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EXHIBIT (C)(6)
INVESTMENT SUB-ADVISORY AGREEMENT
Effective as of March __, 1998
Xxx Xxxxxx American Capital Management Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
WM Investment Advisors, Inc., f/k/a Composite Research & Management Co.
(the "Advisor"), a corporation organized under the laws of the State of
Washington, hereby agrees with Xxx Xxxxxx American Capital Management Inc. (the
"Sub-Advisor"), a corporation organized under the laws of the State of Delaware,
as follows:
1. Investment Description; Appointment
The Advisor desires to employ the capital of the WM Prime Income Fund,
formerly known as the Sierra Prime Income Fund (the "Trust") by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Agreement and Declaration of Trust, as amended ("Declaration of
Trust"), and in its Prospectus and Statement of Additional Information relating
to the Trust as in effect and which may be amended from time to time, and in
such manner and to such extent as may from time to time be approved by the Board
of Trustees of the Trust. Copies of the Trust's Prospectus and Statement of
Additional Information and the Trust's Declaration of Trust, as amended or
restated, have been or will be submitted to the Sub-Advisor. The Trust agrees to
provide copies of all amendments to or restatements of the Trust's Prospectus
and Statement of Additional Information and the Trust's Declaration of Trust to
the Sub-Advisor on a timely and on-going basis but in all events prior to such
time as said amendments or restatements become effective. The Sub- Advisor will
be entitled to rely on all such documents furnished to it by the Trust or the
Advisor. The Trust desires to employ and hereby appoints the Sub-Advisor to act
as investment sub-advisor to the Trust. The Sub-Advisor accepts the appointment
and agrees to furnish the services described herein for the compensation set
forth below.
2. Services as Investment Sub-Advisor
Subject to the supervision of the Board of Trustees of the Trust and of
the Advisor, the Sub-Advisor will (a) act in conformity with the Trust's
Declaration of Trust, the Investment Company Act of 1940 (the "1940 Act"), the
Investment Advisers Act of 1940 and
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the Internal Revenue Code of 1986, as the same may from time to time be amended;
(b) make investment decisions for the Trust in accordance with the Trust's
investment objectives and policies as stated in the Trust's Prospectus(es) and
Statement of Additional Information as in effect and, after timely notice to the
Sub-Advisor, which may be amended from time to time; (c) place purchase and sale
orders on behalf of the Trust to effectuate the investment decisions made; (d)
maintain books and records with respect to the securities transactions of the
Trust and will furnish the Trust's Board of Trustees such periodic, regular and
special reports as the Board may reasonably request; and (e) treat
confidentially and as proprietary information of the Trust, all records and
other information specifically relative to the Trust and prior, present or
potential shareholders; and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld or delayed and such records may not
be withheld where the Sub-Advisor is subject to audit by the U.S. Securities and
Exchange Commission or other regulatory, administrative or judicial proceeding
or audit or where the Sub-Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust. In providing
those services, the Sub-Advisor will supervise the Trust's investments and
conduct a continual program of investment, evaluation and, if appropriate, sale
and reinvestment of the Trust's assets. In addition, the Sub-Advisor will
furnish the Trust or the Advisorwith whatever statistical information the Trust
or the Advisor may reasonably request with respect to the instruments that the
Trust may hold or contemplate purchasing.
3. Brokerage
In executing transactions for the Trust and selecting banks, syndicated
loan agents, brokers or dealers (hereinafter referred to as "brokers or
dealers"), the Sub-Advisor will use its best efforts to seek the best overall
terms available and shall execute or direct the execution of all such
transactions in a manner permitted by law and in a manner that is in the best
interest of the Trust and its shareholders. In assessing the best overall terms
available for any Trust transaction, with respect to the lenders from whom the
Trust will purchase assignments and participations in Senior Loans the
Sub-Advisor will consider all factors it deems relevant including, but not
limited to their professional ability, level of service, relationship with the
borrower, financial condition, credit standards and quality of management. With
respect to investments other than Senior Loans, the Sub-Advisor will consider
all factors it deems relevant including, but not limited to, breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. Pursuant to
its investment determinations for the Trust, in placing orders with brokers or
dealers, the Sub-Advisor will attempt to obtain the best net price and the most
favorable execution of its orders. Consistent with this obligation, when the
execution and price offered by two or more brokers or dealers are comparable,
the Sub-Advisor may, in its
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discretion, purchase and sell portfolio securities to and from brokers or
dealers who provide the Trust with research advice and other services.
4. Information Provided to the Trust
The Sub-Advisor will keep the Trust and the Advisor informed of
developments materially affecting the Trust, and will on its own initiative,
furnish the Trust and the Advisor on at least a quarterly basis with whatever
information the Sub-Advisor reasonably believes is appropriate for this purpose.
5. Standard of Care
The Sub-Advisor shall exercise its reasonable best judgment in rendering
the services described in Paragraphs 2 and 3 above. The Sub-Advisor shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust or the Advisor in connection with the matters to which this Agreement
relates, except (a) a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 0000 Xxx) or (b) a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement
(each such breach, act or omission described in (a) or (b) shall be referred to
as "Disqualifying Conduct").
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Advisor will pay the Sub-Advisor on the first business day of each month a
fee for the previous month at an annual rate of .475% of the Trust's average
daily net assets. The Sub-Advisor shall have no right to obtain compensation
directly from the Trust for services provided hereunder and agrees to look
solely to the Advisor for payment of fees due. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Sub-Advisor, the
value of the Trust's net assets shall be computed at the times and in the manner
specified in the Trust's Prospectus and/or Statement of Additional Information
relating to the Trust as from time to time in effect.
7. Expenses
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The Sub-Advisor will bear all expenses in connection with the
performance of its services under this Agreement, which expenses shall not
include brokerage fees or commissions in connection with the effectuation of
securities transactions. The Trust (or the Advisor) will bear certain other
expenses to be incurred in its operation, including but not limited to:
organizational expenses, taxes, interest, brokerage fees and commissions, if
any; fees of Trustees of the Trust who are not officers, directors or employees
of the Sub-Advisor, the Advisor, the Trust's sub-administrator or any of their
affiliates; Securities and Exchange Commission fees and state Blue Sky
qualification fees; out-of-pocket expenses of custodians, transfer and dividend
disbursing agents and the Trust's sub-administrator and transaction charges of
custodians; insurance premiums; outside auditing and legal expenses; costs of
maintenance of the Trust's existence; costs attributable to investor services,
including without limitation, telephone and personnel expenses; costs of
preparing and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Trust and of the
officers or Board of Trustees of the Trust; and any extraordinary expenses.
8. Services to Other Companies or Accounts
The Trust understands that the Sub-Advisor now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts and as investment advisor or investment Sub-Advisor to one or
more other investment companies or series of investment companies, and the
Advisor has no objection to the Sub-Advisor so acting, provided that whenever
the Trust and one or more other accounts or investment companies advised by the
Sub-Advisor have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with procedures believed to
be equitable to each entity. Similarly, opportunities to sell securities will be
allocated in an equitable manner. The Advisor recognizes that in some cases this
procedure may limit the size of the position that may be acquired or disposed of
for the Trust. In addition, the Advisor understands that the persons employed by
the Sub-Advisor to assist in the performance of the Sub-Advisor's duties
hereunder will not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict the right of the Sub-Advisor or any
affiliate of the Sub-Advisor to engage in and devote time and attention to other
business or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date first written
above, shall continue in effect for a period of two years thereafter, and shall
continue in effect for a period of more than two years thereafter only so long
as such continuance is specifically approved at least annually by (a) the Board
of Trustees of the Trust or (b) a vote of a "majority" (as defined in the 0000
Xxx) of the Trust's outstanding voting securities, provided that in either
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event the continuance is also approved by a majority of the Board of Trustees
who are not "interested persons" (as defined in the 0000 Xxx) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, without penalty, on 30
days' written notice, by the Advisor, the Board of Trustees of the Trust or by
vote of holders of a majority of the Trust's shares, or upon 90 days' written
notice, by the Sub-Advisor and, will terminate automatically upon any
termination of the advisory agreement between the Trust and the Advisor. In
addition, this Agreement will also terminate automatically in the event of its
assignment (as defined in said Act). The Sub- Advisor agrees to notify the Trust
of any circumstances that might result in this Agreement being deemed to be
assigned.
10. Representations of the Trust and the Sub-Advisor
The Trust represents that (a) a copy of its Agreement and Declaration of
Trust, dated October 4, 1995, and Amended Agreement and Declaration of Trust
dated January 18, 1996, together with all amendments thereto, is on file in the
office of the Secretary of the Commonwealth of Massachusetts, (b) the
appointment of the Advisor has been duly authorized, (c) the appointment of the
Sub-Advisor has been duly authorized, and (d) it has acted and will continue to
act in conformity with the 1940 Act, and other applicable laws.
The Sub-Advisor represents that it is authorized to perform the services
described herein.
11. Indemnification
The Advisor shall indemnify and hold harmless the Sub-Advisor, its
officers, directors, employee control persons and affiliated persons (as defined
in the Investment Company Act of 1940, as amended) from and against any and all
claims, losses, liabilities or damages (including reasonable attorneys' fees and
other related expenses), arising from or in connection with this Agreement or
the performance by the Sub-Advisor of its duties hereunder; provided, however,
that nothing contained herein shall require that the Sub-Advisor be indemnified
for Disqualifying Conduct.
12. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought.
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13. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
14. Governing Law
This Agreement shall be governed in accordance with the laws of The
Commonwealth of Massachusetts.
15. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall together,
constitute only one instrument.
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
WM INVESTMENT ADVISORS, INC.
Dated: ___________________ By _____________________________
Name:
Title:
Accepted:
XXX XXXXXX AMERICAN CAPITAL MANAGEMENT INC.
By _________________________ Dated: _____________________
Name:
Title:
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