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EX-99.(E)(2)
BROKER-DEALER AGREEMENT
___________, 2000
This Broker-Dealer Agreement (the "Agreement") is made and entered into
between WM Funds Distributor, Inc. ("WMFD"), a Washington corporation having its
principal business offices at 0000 00xx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000, and the undersigned broker-dealer ("Selling Broker-Dealer").
WITNESSETH:
WHEREAS, the investment companies identified on Schedule A (each a
"Trust" and jointly the "Trusts") for which WMFD, WM Advisors, Inc. ("WMA") or
any other entity controlling, controlled by, under common control with or
affiliated with WMFD acts as investment adviser, administrator or distributor,
each of which is a management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), offers units of beneficial
interest ("shares") of a number of the Trusts' series (each a "Fund"), each with
its own investment objective and strategies;
WHEREAS, each Fund offers one or more classes of shares which may
include Class A shares ("Class A Shares") and Class B shares ("Class B Shares")
(collectively referred to from time to time as the "Shares) subject to
distribution plans (the "Class A and Class B Distribution Plans") adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940;
WHEREAS, each Fund has entered into one or more distribution agreements
with WMFD (the "Distribution Agreement") for the distribution by WMFD of the
Class A Shares and, for certain Funds, Class B Shares;
WHEREAS, Selling Broker-Dealer desires to agree with WMFD to sell Shares
to the customers of the Selling Broker-Dealer;
WHEREAS, WMFD and the Selling Broker-Dealer desire to provide for the
payment of sales loads, commissions, distribution fees, shareholder service fees
and/or revenue sharing payments to Selling Broker-Dealer with respect to sales
of Shares and related shareholder services;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is hereby agreed by and between the parties hereto as follows:
1. Definition of Terms. As used herein, the term "Prospectus" means the
prospectuses and, unless the context otherwise requires, related
statements of additional information (the "Statements of Additional
Information") incorporated therein by reference, as the same are amended
and supplemented from time to time, of each of the respective Funds and
each of the respective classes of Shares of the respective Funds; the
term "Business Day" means any day on which the New York Stock Exchange
is open; and the term "principal underwriter" has the definition
provided in the 1940 Act.
2. Selling Broker-Dealer shall use its best efforts to sell Shares that are
now or hereafter available for sale to customers of Selling
Broker-Dealer. Customers of Selling Broker-Dealer that purchase Shares
(the "Customers") are for all purposes customers of Selling
Broker-Dealer and not customers of the Funds or WMFD. Selling
Broker-Dealer shall be responsible for opening,
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approving and monitoring accounts for Customers and for the review and
supervision of these accounts, all in accordance with the rules of the
Securities and Exchange Commission ("SEC") and the Conduct Rules of the
National Association of Securities Dealers, Inc. (the "NASD Conduct
Rules"). In no transaction involving Shares shall Selling Broker-Dealer
have any authority to act as agent for the Funds or WMFD.
3. All orders for the purchase of Class A Shares of the Funds shall be
executed at the then current public offering price per Share (i.e., the
net asset value per Share plus the applicable sales charge, determined
in accordance with the provisions of the Prospectus) and all orders for
the redemption of Class A Shares of the Funds shall be executed at the
net asset value per Share less any applicable contingent deferred sales
charge determined in accordance with the provisions of the Prospectus.
All orders for the purchase of Class B Shares shall be at net asset
value and all orders for the redemption of Class B Shares shall be
executed at the net asset value per Share less any applicable contingent
deferred sales charge determined in accordance with the provisions of
the Prospectus. The minimum initial purchase order shall be as set forth
in the appropriate Prospectus. Unless otherwise mutually agreed in
writing between WMFD and Selling Broker-Dealer, each transaction for
Shares shall be promptly confirmed in writing to the Customer on a fully
disclosed basis and a copy of each confirmation shall be sent
simultaneously to Selling Broker-Dealer. Selling Broker-Dealer agrees
that upon receipt of such duplicate confirmations, Selling Broker-Dealer
shall examine the same and promptly notify the Transfer Agent and WMFD
of any errors or discrepancies that Selling Broker-Dealer discovers and
shall promptly bring to the attention of the Transfer Agent and WMFD any
errors in such confirmations claimed by any Customers.
4. The Funds and WMFD have each reserved the right to refuse at any time or
times to sell any of the Shares for any reason, and the Funds and WMFD
have each reserved the right to refuse at any time to accept an order
for purchase of Shares for any reason. In ordering Shares, Selling
Broker-Dealer shall rely solely and conclusively on the representations
contained in the Prospectus of the relevant Fund. Selling Broker-Dealer
agrees that Selling Broker-Dealer shall not offer or sell any Shares,
except in compliance with the NASD Conduct Rules and all applicable
federal and state securities laws and the rules and regulations of
applicable regulatory agencies or authorities. In connection with offers
to sell, and sales of, Shares, Selling Broker-Dealer agrees to deliver
or cause to be delivered to each person to whom any such offer or sale
is made, at or prior to the time of such offer or sale, a copy of the
relevant prospectus, and upon request, the relevant statement of
additional information.
Selling Broker-Dealer further agrees to obtain for each Customer to whom
Selling Broker-Dealer sells Shares any taxpayer identification number
certification required under Section 3406 of the Internal Revenue Code
of 1986, as amended (the "Code") or any successor provision, and the
regulations thereunder, and to provide WMFD or WMFD's designated agent
with timely written notice of any failure to obtain such taxpayer
identification number certification in order to enable the
implementation of any required backup withholding in accordance with
Section 3406 of the Code or any successor provision and the regulations
thereunder.
Unless otherwise mutually agreed in writing between WMFD and Selling
Broker-Dealer, WMFD shall deliver or cause to be delivered to each
Customer that purchases Shares through Selling Broker-Dealer copies of
all annual and interim reports, proxy solicitation materials and any
such other information and materials relating to the relevant Fund or
class of Shares thereof and prepared by or on behalf of WMFD, a Fund,
its investment adviser, investment sub-adviser, custodian, transfer
agent or dividend disbursing agent for the purpose of distribution to
such Customer. WMFD agrees to supply Selling Broker-Dealer with copies
of the Prospectus, annual reports, interim reports, proxy solicitation
materials and any such other information and materials
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relating to each Fund and each class of Shares in reasonable quantities
upon request. Selling Broker-Dealer acknowledges that any materials or
information that WMFD furnishes to Selling Broker-Dealer, other than
Prospectuses, annual and interim reports to shareholders and proxy
solicitation materials prepared by the Fund, are the sole responsibility
of WMFD and not the responsibility of the Fund.
5. Selling Broker-Dealer shall not make any representation concerning any
Shares or class of Shares other than those contained in the relevant
Prospectus or in any promotional materials or sales literature furnished
to Selling Broker-Dealer by WMFD. Selling Broker-Dealer shall not
furnish, or cause to be furnished, to any person, or display or publish,
or cause to be displayed or published, any information or materials
relating to any Fund or class of Shares (including, without limitation,
promotional materials and sales literature, advertisements, press
releases, announcements, statements, posters, signs or other similar
materials), except such information and materials as may be furnished to
Selling Broker-Dealer by WMFD and such other information and materials
as may be approved in writing by WMFD. Selling Broker-Dealer
acknowledges that customers choosing between classes should carefully
consider the fee structures of the classes in order to determine the
most appropriate investment class. In almost all cases, customers
planning to purchase $250,000 or more of Shares will pay lower aggregate
charges and expenses by purchasing Class A Shares. In accord with the
NASD Conduct Rules, Selling Broker-Dealer shall have reasonable grounds
for believing that the recommendation of Shares is suitable based upon
reasonable efforts to obtain appropriate suitability information from
the Customer.
6. In determining the amount of any dealer allowance or sales commission
payable to Selling Broker-Dealer hereunder, WMFD reserves the right to
exclude any sales which WMFD reasonably determines are not made in
accordance with the terms of the applicable Prospectus and the
provisions of this Agreement. Unless, at the time of transmitting an
order, Selling Broker-Dealer advises WMFD or the Transfer Agent to the
contrary, the Shares ordered will be deemed to be the total holdings of
the Customer for whom the order is transmitted.
7. (a) In accordance with the terms of the applicable Prospectus,
a reduced sales charge may be available to Customers that purchase Class
A Shares based on the total value (determined using current net asset
value) of (i) current purchases plus (ii) Shares that are already
beneficially owned at the time of purchase by the Customer and which
were purchased subject to an initial or contingent deferred sales
charge. Certain purchases made by a Customer and certain other persons
(for example, a Customer's spouse and minor children), as set forth from
time to time in the applicable Prospectus, may be combined for purposes
of qualifying for a reduced sales charge on Class A Shares purchased. In
each case where a reduced sales charge is applicable, Selling
Broker-Dealer agrees to furnish to the Transfer Agent sufficient
information to permit confirmation of qualification for the reduced
sales charge, and acceptance of the purchase order is subject to such
confirmation. The foregoing sales charge reductions may be modified or
terminated at any time at the sole discretion of each Fund.
(b) Selling Broker-Dealer acknowledges that certain classes of
investors may be entitled to purchase Class A Shares at net asset value,
without a sales charge, as from time to time provided in the applicable
Prospectus.
(c) Selling Broker-Dealer agrees, with respect to the Class A
Shares, to advise WMFD promptly at WMFD's request as to the amount of
any and all sales by Selling Broker-Dealer qualifying for a reduced
sales charge or no sales charge.
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(d) Each exchange of Shares (the investment of the proceeds from
the redemption of Shares of one class of a Fund in the Shares of another
class of Shares of the same Fund or the same or Shares of another Fund)
shall, where available, be made in accordance with, and subject to, the
terms of the Prospectus, including the right of a Fund to suspend sales.
8. The procedures relating to orders and the handling thereof will be
subject to the terms of the Prospectus and to instructions received by
Selling Broker-Dealer from WMFD or the Transfer Agent from time to time.
No conditional orders will be accepted. Selling Broker-Dealer agrees
that purchase orders placed by Selling Broker-Dealer will be made only
for the purpose of covering purchase orders already received from
Customers and that Selling Broker-Dealer will not make purchases of
Shares for any other securities dealer or broker. Selling Broker-Dealer
shall place purchase orders from Customers with WMFD or the Transfer
Agent immediately and shall not withhold the placement of such orders so
as to profit Selling Broker-Dealer; provided, however, that the
foregoing shall not prevent the purchase of Shares by Selling
Broker-Dealer for bona fide investment by Selling Broker-Dealer itself.
Selling Broker-Dealer agrees that Selling Broker-Dealer shall not effect
any transactions (including, without limitation, any purchases and
redemptions) in any Shares registered in the name of, or beneficially
owned by, any Customer unless such Customer has granted Selling
Broker-Dealer full right, power and authority to effect such
transactions on behalf of such Customer.
9. To the maximum extent permitted by applicable law, WMFD, the Funds, the
Transfer Agent and the respective officers, directors or trustees,
agents, employees and affiliates of WMFD, the Funds and the Transfer
Agent (collectively the "indemnified persons") shall not be liable for
and shall be fully indemnified and held harmless by Selling
Broker-Dealer from and against any and all liabilities, claims, losses,
damages, costs, settlements and expenses in any way arising out of or
connected with any failure by Selling Broker-Dealer to comply with the
terms of this Agreement or any act or omission, including, without
limitation, any material misstatement, by Selling Broker-Dealer in
connection with any orders or solicitation of orders of or transactions
in Shares that may be incurred by any indemnified person. Shares shall
be offered and sold only in the states and other jurisdictions in which
WMFD has indicated in writing that such offers and sales can be made and
in which Selling Broker-Dealer is legally qualified and permitted to so
act.
WMFD agrees to indemnify and hold harmless Selling Broker-Dealer, its
respective officers, employees and directors from and against any and
all claims, liabilities, expenses or losses in any way arising out of or
connected with the negligent, reckless or intentional conduct of WMFD or
its affiliates, officers, representatives or employees or in any way
arising out of or connected with any breach of any representation,
warranty, covenant or agreement made by WMFD in this Agreement or in any
way connected with any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus of any Fund or arising out of
or based upon any omission or alleged omission to state therein a
material fact required to be stated in order for the statements made
therein not to be misleading.
The indemnification obligations contained in this Section 9 shall
survive the termination of this Agreement.
10. (a) Selling Broker-Dealer agrees that payment for orders from
Selling Broker-Dealer for the purchase of Shares will be made in
accordance with the terms of the Prospectus.
(b) On or before the settlement date of each purchase order for
Class A Shares, Selling Broker-Dealer shall either (i) remit to an
account designated by WMFD with the Transfer Agent an amount equal to
the then current public offering price of such Class A Shares being
purchased, less the dealer allowance, if any, that shall be payable by
WMFD to Selling Broker-
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Dealer with respect to such purchase order as determined by WMFD in
accordance with the terms of the applicable Prospectus, or (ii) remit to
an account designated by WMFD with the Transfer Agent an amount equal to
the then-current public offering price of such Class A Shares as
determined by WMFD in accordance with the terms of the applicable
Prospectus, in which case Selling Broker-Dealer's dealer allowance, if
any, with respect to such purchase order, as determined by WMFD in
accordance with the terms of the applicable Prospectus, shall be payable
to Selling Broker-Dealer within one month. If payment for any purchase
order for Class A Shares is not received in accordance with the terms of
the applicable Prospectus, WMFD reserves the right, without notice, to
cancel the sale, and Selling Broker-Dealer shall be responsible for any
loss sustained as a result thereof.
(c) On or before the settlement date of each purchase order for
Class B Shares, Selling Broker-Dealer shall either (1) remit to an
account designated by WMFD with the Transfer Agent an amount equal to
(i) the net asset value of such Class B Shares being purchased, less
(ii) a Sales Commission (as defined below) that shall be payable by WMFD
to Selling Broker-Dealer with respect to such purchase order, or (2)
remit to an account designated by WMFD with the Transfer Agent an amount
equal to the net asset value of such Class B Shares, in which case the
Sales Commission with respect to such purchase order shall be payable to
Selling Broker-Dealer by WMFD within one month. Until changed by notice
from WMFD, "Sales Commission" shall mean an amount equal to (1) 4.0% of
the net asset value of Shares being purchased subject to a contingent
deferred sales charge payable at any time during the five-year period
following purchase, or (2) 3.0% of the net asset value of Shares being
purchased subject to a contingent deferred sales charge payable at any
time during the four-year period following purchase. WMFD will pay or
cause to be paid to the Funds the net asset value of such Shares being
purchased. If payment for any purchase order for Class B Shares is not
received in accordance with the terms of the applicable Fund Prospectus,
WMFD reserves the right, without notice, to cancel the sale and Selling
Broker-Dealer shall be responsible for any loss sustained as a result
thereof.
(d) If any Shares sold under the terms of this Agreement or are
tendered for redemption within seven (7) Business Days after
confirmation of Selling Broker-Dealer's purchase order for such Shares,
Selling Broker-Dealer shall forthwith refund to WMFD the full dealer
allowance or Sales Commission received by Selling Broker-Dealer on the
sale.
(e) In addition to the fees set forth above in this paragraph 10,
WMFD agrees, subject to the other terms and conditions of this
Agreement, to pay Selling Broker-Dealer a service fee, and Selling
Broker-Dealer agrees to accept the same as full payment therefor,
accrued daily and payable quarterly at the annual rate of 0.25% of the
average daily net assets of Shares of the Customers for which Selling
Broker-Dealer is designated as the dealer of record. WMFD reserves the
right to change the rate at which such service fee is paid upon fifteen
(15) days prior written notice to Selling Broker-Dealer. Accrual of such
service fee will commence after such Shares are held for three months
(for Class A Shares) or thirteen months (for Class B Shares) and average
daily net assets of all Shares of Customers are at a level of $100,000.
Selling Broker-Dealer acknowledges that such fee will be paid solely
from monies received by WMFD under the Distribution Agreement entered
into pursuant to the Class A and Class B Distribution Plans;
accordingly, any obligation of WMFD to pay Selling Broker-Dealer any
service fee shall not arise unless and until WMFD receives from the
relevant Fund monies intended to be used by WMFD for such purpose and in
amounts sufficient for such purpose. Under the Class A and Class B
Distribution Plans, each Fund is authorized to make expenditures of Fund
assets for
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various distribution and support services. Selling Broker-Dealer
understands and agrees that (i) all service fees are subject to the
limitations contained in the Distribution Agreement and the Class A and
Class B Distribution Plans, which may be amended or terminated at any
time, and (ii) Selling Broker-Dealer's failure to provide services as
agreed in Section 11 hereof will render Selling Broker-Dealer ineligible
to receive service fees.
(f) In addition to the dealer allowance, Sales Commissions and/or
service fees set forth above, WMA agrees to pay to Selling
Broker-Dealer, with respect to Shares of WM Strategic Asset Management
Portfolios, LLC, a revenue sharing payment accrued daily and payable
quarterly at the annual rate of 0.50% of the average daily net assets of
Shares held by Customers for whom it is the dealer of record. WMA
reserves the right to change the rate at which such revenue sharing
payment is made upon fifteen (15) days prior written notice to Selling
Broker-Dealer.
11. Selling Broker-Dealer will provide shareholder servicing, such as, but
not limited to, responding to Customer inquiries and providing account
information. WMFD will provide personnel during normal business hours to
provide information about the Funds in response to Customer inquiries.
12. Selling Broker-Dealer hereby represents and warrants that: (a) Selling
Broker-Dealer is a corporation, partnership or other entity duly
organized and validly existing in good standing under the laws of the
jurisdiction in which Selling Broker-Dealer is organized; (b) the
execution and delivery of this Agreement and the performance of the
transactions contemplated hereby have been duly authorized by all
necessary action and all other authorizations and approvals (if any)
required for Selling Broker-Dealer's lawful execution and delivery of
this Agreement and Selling Broker-Dealer's performance hereunder have
been obtained; and (c) upon execution and delivery by Selling
Broker-Dealer, and assuming due and valid execution and delivery by
WMFD, this Agreement will constitute a valid and binding agreement,
enforceable against Selling Broker-Dealer in accordance with its terms.
13. Selling Broker-Dealer further represents and warrants that Selling
Broker-Dealer is a registered broker-dealer and a member of the NASD
and, with respect to any sales in the United States, Selling
Broker-Dealer agrees to abide by the NASD Conduct Rules. Selling
Broker-Dealer agrees to comply with all applicable federal and state
laws, rules and regulations. WMFD agrees to inform Selling
Broker-Dealer, upon request, as to the states in which WMFD believes the
Shares have been registered or qualified for sale under, or are exempt
from the requirements of, the respective securities laws of such states,
but WMFD shall have no obligation or responsibility to make Shares
available for sale to Customers in any jurisdiction. Selling
Broker-Dealer agrees to notify WMFD immediately in the event of Selling
Broker-Dealer's expulsion or suspension from the NASD. Selling
Broker-Dealer's expulsion from the NASD will automatically terminate
this Agreement immediately without notice. Selling Broker-Dealer'
suspension from the NASD will terminate this Agreement effective
immediately upon written notice of termination to Selling Broker-Dealer.
14. The names and addresses and other information concerning Customers are
and shall remain Selling Broker-Dealer's sole property, and neither WMFD
nor the affiliates of WMFD shall use such names, addresses or other
information for any purposes except in connection with the performance
of the duties and responsibilities of WMFD hereunder and except for
servicing and informational mailings relating to the Funds and Shares.
Notwithstanding the foregoing, this paragraph shall not prohibit the
WMFD or any of its affiliates from utilizing for any purpose the names,
addresses or other information concerning any such customers if such
names and addresses or other information are obtained in any manner
other than from the Selling Broker-
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Dealer pursuant to this Agreement. The provisions of this Section 14
shall survive the termination of this Agreement.
15. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or joint
venture between WMFD and Selling Broker-Dealer. Neither party hereto
shall be, act as, or represent itself as, the agent or representative of
the other party hereto, nor shall either party hereto have the right or
authority to assume, create or incur any liability or any obligation of
any kind, express or implied, against or in the name of, or on behalf
of, the other party hereto. This Agreement is not intended to, and shall
not, create any rights against either party hereto by any third party
solely on account of this Agreement. Neither party hereto shall use the
name of any of the other party hereto in any manner without the other
party's prior written consent, except as required by any applicable
federal or state law, rule or regulation, and except pursuant to any
promotional programs mutually agreed upon in writing by the parties
hereto.
16. Except as otherwise specifically provided herein, all notices required
or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by personal or overnight delivery or facsimile
(with confirming copy by mail as provided herein). Unless otherwise
notified in writing, all notices to WMFD shall be given or sent to WMFD
at its office, located at 0000 00xx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000; and all notices to Selling Broker-Dealer shall be
given or sent to Selling Broker-Dealer at Selling Broker-Dealer's
address shown below.
17. This Agreement shall become effective upon written acceptance by WMFD
and may be terminated at any time by either party hereto upon fifteen
(15) days prior written notice to the other parties hereto. To the
extent permitted by law, this Agreement, including any schedules hereto,
shall be deemed amended as provided in any written notice delivered by
WMFD to Selling Broker-Dealer and otherwise may be amended only by a
written instrument signed by both of the parties hereto. This Agreement
may not be assigned by either party without the prior written consent of
the other party hereto. This Agreement constitutes the entire agreement
and understanding between the parties hereto relating to the subject
matter hereof and supersedes any and all prior agreements between the
parties relating to said subject matter, and Selling Broker-Dealer
agrees that WMFD shall have no obligations to Selling Broker-Dealer
other than those expressly provided herein.
18. This Agreement shall apply to all Shares that are currently outstanding
or being offered and that are offered and sold in the future, including
the Shares of all of the classes of all Funds, whether such Funds or
classes are currently established or are established hereafter. Any
classes of Shares in addition to the Class A and Class B Shares that are
established hereafter shall be treated hereunder for all intents and
purposes as Class A Shares if the newly established class has a
front-end sales charge and/or a contingent deferred sales charge that
may be deferred for no more than two years and shall be treated for all
intents and purposes as Class B Shares if the newly established class
has a contingent deferred sales charge that may be deferred for more
than two years.
19. Selling Broker-Dealer agrees to provide to WMFD and each Trust each
calendar quarter such information as shall reasonably be requested by
WMFD or a Trust with respect to the service fees paid to Selling
Broker-Dealer under this Agreement. Selling Broker-Dealer will permit
representatives of WMFD and each Trust reasonable access to its
personnel and records to monitor the quality of services being provided
by Selling Broker-Dealer pursuant to this agreement. Selling
Broker-Dealer shall promptly deliver to each Trust such information as
shall
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reasonably be necessary to permit the Trustees of each Trust to make an
informed determination to continue the Class A and Class B Distribution
Plans.
20. Selling Broker-Dealer agrees that, in the event that it should come to
the attention of Selling Broker-Dealer that any of its Customers is
engaging in a pattern of purchases, redemptions and/or exchanges of
Shares that appears to evidence "market timing," Selling Broker-Dealer
shall notify WMFD of such pattern and shall cooperate fully with WMFD in
investigation and, if deemed necessary or appropriate by WMFD,
terminating any such pattern of trading, including, without limitation,
by refusing such Customer's orders to purchase or exchange Shares.
21. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of Washington, without giving effect to
principles of conflict of laws.
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IN WITNESS WHEREOF the parties hereto have caused the Agreement to be duly
executed as of the date first written above.
WM FUNDS DISTRIBUTOR, INC.
By:
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Name: Xxxxx Xxxxxxxxx
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Title: First Vice President
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NAME OF SELLING BROKER-DEALER:
By:
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Name:
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Title:
------------------------------
Address:
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Tel. #:
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Fax #:
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Schedule A
to the
Broker-Dealer Agreement
between
WM Funds Distributor, Inc.
and
Selling Broker-Dealer
WM Group of Funds
WM Trust I
WM Trust II
WM Strategic Asset Management Portfolios, LLC
