase of such Shares.
B. Other Services; Service Fee. Upon request of the Trust's Board of
Trustees, the Distributor may, but shall be under no duty to, perform additional
services on behalf of the Trust, which services are not required by this
Agreement but may be performed by the Distributor in conformity with applicable
law. Any such services will be performed on behalf of the Trust, and the
Distributor may impose additional charges for such services, which charges may
be billed to the Trust and subject to examination by the Trust's independent
accountants. The Distributor's payment or assumption of any expense of the Trust
that it is not required to pay or assume under this Agreement shall not relieve
the Distributor of any of its obligations ot the Trust or obligate the
Distributor to pay or assume any similar expense on any subsequent occasion.
C. Directed Payment; Allocable Portion Calculations. The Distributor
may direct the Trust to pay any part or all of the EWCs payable to the
Distributor in respect of any Shares directly to persons providing funds to the
Distributor to cover or otherwise enable the incurring of expenses associated
with distribution services, and the Trust agrees to accept and to comply with
such direction. The Distributor shall, at its own expense and not as the expense
of the Trust, provide the Trust with any necessary calculations of the
Distributor's Allocable Portion of any EWCs, and the Trust shall be entitled to
rely conclusively on such calculations, without prejudice to any claim it may
have concerning the accuracy of such calculations.
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D. Maximum Charges. Notwithstanding anything to the contrary
contained in this Agreement, EWCs paid to Distributor by any class of shares of
the Trust shall not exceed the amount permitted by the NASD Contract ("NASD
Rules"), as in effect from time to time, and the aggregate amount of EWCs paid
to the Distributor by any class of shares of the Trust shall not exceed 8.50% of
the offering price (determined in accordance with the NASD Rules in effect from
time to time).
6. EXPENSES. The expenses connected with distribution shall be
allocable between the Trust and the Distributor as follows:
(a) The Distributor shall furnish the services of personnel
to the extent that such services are required to carry out its
obligations under this Agreement and shall bear all distribution
expense incurred in the distribution of Shares except those expenses
allocated specifically to the Trust in Section 6(b) of this
Agreement. For purposes of this Agreement, "distribution expenses" of
the Distributor shall mean all expenses borne by the Distributor
which represent payment for activities primarily intended to result
in the sale of the Trust shares.
(b) The Trust assumes and shall pay or cause to be paid the
following expenses incurred on its behalf:
Registration of shares including the expense of printing and
distributing prospectuses to existing shareholders; expenses incurred for
maintaining the Trust's existence, taxes and expenses related to portfolio
transactions; charges and expenses of any registrar, custodian or depository for
portfolio securities and other property, and any stock transfer, dividend or
account agent or agents; all taxes, including securities issuance and transfer
taxes, and fees payable to federal, state or other governmental agencies; costs
and expenses in connection with the registration and maintenance of registration
of the Trust and the Shares with the SEC and various states and other
jurisdictions (including filing fees, legal fees and disbursements of counsel);
expenses of shareholders' and directors' meetings and preparing, printing, and
mailing of proxy statements and reports to shareholders; fees and travel
expenses of directors who are not "interested persons" as that term is defined
in the 1940 Act; expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Shares; fees and expenses of legal
counsel and of independent accountants; membership dues of industry
associations; postage (excluding postage for promotional and sales literature);
insurance premiums on property of personnel (including, but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto); and all other charges and costs of the Trust's operation unless
otherwise explicitly provided herein.
7. DUTIES OF THE TRUST.
A. The Trust agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other actions that
may be reasonably necessary in connection
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with (a) the registration of Shares under the 1933 Act and (b) the
qualification, pursuant to state securities laws, of the Shares for sale in
those states that the Distributor may designate.
B. Information Reports; Financial Data. The Trust shall furnish to
the Distributor from time to time, for use in connection with the sale of the
Shares, such information reports with respect to the Trust and the Shares as the
Distributor may reasonably request. Such reports shall be signed by officers of
the Trust duly authorized; the Trust warrants the statements contained in any
reports so signed to be true and correct. The Trust shall furnish to the
Distributor, upon its request, (a) annual audits of the Trust's books and
accounts made by independent public accounts regularly retained by the Trust,
(b) semiannual unaudited financial statements pertaining to the Trust, (c)
quarterly earnings statements prepared by the Trust, (d) a monthly itemized list
of the securities in the portfolio of the Trust, (e) monthly balance sheets as
soon as practicable after the end of each month and (f) such additional
information regarding the Trust's financial condition as the Distributor may
reasonable request from time to time.
8. NON-EXCLUSIVITY. The services of the Distributor are not exclusive
and the Distributor shall be entitled to render distribution or other services
to others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers of the Distributor may
serve as officers or trustees of the Trust, and that officers or trustees of the
Trust may serve as officers of the Distributor to the extent permitted by law;
and that officers of the Distributor are not prohibited from engaging in any
other business activity or from rendering services to any other person, or from
serving as partners, officers or directors of any other firm or corporation,
including other investment companies and broker/dealers.
9. TERM AND APPROVAL. This Agreement shall become effective as of the
date first above written for an initial period of two years, and shall continue
in force and effect from year to year thereafter, provided that, with respect to
the Trust or the Trust shares, such continuance is specifically approved at
least annually:
(a) By the Trust's Board of Trustees, including the
affirmative vote of a majority of the Board of Trustees of the Trust
who are not (i) parties to this Agreement, (ii) interested persons of
any such party (as defined in Section 2(a)(19) of the 1940 Act), or
(iii) persons having a direct or indirect financial interest in the
operation of this Agreement or any agreement related to this
Agreement (the "Qualified Trustees") by votes cast in person at a
meeting called for the purpose of voting on such approval, or
(b) By the vote of a majority of the outstanding voting
securities of the Fund (as defined in Section 2(a)(42) of the 1940
Act).
10. TERMINATION. This Agreement may be terminated, with respect to
the Trust or the Trust share, at any time, without the payment of any penalty,
on sixty (60) days' written notice, by vote of the Board of Trustees of the
Trust, or by a vote of a majority of the Qualified Trustees, or by a vote of a
majority of the outstanding voting securities of the Fund (as defined in Section
2(a)(42) of the 1940 Act), or by the Distributor on sixty (60) days' written
notice to the Fund. The notice provided for herein may be waived by either
party. This Agreement shall
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automatically terminate in the event of its assignment, the term "assignment"
for this purpose having the meaning set forth in Section (a)(4) of the 1940 Act.
11. REPRESENTATIONS AND WARRANTIES. The Trust represents and warrants
to the Distributor that any registration statement, prospectus and statement of
additional information, when such Registration Statement becomes effective, will
include all statements required to be contained therein in conformity with the
1933 Act, the 1940 Act and the rules and regulations of the SEC; that all
statements of fact contained in any registration statement, prospectus or
statement of additional information will be true and correct when such
Registration Statement becomes effective; and that neither any registration
statement nor any prospectus or statement of additional information when such
Registration Statement becomes effective will include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of
shares. The Distributor may, but shall not be obligated to, propose from time to
time such amendment or amendments to any registration statement and such
supplement or supplements to any prospectus or statement of additional
information as, in the light of future developments, may, in the opinion of the
Distributor's counsel, be necessary or advisable. If the Trust shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
(15) days after receipt by the Trust of a written request from the Distributor
to do so, the Distributor may, at its option, terminate this Agreement. The
Trust shall not file any amendment to any registration statement or supplement
to any prospectus or statement of additional information without giving the
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Trust's right to
file at any time such amendments to any registration statement and/or
supplements to any prospectus or statement of additional information, of
whatever character, as the Trust may deem advisable, such right being in all
respects absolute and unconditional.
12. AMENDMENTS. This Agreement may be amended, with respect to any
Fund or Class, by the parties hereto only if such amendment is specifically
approved (i) by the Board of Trustees of the Trust or by the vote of majority of
outstanding voting securities of the Fund, and (ii) by a majority of the
Qualified Trustees, which vote must be cast in person at a meeting called for
the purpose of voting on such approval.
13. INDEMNIFICATION.
13.1 The Trust authorizes the Distributor and any
dealers with whom Distributor has entered into dealer
agreements to use any prospectus or statement of additional
information furnished by the Trust from time to time, in
connection with the sale of shares of each Fund. The Trust
agrees to indemnify, defend and hold Distributor, its
several officers and directors, and any person who controls
Distributor within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection
therewith) which Distributor, its officers and directors,
or any such controlling person, may incur under the 1933
Act, the 1940
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Act or common law or otherwise, arising out of or based
upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, any
prospectus or any statement of additional information, or
arising out of or based upon any omission or alleged
omission to state a material fact required to be stated in
any registration statement, any prospectus or any statement
of additional information, or necessary to make the
statements in any of them not misleading; provided,
however, that the Trust's agreement to indemnify the
Distributor, its officers or directors, and any such
controlling person shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of or based
upon any statements or representations made by Distributor
or its representatives or agents other than such statements
and representations as are contained in any registration
statement, prospectus or statement of additional
information and in such financial and other statements as
are furnished to the Distributor pursuant to paragraph 2
hereof; and further provided that the Trust's agreement to
indemnify the Distributor and the Trust's representations
and warranties shall not be deemed to cover any liability
to the Trust or its shareholders to which Distributor would
otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties,
or by reason of Distributor' reckless disregard of its
obligations and duties under this Agreement. The Trust's
agreement to indemnify Distributor, its officers and
directors, and any such controlling person, as aforesaid,
is expressly conditioned upon the Trust's being notified of
any action brought against Distributor, its officers or
directors, or any such controlling person, such
notification to be given by letter or by telegram addressed
to the Trust at its principal office stated herein and sent
to the Trust by the person against whom such action is
brought, within ten (10) days after the summons or other
first legal process shall have been served. The failure so
to notify the Trust of any such action shall not relieve
the Trust from any liability that the Trust may have to the
person against whom such action is brought by reason of any
such untrue or alleged untrue statement or omission or
alleged omission otherwise than on account of the Trust's
indemnity agreement contained in this paragraph 12.1. The
Trust's indemnification agreement contained in this
paragraph 12.1 and the Trust's representations and
warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made
by or on behalf of Distributor, its officers and directors,
or any controlling person, and shall survive the delivery
of any shares. This agreement of indemnity will inure
exclusively to Distributor's benefit, to the benefit of its
several officers and directors and their respective
estates, and to the benefit of the controlling persons and
their successors. The Trust agrees to notify Distributor
promptly of the commencement of any litigation or
proceedings against the Trust or any of its officers or
trustees in connection with the issuance and sale of any
shares.
13.2 Distributor agrees to indemnify, defend and
hold the Trust, its several officers and trustees, and any
person who controls the Trust within the meaning of Section
15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses
(including the costs of investigating
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or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that the
Trust, its officers or trustees or any such controlling
person may incur under the 1933 Act, the 1940 Act or common
law or otherwise, but only to the extent that such
liability or expense incurred by the Trust, its officers or
trustees or such controlling person resulting from such
claims or demands shall arise out of or be based upon (a)
any unauthorized sales literature, advertisements,
information, statements or representations or (b) any
untrue or allegedly untrue statement of a material fact
contained in information furnished in writing by the
Distributor to the Trust and used in the answers to any of
the items of the Registration Statement or in the
corresponding statements made in the prospectus or
statement of additional information, or shall arise out of
or be based upon any omission or alleged omission to state
a material fact in connection with such information
furnished in writing by Distributor to the Trust and
required to be stated in such answers or necessary to make
such information not misleading. Distributor's agreement to
indemnify the Trust, its officers and trustees, and any
such controlling person, as aforesaid, is expressly
conditioned upon Distributor being notified of any action
brought against the Trust, its officers or trustees, or any
such controlling person, such notification to be given by
letter or telegram addressed to Distributor at its
principal office as stated herein and sent to Distributor
by the person against whom such action is brought, within
ten days after the summons or other first legal process
shall have been served. The failure so to notify the
Distributor of any such action shall not relieve
Distributor from any liability that the Distributor may
have to the Trust, its officers or trustees, or to such
controlling person by reason of any such untrue or alleged
untrue statement or omission or alleged omission otherwise
than on account of Distributor's indemnity agreement
contained in this paragraph 12.2. The Distributor agrees to
notify the Trust promptly of the commencement of any
litigation or proceedings against Distributor or any of its
officers or directors in connection with the issuance and
sale of any shares.
13.3 In case any action shall be brought against
any indemnified party under paragraph 12.1 or 12.2, and it
shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish to do
so, to assume the defense thereof with counsel satisfactory
to such indemnified party. If the indemnifying party opts
to assume the defense of such action, the indemnifying
party will not be liable to the indemnified party for any
legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof
other than (a) reasonable costs of investigation or the
furnishing of documents or witnesses and (b) all reasonable
fees and expenses of separate counsel to such indemnified
party if (i) the indemnifying party and the indemnified
party shall have agreed to the retention of such counsel or
(ii) the indemnified party shall have concluded reasonably
that representation of the indemnifying party and the
indemnified party by the same counsel would be
inappropriate due to actual or potential differing
interests between them in the conduct of the defense of
such action.
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14. LIABILITY OF THE DISTRIBUTOR. In the performance of its duties
hereunder, the Distributor shall be obligated to exercise care and diligence and
to act in good faith and to use its best efforts within reasonable limits to
insure the accuracy of all services performed under this Agreement, but the
Distributor shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or gross negligence on the part of the
Distributor or reckless disregard by the Distributor of its duties under this
Agreement.
15. 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 Trust
shall be 000 Xxxx Xxxx Xxxxxx, Xxxxxxx, XX 00000, and the address of the
Distributor shall be 0000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000.
16. DECLARATION OF TRUST AND LIMITATION OF LIABILITY. A copy of the
Declaration of Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed by an officer of the Trust on behalf of the trustees of the Trust, as
trustees and not individually, on further behalf of each Fund, and that the
obligations of this Agreement with respect to each Fund shall be binding upon
the assets and properties of the Fund only and shall not be binding upon the
assets and properties of any other Fund or series of the Trust or upon any of
the trustees, officers, employees, agents or shareholders of the Fund or the
Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective officers on the day and year first
above written.
WM PRIME INCOME FUND
By: _______________________________
Name:
Title:
Attest:
By: ___________________________________
Name:
Title:
WM FUNDS DISTRIBUTOR, INC.
By: _____________________________
Xxxxxxx X. Xxxxxx
President
Attest:
By: _________________________
Xxxxxx X. Xxxxxxx
Secretary
