EXHIBIT (e)(3)
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
THIS AMENDED AND RESTATED DISTRIBUTION AGREEMENT (this "Agreement"),
dated this 20th day of February, 2003, between WM Variable Trust, a
Massachusetts business trust (the "Trust"), on behalf of each of its constituent
series (each a "Fund" and collectively the "Funds"), and WM Funds Distributor,
Inc., a Washington corporation doing business at Gold River, California, herein
sometimes referred to as the "Distributor."
RECITALS
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Funds are separate series of the Trust;
WHEREAS, each Fund and the Distributor desire to enter into an
agreement that sets forth standard terms and conditions for distribution and
other services for Trust's Class 1 shares and Class 2 shares (collectively, the
"Shares"); the shareholders of each Fund are and will be separate accounts in
unit investment trust form ("Eligible Separate Accounts") of insurance
companies, portfolios holding interests in such Funds in connection with asset
allocation programs or qualified retirement plans ("Plans");
WHEREAS, variable annuity and insurance product ("Variable Products")
net premiums and considerations will be allocated to Eligible Separate Accounts
for investment in each Fund, and contributions of Plans will be invested in each
Fund;
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 as the agent for distribution of Shares and grants the
Distributor the right to sell Shares on behalf of each Fund and on terms set
forth in this Agreement. The Distributor accepts such appointment and agrees to
render the services herein set forth for the payments herein provided (including
reimbursement of expenses).
2. CONFLICTS PROCEDURES. The Trust has approved a Memorandum of
"Procedures for Monitoring Potential Conflicts Among Shareholders" (the
"Procedures"). This Distribution Contract shall be subject to the provisions of
the Procedures, the terms of which are incorporated herein by reference, made a
part hereof and controlling. The Procedures may be amended or superseded,
without prior notice, and this Agreement shall be deemed amended to the extent
the Procedures are amended or superseded. The Distributor represents and
warrants that it will act in a manner consistent with such Procedures as so set
forth and as they may be amended or superseded, so long as it is the distributor
of the Shares. This provision shall survive the termination of this Agreement.
Distribution Agreement
3. PARTICIPATION AGREEMENTS. The Distributor is hereby
authorized, from time to time, to enter into separate written agreements
("Participation Agreements" or, individually, a "Participation Agreement"), on
terms and conditions not inconsistent with this Agreement, with Plans and with
insurance companies which have Eligible Separate Accounts and which agree to
participate in the distribution of Trust Shares, directly or through affiliated
broker-dealers (collectively, with the insurance companies the "Participating
Insurance Companies"), by means of distribution of Variable Products and to use
their best efforts to solicit applications for Variable Products. Each
Participation Agreement shall be entered into jointly with the Plan or the
Participating Insurance Company and the Eligible Separate Account, as
appropriate. Such Participating Insurance Companies and their agents or
representatives soliciting applications for Variable Products shall be duly and
appropriately licensed, registered or otherwise qualified for the sale of
Variable Products under any applicable insurance laws and any applicable
securities of one or more states or other jurisdictions in which Variable
Products may be lawfully sold. Each such Participating Insurance Company shall
be both registered as a broker-dealer under the Securities Exchange Act and a
member of the NASD. Each Plan and Participating Insurance Company shall agree to
comply with all laws and regulations, whether federal or state, and whether
relating to insurance, securities or other general areas, including but not
limited to the record-keeping and sales supervision requirements of such laws
and regulations.
4. DELIVERY OF DOCUMENTS. The Trust and/or each Fund 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
(c) The Trust's registration statement,
prospectus and statement of additional information, 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 securities of
each Fund are sold by the Distributor.
5. 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 the Distributor. The Distributor will act as the exclusive
Distributor of the Trust's 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 each Fund's
affairs; (ii) in all matters relating to the performance of this Agreement, the
Distributor will act in conformity with the Declaration of Trust and Bylaws of
the Trust and the Registration Statement of each Fund and with the instructions
and directions of the Trust's Board of Trustees; and (iii) the
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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. In carrying out its obligations hereunder, the Distributor shall:
(a) Provide to the Trust's Board of Trustees, at
least quarterly, a written report of the amounts expended in
connection with all distribution services rendered pursuant to
this Agreement, including an explanation of the purposes for
which such expenditures were made; and
(b) Take, on behalf of each Fund, all actions
which appear to be necessary to carry into effect the
distribution of each Fund's Shares as provided in paragraph 6.
6. 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. 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 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 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 or of any order, rule or regulation of any
governmental body having jurisdiction;
(c) Purchases and redemptions of Shares shall be
at the net asset value of the appropriate class of the
appropriate Fund, computed as set forth in the most recent
Prospectus and Statement of Additional Informations relating
to the Trust contained in its Registration Statement on Form
N-1A, File No. 33-57732, or any amendments thereto, and any
supplements thereto ("Registration Statement"). Trust Shares
may not be sold or transferred except to an Eligible Separate
Account, a Plan or a Fund with the prior approval of the
Trust's Board of Trustees.
(d) 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 Statement, or contained in shareholder reports or
other material that may be prepared by or on behalf of the
Trust for the 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.
7. COMPENSATION. Except as provided in the second paragraph of
this Section 7, the Trust shall not pay any compensation to the Distributor for
services as principal
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underwriter herein, nor shall the Trust reimburse the Distributor for any
expenses related to such services. The Distributor may, but need not, pay or
charge other Participating Insurance Companies pursuant to agreements as
described in 3.
The Trust will pay the Distributor in consideration of its services in
connection with the distribution of Class 2 shares of each Fund a fee, accrued
daily and paid monthly, at an annual rate of 0.25% of the average daily net
asset value of such Class 2 shares of such Fund (the "Distribution Fee"). The
Distributor may direct the Trust to pay any part or all of the Distribution Fee
payable to the Distributor in respect of any Class 2 shares of any Fund 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.
8. 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.
(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 or Fund'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 its 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 Trust's
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.
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(c) The Distributor will bear all expenses
incurred in connection with its performance of the services
described herein and the incurring of distribution expenses
under 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 Trust
Shares.
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
any Fund or class of Shares, 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. Termination of this Agreement with respect to any class of Shares of
any Fund shall not cause this Agreement to terminate with respect to the other
class of Shares of such Fund or any Shares of any other Fund. The notice
provided for herein may be waived by either party. This Agreement shall
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
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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 of Shares, 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.
(a) The Trust authorizes the Distributor and any dealers
with whom the 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 the Distributor,
its several officers and directors, and any person who controls the
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 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 the Distributor or its
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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 the 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 the Distributor's reckless
disregard of its obligations and duties under this Agreement. The
Trust's agreement to indemnify the 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 the 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 13(a). The Trust's
indemnification agreement contained in this paragraph 13(a) 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 the 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 the 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 the 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.
(b) The 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 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 the
Distributor to the Trust and required to be stated in such answers or
necessary to make such information not misleading. The Distributor's
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agreement to indemnify the Trust, its officers and trustees, and any
such controlling person, as aforesaid, is expressly conditioned upon
the 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 the
Distributor at its principal office as stated herein and sent to the
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 the 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
the Distributor's indemnity agreement contained in this paragraph
13(b). The Distributor agrees to notify the Trust promptly of the
commencement of any litigation or proceedings against the Distributor
or any of its officers or directors in connection with the issuance and
sale of any Shares.
(c) In case any action shall be brought against any
indemnified party under paragraphs 13(a) or 13(b) hereof, 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.
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 0000 Xxxxx Xxxxxx, Xxxxxxx, XX 00000, and the address of the
Distributor shall be 00000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx, 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
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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.
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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 VARIABLE TRUST, on behalf of its WM FUNDS DISTRIBUTOR, INC.
constituent series
By:_____________________________ By:____________________________
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: President Title: President
Attest: Attest:
By:______________________________ By:____________________________
Name: Xxxx X. Xxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: Secretary
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