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Exhibit (e)(3)
WM STRATEGIC ASSET MANAGEMENT PORTFOLIOS, LLC
DISTRIBUTION CONTRACT
THIS DISTRIBUTION CONTRACT (this "Agreement"), dated this __th day of
________, 1999, between the WM Strategic Asset Management Portfolios, LLC, a
Massachusetts limited liability company (the "LLC"), on behalf of each of its
series which are listed on the signature page of this Agreement (each a "Fund"),
and WM Funds Distributor, Inc., a Washington corporation doing business at
Sacramento, California herein sometimes referred to as the "Distributor."
RECITALS
WHEREAS, the LLC 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 LLC;
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 Class A and Class B shares of 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.
1.1. The LLC hereby affirms the appointment of WM Funds Distributor, Inc.
as the agent for distribution of shares for each Fund and grants Distributor the
right to sell Class A and Class B shares on behalf of each Fund and on terms set
forth in this Agreement.
1.2. The Distributor accepts such appointment and agrees to render the
services herein set forth for the payments herein provided (including
reimbursement of expenses).
2. DELIVERY OF DOCUMENTS.
2.1. The LLC and/or each Fund has furnished the Distributor with copies
of:
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(a) LLC Operating Agreement and all amendments thereto for the LLC (as
amended from time to time, the "LLC Agreement");
(b) Bylaws and all amendments thereto for the LLC (as amended from time
to time, the "Bylaws"); and
(c) Each Fund'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
0000 Xxx.
2.2. From time to time, each Fund 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.
3. DUTIES OF THE DISTRIBUTOR.
3.1. The Distributor shall provide each Fund with the benefit of its best
judgment, efforts and facilities in rendering its services as Distributor. The
Distributor will act as the exclusive Distributor of the Class A and Class B
shares of each Fund, subject to the supervision of the LLC's Board of Trustees
and the following understandings:
(a) The LLC's Board of Trustees shall be responsible for and control
the conduct of each Fund's affairs;
(b) In all matters relating to the performance of this Agreement, the
Distributor will act in conformity with the LLC Agreement and Bylaws of
the LLC and the Registration Statement of each Fund and with the
instructions and directions of the LLC's Board of Trustees; and
(c) The Distributor will conform to and comply with applicable
requirements of the 1940 Act, the 1933 Act and all other applicable
federal or state laws and regulations.
3.2. In carrying out its obligations hereunder, the Distributor shall:
(a) Provide to the LLC'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
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 Section 4.
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4. DISTRIBUTION OF SHARES.
4.1. It is mutually understood and agreed that the Distributor does not
undertake to sell all or any specific portion of the Class A or Class B shares
of any Fund. Distributor shall have the right to enter into sales agreements
with dealers of its choice for the sale of the Class A or Class B shares of each
Fund to the public at the public offering price. Distributor shall set forth in
such agreements the portion of the sales charge which may be retained by such
dealers.
4.2. If any Fund determines that it is necessary to file the form of
dealer agreement and amendments thereto as an exhibit to its currently effective
Registration Statement under the 1933 Act, then the Distributor shall provide
the Fund with currently effective documents.
4.3. A Fund shall not sell any of its Class A or Class B shares except
through the Distributor. Notwithstanding the provisions of the foregoing
sentence:
(a) A Fund may issue its Class A or Class B shares at their net asset
value to any shareholder of the Fund purchasing such shares with
dividends or other cash distributions received from the Fund pursuant
to any special or continuing offer made to shareholders;
(b) The Distributor may, and when requested by a Fund, shall, suspend
its efforts to effectuate sales of the Class A or Class B shares of a
Fund at any time when in the opinion of the Distributor or of the Fund
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;
(c) A Fund may withdraw the offering of its Class A or Class B shares
at any time with the consent of the Distributor or 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;
(d) The price at which the Class A or Class B shares will be sold to
investors (the "offering price") shall be the net asset value per
share, determined in accordance with the provisions of the Fund's
current Registration Statement, plus a sales charge determined in the
amount and manner established from time to time by the Distributor and
set forth in a Fund's current prospectus. The Fund shall receive the
net asset value per share for the sale of its Class A or Class B
shares;
(e) If a sales charge is in effect, the Distributor shall have the
right, subject to such rules or regulations of the Securities and
Exchange Commission as may then be in effect pursuant to Section 22 of
the 1940 Act, to pay a portion of the sales charge to dealers
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who have sold Class A or Class B shares of the Fund in accordance with
provisions of dealer agreements; and
(f) The Distributor is not authorized by any Fund to provide any
information or to make any representations other than those contained
in the appropriate Registration Statements, or contained in shareholder
reports or other material that may be prepared by or on behalf of a
Fund for Distributor's use. This shall not be construed to prevent the
Distributor from preparing and distributing sales literature or other
material as it may deem appropriate.
5. COMPENSATION FOR SERVICING SHAREHOLDER ACCOUNTS.
5.1. As compensation for its services hereunder, the Distributor shall be
entitled to receive all front-end loads and contingent deferred sales charges as
may be described from time to time in the Registration Statement. The Fund also
shall pay a distribution fee to the Distributor at an annual rate as shall be
authorized by the shareholders and further set by the Board of Trustees pursuant
to the provisions of the LLC's Distribution Plans for Class A and Class B
shares, then in effect, in accordance with Rule 12b-1 under the 1940 Act (the
"Distribution Plans").
5.2. The LLC acknowledges that the Distributor and its dealers may
compensate their investment representatives for opening accounts, processing
investors' purchase and redemption orders, responding to inquiries from Fund
shareholders concerning the status of their accounts and the operations of a
Fund, and communicating with a Fund and its transfer agent on behalf of Fund
shareholders in such manner and amount as the Distributor may deem appropriate.
6. EXPENSES.
The expenses connected with distribution shall be allocable between the
Funds and the Distributor as follows:
6.1. The Distributor shall furnish the services of personnel to the
extent that such services are required to carry out its obligations under this
Agreement.
6.2. Each Fund 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 LLC'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, maintenance of registration and qualification for sale of a Fund
and its shares with the SEC and various states and other jurisdictions
(including
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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 a Fund'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 a Fund's operation unless otherwise explicitly
provided herein.
6.3. 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 Class A or Class B shares, including, but not limited to, the
expenses of distribution that are described in the Distribution Plans. The
Distributor will furnish the Board of Trustees statements of distribution
revenues and expenditures at least quarterly with respect to the Class A and
Class B shares of each Fund as required by the Distribution Plans for each
respective Class.
7. NON-EXCLUSIVITY.
7.1. 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.
7.2. It is understood and agreed that officers of the Distributor may
serve as officers or trustees of the LLC, and that officers or trustees of the
LLC 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.
8. TERM AND APPROVAL.
8.1. 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 any Fund or
Class, such continuance is specifically approved at least annually:
(a) By the LLC's Board of Trustees, including the affirmative vote of a
majority of the Board of Trustees of the LLC who are not (i) parties to
this Agreement, (ii) interested
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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).
9. TERMINATION.
9.1. This Agreement may be terminated, with respect to any Fund or Class,
at any time, without the payment of any penalty, on sixty (60) days' written
notice, by vote of the Board of Trustees of the LLC, or by a vote of a majority
of the Qualified Trustees, or by a vote of a majority of the outstanding voting
securities of the Fund (as defined in Section 2(a)(42) of the 1940 Act), or by
the Distributor on sixty (60) days' written notice to the Fund. The notice
provided for herein may be waived by either party.
9.2. This Agreement shall automatically terminate in the event of its
assignment, the term "assignment" for this purpose having the meaning set forth
in Section 2(a)(4) of the 1940 Act.
10. REPRESENTATIONS AND WARRANTIES.
10.1. The LLC represents and warrants to the Distributor that any
registration statement, prospectus and statement of additional information, when
such Registration Statement becomes effective, will include all statements
required to be contained therein in conformity with the 1933 Act, the 1940 Act
and the rules and regulations of the SEC; that all statements of fact contained
in any registration statement, prospectus or statement of additional information
will be true and correct when such Registration Statement becomes effective; and
that neither any registration statement nor any prospectus or statement of
additional information when such Registration Statement becomes effective will
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading to a purchaser of shares.
10.2. 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 LLC shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
(15) days after receipt by the LLC of a written request from the Distributor to
do so, the Distributor may, at its option, terminate this Agreement.
10.3. The LLC shall not file any amendment to any registration statement
or supplement to any prospectus or statement of additional information without
giving the Distributor
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reasonable notice thereof in advance; provided, however, that nothing contained
in this Agreement shall in any way limit the LLC'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
LLC may deem advisable, such right being in all respects absolute and
unconditional.
11. AMENDMENTS.
This Agreement may be amended, with respect to any Fund or Class, by
the parties hereto only if such amendment is specifically approved by the Board
of Trustees of the LLC or by the vote of majority of outstanding voting
securities of the Fund, and 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; provided, however, that any such amendment that constitutes an
amendment of the Distribution Plans for any Class of shares of the Fund shall be
approved by shareholders pursuant to Rule 12b-1 to the extent required by
applicable law.
12. INDEMNIFICATION.
12.1. The LLC authorizes the Distributor and any dealers with whom
Distributor has entered into dealer agreements to use any prospectus or
statement of additional information furnished by the LLC from time to time, in
connection with the sale of shares of each Fund. The LLC agrees to indemnify,
defend and hold Distributor, its several officers and directors, and any person
who controls Distributor within the meaning of Section 15 of the 1933 Act, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities and any counsel fees incurred in connection therewith) which
Distributor, its officers and directors, or any such controlling person, may
incur under the 1933 Act, the 1940 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 LLC's agreement to indemnify the Distributor, its officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of or based upon any
statements or representations made by Distributor or its representatives or
agents other than such statements and representations as are contained in any
registration statement, prospectus or statement of additional information and in
such financial and other statements as are furnished to the Distributor pursuant
to Section 2 hereof; and further provided that the LLC's agreement to indemnify
the Distributor and the LLC's representations and warranties shall not be deemed
to cover any liability to the LLC or its shareholders to which Distributor would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of Distributor's
reckless disregard of its obligations and duties under this Agreement. The LLC's
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agreement to indemnify Distributor, its officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon the LLC's being
notified of any action brought against Distributor, its officers or directors,
or any such controlling person, such notification to be given by letter or by
telegram addressed to the LLC at its principal office stated herein and sent to
the LLC 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 LLC of any such action shall not relieve the LLC from
any liability that the LLC 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 LLC's indemnity agreement
contained in this Sub-Section 12.1. The LLC's indemnification agreement
contained in this Sub-Section 12.1 and the LLC's representations and warranties
in this Agreement shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of Distributor, its officers and
directors, or any controlling person, and shall survive the delivery of any
shares. This agreement of indemnity will inure exclusively to Distributor's
benefit, to the benefit of its several officers and directors and their
respective estates, and to the benefit of the controlling persons and their
successors. The LLC agrees to notify Distributor promptly of the commencement of
any litigation or proceedings against the LLC or any of its officers or trustees
in connection with the issuance and sale of any shares.
12.2. Distributor agrees to indemnify, defend and hold the LLC, its
several officers and trustees, and any person who controls the LLC 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 LLC, 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 LLC, 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 LLC and used in the
answers to any of the items of the Registration Statement or in the
corresponding statements made in the prospectus or statement of additional
information, or shall arise out of or be based upon any omission or alleged
omission to state a material fact in connection with such information furnished
in writing by Distributor to the LLC and required to be stated in such answers
or necessary to make such information not misleading. Distributor's agreement to
indemnify the LLC, its officers and trustees, and any such controlling person,
as aforesaid, is expressly conditioned upon Distributor being notified of any
action brought against the LLC, its officers or trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to Distributor at its principal office as stated herein and sent to
Distributor by the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been served. The
failure so to notify the Distributor of any such action shall not relieve
Distributor from any liability that the Distributor may have to the LLC, its
officers or trustees, or to such controlling person by reason of any such untrue
or alleged untrue
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statement or omission or alleged omission otherwise than on account of
Distributor's indemnity agreement contained in this Sub-Section 12.2. The
Distributor agrees to notify the LLC promptly of the commencement of any
litigation or proceedings against Distributor or any of its officers or
directors in connection with the issuance and sale of any shares.
12.3. In case any action shall be brought against any indemnified party
under Sub-Sections 12.1 or 12.2, and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish to do so, to assume the
defense thereof with counsel satisfactory to such indemnified party. If the
indemnifying party opts to assume the defense of such action, the indemnifying
party will not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than (a) reasonable costs of investigation or the
furnishing of documents or witnesses and (b) all reasonable fees and expenses of
separate counsel to such indemnified party if (i) the indemnifying party and the
indemnified party shall have agreed to the retention of such counsel or (ii) the
indemnified party shall have concluded reasonably that representation of the
indemnifying party and the indemnified party by the same counsel would be
inappropriate due to actual or potential differing interests between them in the
conduct of the defense of such action.
13. 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.
14. 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 each Fund shall be 0000
Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000, and the address of the Distributor
shall be 0000 00xx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, XX 00000.
15. LIMITATION OF LIABILITY.
A copy of the Certificate of Formation of the LLC is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this Agreement is executed by an officer of the LLC on behalf of the trustees of
the LLC, as trustees and not individually, on further behalf of each Fund, and
that the obligations of this Agreement as they relate to each Fund shall be
binding upon the assets and properties of that Fund only and shall not be
binding
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upon the assets and properties of any other Fund or series of the LLC or upon
any of the trustees, officers, employees, agents or shareholders of the Fund or
the LLC individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
WM STRATEGIC ASSET MANAGEMENT
PORTFOLIOS, LLC, on behalf of its portfolios:
INCOME PORTFOLIO,
FLEXIBLE INCOME PORTFOLIO,
BALANCED PORTFOLIO,
CONSERVATIVE GROWTH PORTFOLIO and
STRATEGIC GROWTH PORTFOLIO
By:
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Xxxxxxx X. Xxxxxx
President
Attest:
By:
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Xxxx X. Xxxx
Secretary
WM FUNDS DISTRIBUTOR, INC.
By:
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Xxxxxxx X. Xxxxxx
President
Attest:
By:
--------------------
Xxxxxx X. Xxxxxxx
Secretary
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