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Chief Financial Officer, Treasurer and
Secretary
EXHIBIT (C)(4)
DISTRIBUTION AGREEMENT
Sierra Investment Services Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
This is to confirm that, whereas the undersigned Sierra Prime Income
Fund (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts and registered as a closed-end, management
investment company under the Investment Company Act of 1940, as amended
(the "1940 Act"), and Sierra Investment Services Corporation ("Sierra
Services"), a corporation organized under the laws of the State of
California, have entered into a Distribution Agreement dated as of
February 14, 1996 pursuant to which the Trust and Sierra Services have
agreed that Sierra Services shall act as a distributor of the classes of
Common Shares of beneficial interest of the Trust.
Now, therefore, in consideration of the mutual promises and covenants
hereinafter contained, the Trust and Sierra Services do agree as follows:
1. Appointment
The Trust hereby appoints Sierra Services as agent of the Trust to
act, for the period and on the terms set forth in this Agreement, as a
distributor of the Trust Shares covered by the Trust's registration
statement (the "Registration Statement"), prospectuses and statements of
additional information as in effect from time to time under the Securities
Act of 1933, as amended (the "1933 Act"), and the 1940 Act, and Sierra
Services accepts such appointment and agrees to render the services herein
described for the compensation herein provided.
As used in this Agreement, the terms "registration statement,"
"prospectus," and "statement of additional information" shall mean any
registration statement, prospectus and statement of additional information
filed by the Trust with the Securities and Exchange Commission ("SEC" or
"Commission") and any amendments thereof and supplements thereto which at
any time shall have been filed with the SEC. "Prospectus" shall mean, with
respect to any Shares of the Trust at any time, the then-current
prospectus and statement of additional information relating to such
Shares. The Trust and Sierra Services acknowledge expressly that
references in this Agreement to the "term" or "period" of this Agreement
shall include the term or period of this Original Agreement.
2. Sales of Shares
A. Authorization. The Trust hereby authorizes Sierra Services to sell
Shares of the Trust, and Sierra Services 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. Sierra Services shall have the right to order from the Trust
the Shares of the Funds needed, but not more than needed (correcting for
any clerical errors or errors of transmission), to fill such orders as are
unconditional.
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B. Selling Broker-Dealers and Other Agents. Sierra Services may, as
principal and on its own behalf, enter into agreements ("Dealer
Agreements"), on such terms and conditions as Sierra Services 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 1934 Act) 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 the 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 Sierra Services for sales of
Shares as of the effective date of such expulsion or suspension.
X. Xxxxxxx and Suspension of Sales. Each of Sierra Services and the
Trust reserves the right to refuse at any time or times (a) to sell any
Shares for any reason, and (b) to accept an order for Shares for any
reason. Sierra Services acknowledges specifically that, whenever in the
judgment of the Trust's officers such action is warranted for any reason,
including, without limitation, market, economic or political conditions,
the Trust may decline to accept any orders for, or make any sales of, any
Shares until such time as those officers deem it advisable to accept such
orders and to make such sales.
No Shares shall be offered and no orders for the purchase or sale of
Shares under any provisions of this Agreement shall be accepted by the
Trust (a) if and so long as the effectiveness of the Registration
Statement or any necessary amendments thereto shall be suspended under any
provisions of the 1933 Act, or (b) if and so long as a current prospectus
as required by Section 5(b)(2) of the 1933 Act is not on file with the
SEC.
3. Distribution Services and Expenses
A. Distribution Expenses. Sierra Services will bear all expenses in
connection with the performance of its services and the incurring of
distribution expenses under this Agreement. For purposes of this
Agreement, "distribution expenses" of Sierra Services shall mean all
expenses borne by Sierra Services or by any other person with which Sierra
Services has an agreement (including but not limited to Dealer Agreements)
approved by the Trust, which expenses represent payment for activities
primarily intended to result in the sale of Shares, including, but not
limited to, the following (provided, that "distribution expenses" shall
not include any expenditures in connection with services that Sierra
Services or any other person have agreed to bear or provide without
reimbursement or compensation):
(1) payments made to, and expenses of, registered
representatives and other employees of Sierra Services or of
Brokers;
(2) payments made to, and expenses of, persons providing support
services in connection with the distribution of Shares,
including but not limited to office space and equipment,
telephone facilities, answering routine inquiries regarding the
Trust, and processing transactions;
(3) costs relating to the formulation and implementation of
marketing and promotional activities, including but not limited
to direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising, and costs involved in
preparing, printing and distributing advertising and sales
literature pertaining to the Trust;
(4) costs of printing and distributing Prospectuses and reports
of the Trust to prospective Shareholders;
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(5) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and
promotional activities that the Trust may, from time to
time, deem advisable; and
(6) costs of financing any of the foregoing.
B. Scope of Distribution Services. Distribution services rendered
pursuant to this Agreement with respect to any Share of the Trust shall be
deemed to be complete upon the issuance and sale of such Share.
C. Trust Expenses. Sierra Services shall not be liable to assume any
other expenses of the Trust, which other expenses may include without
limitation: investment advisory fees; charges and expenses of any
registrar, custodian or depositary appointed by the Trust for safekeeping
of its cash, portfolio securities, or other property, and any transfer,
dividend or accounting agent(s) appointed by the Trust; brokers'
commissions chargeable to the Trust in connection with its portfolio
securities transactions; all taxes, including securities issuance and
transfer taxes; all costs and expenses in connection with maintenance of
registration of the Trust, any Fund and the Shares with the SEC, various
states, and other jurisdictions (including filing and legal fees and
disbursements of counsel); expenses of printing, including typesetting,
and distributing Prospectuses to the Trust's shareholders; all expenses of
shareholders' and Trustees' meetings and of preparing, printing and
mailing proxy statements and reports to shareholders; fees and expenses of
Trustees; all 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 Shares;
charges and expenses of legal counsel and independent accountants, in
connection with any matter relating to the Trust; membership dues of
industry associations; interest payable on borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the
Trust that inure to its benefit; extraordinary expenses (including but not
limited to legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs of
operations unless otherwise explicitly provided herein.
4. Compensation
The Distributor will receive no compensation from the Trust in
consideration of its services in connection with the distribution of
Shares of the Trust.
A. Early Withdrawal Charges. The Trust shall cause its transfer agent
(the "Transfer Agent") to withhold, from repurchase proceeds payable to
holders of Shares of the Funds, 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, Sierra Services 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 Sierra Services in
conformity with applicable law. Any such services will be performed on
behalf of the Trust, and Sierra Services 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. Sierra Services's
payment or assumption of any expense of the Trust that Sierra Services is
not required to pay or assume under this Agreement shall not relieve
Sierra Services of any of its obligations to the Trust or obligate Sierra
Services to pay or assume any similar expense on any subsequent occasion.
Any shareholder services provided by Sierra Services to the Trust,
which services may include processing of shareholder transactions,
responding to inquiries from shareholders concerning the status of their
accounts and the operations of the Trust communicating with the Trust and
its transfer agent on behalf of such shareholders, or providing other
shareholder services, nor for any expenses associated with the provision
of such shareholder services, including office space and equipment, and
telephone facilities, shall be provided pursuant to a separate agreement.
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C. Directed Payment; Allocable Portion Calculations. Sierra Services
may direct the Trust to pay any part or all of the EWCs payable to Sierra
Services in respect of any Shares directly to persons providing funds to
Sierra Services 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. Sierra Services shall, at its own expense
and not the expense of the Trust, provide the Trust with any necessary
calculations of Sierra Services'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.
D. Maximum Charges. Notwithstanding anything to the contrary
contained in this Agreement, EWCs paid to Sierra Services by any class of
shares of the Trust shall not exceed the amount permitted by the Rules of
Fair Practice of the NASD ("NASD Rules"), as in effect from time to time,
and the aggregate amount of EWCs paid to Sierra Services 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).
5. Disclosure and Sales Materials
A. Trust Governing Documents. The Trust shall have furnished Sierra
Services with copies, properly certified or authenticated as Sierra
Services may reasonably request, of the following documents and of all
amendments or supplements thereto ("Governing Documents"):
(1) The Agreement and Declaration of Trust, as amended and
in effect as of the date of this Agreement (such
Declaration of Trust, as they may be amended from time to
time hereafter, the "Declaration of Trust");
(2) The Trust's Bylaws, as amended and in effect as of the
date of this Agreement (such Bylaws, as they may be amended
from time to time hereafter, the "Bylaws");
(3) Resolutions of the Trust's Board of Trustees
authorizing the appointment of Sierra Services as a
Distributor of the Shares and authorizing this Agreement as
hereby amended and restated;
(4) The Trust's Notification of Registration filed pursuant
to Section 8(a) of the 1940 Act on Form N-8A under the 1940
Act, as filed with the Securities and Exchange Commission
(the "SEC") on October 31, 1995;
(5) The Trust's registration statement on Form N-2 under
the 1933 Act, (File No. 33-27489) and under the 1940 Act as
filed with the SEC on October 31, 1995 relating to the
Shares of the Fund, and all amendments thereto;
(6) The most recent Prospectus relating to the Shares; and
(7) All documents, notices and reports filed with the SEC.
The Trust authorizes Sierra Services and any Broker with whom Sierra
Services has entered into Dealer Agreements to use, in connection with the
sale of Shares, any Prospectus furnished by the Trust from time to time.
Sierra Services shall not, and shall take reasonable steps to ensure that
no Broker will, give any information nor make any representations,
concerning any aspect of the Shares or the Trust to any persons or entity
unless such information or representations are contained in the
Registration Statement and/or the pertinent Prospectus, or are contained
in sales or promotional literature approved by the Trust. Sierra Services
shall not use, and shall take reasonable steps to ensure that no Broker
will, use any sales promotion material or advertising that has not been
previously approved by the Trust.
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6. 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 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 Sierra Services may designate.
B. Information Reports; Financial Data. The Trust shall furnish to
Sierra Services 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 Sierra Services 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 Sierra Services, upon its request, (a) annual
audits of the Trust's books and accounts made by independent public
accountants 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 Sierra Services
may reasonably request from time to time.
7. Compliance; Standard of Care
A. Compliance. In performing any activity as distributor for the
Shares pursuant to this Agreement, Sierra Services shall comply with:
(1) all applicable provisions of the 1940 Act and any
rules and regulations thereunder;
(2) all provisions of the Registration Statement
relating to the Trust;
(3) all provisions of the Trust's Governing Documents;
(4) all rules and regulations of the NASD and all other
self-regulatory organizations applicable to the sale of
investment company shares; and
(5) any other applicable provisions of federal and state
law.
Sierra Services shall use its best efforts to maintain all required
licenses and registrations for itself as a broker or dealer, and for its
registered representatives or other associated persons, under the 1934 Act
and applicable state securities or blue sky laws. Sierra Services shall be
responsible for ensuring that each Broker and its representatives engaged
in selling Shares of the Trust shall be duly and appropriately licensed,
registered and otherwise qualified to do so under the 1934 Act and any
applicable blue sky laws of each state or other jurisdiction in which such
Shares may be sold. Sierra Services shall be responsible for ensuring that
each Broker supervises its representatives. Expulsion or suspension of
Sierra Services from the NASD shall automatically terminate this Agreement
on the effective date of such expulsion or suspension.
B. Direction of the Board. Any distribution activities undertaken by
Sierra Services pursuant to this Agreement or any other services
undertaken by Sierra Services on behalf of the Trust, shall at all times
be subject to any directives of the Board of Trustees of the Trust.
C. Standard of Care. In performing its duties under this Agreement,
Sierra Services shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits in
performing all services provided for under this Agreement, but shall not
be liable for any act or omission not constituting Sierra Services's
willful misfeasance, bad faith or gross negligence, or Sierra Services's
reckless disregard of its duties under this Agreement.
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8. Representations and Warranties
A. Registration Statements and Prospectuses. The Trust represents to
Sierra Services that all Registration Statements and Prospectuses filed by
the Trust with the SEC under the 1933 Act and the 1940 Act with respect to
the Shares are in conformity with the requirements of the 1933 Act, the
1940 Act and the rules and regulations of the SEC thereunder. The Trust
represents and warrants to Sierra Services that any Registration Statement
or Prospectus, when it 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 or Prospectus will be true and
correct when such Registration Statement or Prospectus becomes effective;
and that no Registration Statement nor any Prospectus, when the same shall
become effective, will include any 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.
Sierra Services may, but shall not be obligated to, propose from time to
time such amendment(s) to any Registration Statement and such
supplement(s) to any Prospectus as, in the light of future developments,
may, in the opinion of Sierra Services or its counsel, be necessary or
advisable. The Trust shall not file any amendment to any Registration
Statement or supplement to any Prospectus without giving Sierra Services
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 amendment(s) to any Registration Statement and
supplement(s) to any Prospectus, of whatever character, as the Trust may
deem advisable, such right being in all respects absolute and
unconditional.
B. Charter. The Trust represents that a copy of its Agreement and
Declaration of Trust dated October 4, 1995, together with all amendments
thereto, is on file in the office of the Secretary of the Commonwealth of
Massachusetts and the office of the City Clerk of Boston, Massachusetts.
C. Authorization. Sierra Services represents to the Trust that it is
authorized to perform the services described herein.
D. NASD. Sierra Services represents to the Trust that it is a member
in good standing of the NASD.
9. Indemnification
A. Indemnification by the Trust. The Trust agrees to indemnify,
defend and hold Sierra Services, its officers, directors, agents,
employees, and any person who controls Sierra Services within the meaning
of Section 15 of the 1933 Act (Sierra Services and such persons,
collectively, "Sierra Services Indemnified Persons"), 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) that
any Sierra Services Indemnified Person may incur under the 1933 Act, the
1940 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 or Prospectus relating to Shares
of the Trust, 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 or Prospectus relating to Shares of the Trust, or
necessary to make the statements in such Registration Statement or
Prospectus not misleading, or arising out of or based upon the Trust's
material breach of this Agreement; provided, however, that the Trust's
agreement to indemnify Sierra Services Indemnified Persons shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of or based upon any statements or representations made by Sierra Services
or its representatives or agents other than such statements and
representations as are contained in any Registration Statement or
Prospectus and in such financial and other statements regarding the Shares
as are furnished to Sierra Services pursuant to Sections 5a and 6b of this
Agreement; provided further, that the Trust's agreement to indemnify
Sierra Services and the Trust's representations and warranties
hereinbefore set forth in Section 8 of this Agreement shall not be deemed
to cover any liability to the Trust or its shareholders to which Sierra
Services would otherwise be subject by reason of Sierra Services' willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or
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by reason of Sierra Services' reckless disregard of its obligations and
duties under this Agreement; and provided further, that this Section 9
shall apply to all acts or omissions by the parties hereto that occur on
or after the date first written above and the indemnification provisions
of this Agreement shall apply to all acts or omissions by the parties
hereto that occur prior to such date.
The Trust's agreement to indemnify Sierra Services Indemnified
Persons is expressly conditioned upon such Sierra Services Indemnified
Person's notifying the Trust, or causing the Trust to be notified, of any
action brought against such Sierra Services Indemnified Person, such
notification to be given by letter, telegram, telecopy or facsimile
addressed to the Trust at its principal office, within ten (10) days after
the summons or other first legal process shall be served; provided that
the failure to provide such notification within such time limit shall
limit the Trust's obligation to indemnify such persons only to the extent
such failure causes prejudice to the interests of the Trust with respect
to such action. 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 Section 9a. The Trust's indemnification agreement contained in this
Section 9a 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 any Sierra Services
Indemnified Person, and shall survive the delivery of any Shares and, to
the extent permitted by law, the termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of Sierra
Services Indemnified Persons and their respective estates or successors,
as applicable.
B. Indemnification by Sierra Services. Sierra Services agrees to
indemnify, defend and hold the Trust, its officers, directors, agents,
employees, and any person who controls the Trust within the meaning of
Section 15 of the 1933 Act (the Trust and such persons, collectively,
"Trust Indemnified Persons"), free and harmless from and against any and
all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that any Trust Indemnified
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 such Trust Indemnified Person shall arise out of or be based upon (a)
any unauthorized sales literature, advertisements, information, statements
or representations or (b) any untrue statement (or alleged untrue
statement) of a material fact contained in information furnished in
writing by Sierra Services to the Trust and used in the answers to any of
the items of the Registration Statement or in the corresponding statements
made in any Prospectus, 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 Sierra Services to the Trust and
required to be stated in such answers or necessary to make such
information not misleading, or shall arise out of or be based upon Sierra
Services' material breach of this Agreement; provided, that this Section 9
shall apply to all acts or omissions by the parties hereto that occur on
or after the date first written above and the indemnification provisions
of the Original Agreement shall apply to all acts or omissions by the
parties hereto that occur prior to such date.
Sierra Services' agreement to indemnify Trust Indemnified Persons is
expressly conditioned upon such Trust Indemnified Person's notifying
Sierra Services, or causing Sierra Services to be notified, of any action
brought against such Trust Indemnified Person, such notification to be
given by letter, telegram, telecopy or facsimile addressed to Sierra
Services at its principal office, within ten (10) days after the summons
or other first legal process shall be served; provided that the failure to
provide such notification within such time limit shall limit Sierra
Services' obligation to indemnify such persons only to the extent such
failure causes prejudice to the interests of Sierra Services with respect
to such action. The failure so to notify Sierra Services of any such
action shall not relieve Sierra Services from any liability that Sierra
Services may have to the Trust Indemnified Person by reason of any such
untrue (or alleged untrue) statement or omission (or alleged omission)
otherwise than on account of Sierra Services' indemnity agreement
contained in this Section 9b. Sierra Services' indemnification agreement
contained in this Section 9b and its 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 any Trust
Indemnified Person, and shall survive the delivery of any Shares and, to
the extent permitted by law, the termination of this Agreement. This
agreement of indemnity will inure exclusively to the benefit of Trust
Indemnified Persons and their respective estates or successors, as
applicable.
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C. Assumption of Defense. An indemnifying party will be entitled to
assume the defense of any suit brought to enforce any such claim, demand
or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the indemnifying party and approved by
the indemnified party (provided that such counsel shall not, except with
the consent of an indemnified party that is a Sierra Services Indemnified
Person, be counsel to any investment fund of the Trust); provided that the
indemnified party shall be entitled to conduct its own defense with
counsel selected by it if such indemnified party is advised by counsel
that there may be a conflict of interest between the indemnified party and
the indemnifying party with respect to such defense. In the event the
indemnifying party elects to assume the defense of any such suit and
retain counsel of good standing approved by the indemnified party, the
defendant or defendants in such suit shall bear the fees and expenses of
any additional counsel retained by any of them; but in case the
indemnifying party does not elect or is not permitted to assume the
defense of any such suit, or in case the indemnified party does not
approve of counsel chosen by the indemnifying party, the indemnifying
party will reimburse the indemnified party named as defendant or
defendants in such suit, for the fees and expenses of any counsel retained
by such indemnified party.
D. Notice. Each of Sierra Services and the Trust agrees to notify the
other promptly of the commencement of any litigation or proceedings
against it or any of its officers or directors or Trustees, as applicable,
in connection with the issuance and sale of any Shares.
E. Contribution. If the indemnification provided for in this Section
shall for any reason be unavailable to or insufficient to hold harmless a
party indemnified hereunder in respect of any claim, demand, liability or
expense, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a
result of such claim, demand, liability or expense, or action in respect
thereof, (a) in such proportion as shall be appropriate to reflect the
relative benefits received by the Trust on the one hand and Sierra
Services on the other from the offering of the Shares or (b) if the
allocation provided by clause (a) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (a) above but also the relative fault of
the Trust (and its agents other than Sierra Services) on the one hand and
Sierra Services on the other with respect to the statements or omissions
which resulted in such claim, demand, liability or expense, or action in
respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Trust on the one hand and Sierra
Services on the other with respect to the offering of the Shares shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Shares purchased under this agreement (before deducting
expenses) received by the Trust bear to the total net underwriting
discounts and commissions received by Sierra Services with respect to the
Shares purchased under this Agreement and retained by Sierra Services
after payments to the selling agents retained by it. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Trust (or any of its
agents other than Sierra Services) or by Sierra Services, the intent of
the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Trust
and Sierra Services agree that it would not be just and equitable if
contributions pursuant to this Section were to be determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the claim, demand,
liability or expense, or action in respect thereof, referred to above in
this Section shall be deemed to include, for purposes of this Section, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, Sierra Services shall not
be required to contribute any amount in excess of the amount by which the
total net underwriting discounts and commissions received by Sierra
Services with respect to the Shares purchased under this Agreement and
retained by Sierra Services after payments to the selling agents retained
by it exceed the amount of any damages which Sierra Services has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
10. Notice to Sierra Services.
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A. The Trust agrees to advise Sierra Services immediately in writing:
(1) of any request by the SEC for amendments to the
Registration Statement or Prospectus then in effect or
for additional information;
(2) in the event of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration
Statement or Prospectus then in effect or the initiation
of any proceeding for that purpose;
(3) of the happening of any event that makes untrue any
statement of a material fact made in the Registration
Statement or Prospectus then in effect or that requires
the making of a change in such Registration Statement or
Prospectus in order to make the statements therein not
misleading; and
(4) of all actions of the SEC with respect to any
amendment to any Registration Statement or Prospectus
that may from time to time be filed with the SEC.
11. Term of Agreement.
A. This Agreement shall become effective as of the date first set
forth above, shall remain in effect for an initial period of two years,
and shall continue thereafter from year to year for so long as such
continuance is specifically approved at least annually by
(1) the Trust's Board of Trustees or a vote of a
"majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Trust; and
(2) a vote of a majority of the Trustees who are not
"interested persons" (as defined in the 1940 Act) of the
Trust and who have no direct or indirect financial
interest in the operation of the Plan, in this Agreement
or any other agreement related to the Plan (the
"Qualified Trustees"), such vote cast in person at a
meeting called for the purpose of the voting on such
approval.
12. Termination.
A. Termination on Assignment. This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the 1940
Act), it being understood that this Agreement has been approved by the
Trustees, including the Qualified Trustees. Xxxxxx Services agrees to
notify the Trust of any circumstances that might result in this Agreement
being deemed to be assigned.
B. Voluntary Termination. The Trust may terminate this Agreement with
respect to the Trust, or in its entirety, without penalty, on 60 days'
written notice to Sierra Services, by vote of a majority of the Qualified
Trustees or by vote of a "majority of the outstanding voting securities"
of the Trust, as the case may be. Sierra Services may terminate this
Agreement on 90 days' written notice to the Trust. Termination of this
Agreement with respect to any class of shares of the Trust shall not cause
this Agreement to terminate with respect to any other class of shares of
such Trust. Notice of termination as provided for in this Section may be
waived by either party, such waiver to be in writing.
13. Miscellaneous.
A. Non-Exclusivity. The Trust recognizes that Sierra Services and its
affiliates shall be free to render distribution or other services to
others (including other investment companies) and to engage in other
activities. The Trust agrees that the directors, officers and employees of
Sierra Services shall not be prohibited by reason of this Agreement from
engaging in any other business activity or from rendering services to any
other person, or from
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serving as partners, directors, trustees or officers of any other firm or
corporation, including the Trust and other investment companies. Sierra
Services acknowledges that its appointment as distributor pursuant to this
Agreement is not exclusive, and that the Trust may appoint one or more
other persons to act as distributor for the Shares of one or more Funds.
B. Independent Contractor. Sierra Services and any Broker shall be
independent contractors and none of them nor any of their directors,
officers or employees shall, as such, be deemed employees of the Trust.
C. Notices. Any notices under this Agreement shall be in writing,
mailed postage paid or sent by telegram, telecopy, or facsimile to the
other party at such address as such other party may designate from time to
time for the receipt of such notice.
D. Integration; Amendment; Counterparts; Governing Law.
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof, and may not be modified,
amended, or waived except by a written instrument duly executed by the
party against whom such modification, amendment, or waiver is sought to be
enforced. If any provisions of this Agreement shall be held or made
invalid by a court decision, statute rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
This Agreement shall be subject to the provisions of the 1940 Act and
the 1934 Act and the rules, regulations and rulings thereunder, and of the
applicable rules and regulations of the NASD, from time to time in effect,
and the terms hereof shall be interpreted and construed in accordance
therewith.
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will
constitute one and the same instrument.
This Agreement shall be governed in accordance with the internal
substantive laws of the Commonwealth of Massachusetts.
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but bind only the
trust property of the Trust, as provided in the Trust Agreement. The
execution and delivery of this Agreement have been authorized by the
Trustees and effected by an authorized officer of the Trust, acting as
such, and neither such authorization nor such execution and delivery shall
be deemed to have been made by any Trustee or officer individually or to
impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in the Trust Agreement.
Please confirm that the foregoing accurately sets forth our agreement
by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us as of the date
first set forth above.
Very truly yours,
Sierra Prime Income Fund
By /s/ X. Xxxxx Xxxxxx
----------------------------
Title: President
ACCEPTED:
Sierra Investment Services Corporation
By /s/ Xxxxx X. Xxxxx
--------------------------------------------
Title: Senior Vice President and Secretary
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