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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.
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
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other person (as such term is defined in the 0000 Xxx) that is not required,
for purposes of effecting transactions in securities, to be registered under
the 1934 Act, but is registered as required under applicable state securities
or blue sky laws, authorizing such broker- dealers and other persons
(collectively, "Brokers") to act as agents in connection with the sale of 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.
C. Refusal 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;
(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.
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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.
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
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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.
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.
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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.
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
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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 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
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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.
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
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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 0000
Xxx) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
10. Notice to Sierra Services.
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;
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(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 0000 Xxx) of the Trust; and
(2) a vote of a majority of the Trustees who are not
"interested persons" (as defined in the 0000 Xxx) 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. Sierra 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 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.
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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/ F. Xxxxx Xxxxxx
-------------------------
Title: President
ACCEPTED:
Sierra Investment Services Corporation
By /s/ Xxxxx X. Xxxxx
----------------------------------------
Title: Senior Vice President and Secretary
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