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EXHIBIT (C)(5)
WM PRIME INCOME FUND
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated March __,
1998, between the WM Prime Income Fund, formerly known as the Sierra Prime
Income Fund, a Massachusetts business trust, (the "Fund"), and WM Investment
Advisors, Inc., formerly known as Composite Research & Management Co., a
Washington corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Fund is a closed-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Fund desires to retain the Manager to render investment
management services to the Fund, and the Manager is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
1. Appointment. The Fund hereby appoints the Manager to act as investment
manager to the Fund for the period and on the terms set forth in this Agreement.
The Manager accepts such appointment and agrees to render the services herein
described, for the compensation herein provided.
2. Management. Subject to the supervision of the Board of Trustees of the Fund,
the Manager shall manage the investment operations of the Fund and the
composition of the Fund's portfolio, including the purchase, retention and
disposition of securities therefor, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus and Statement
of Additional Information (as such terms are hereinafter defined) and
resolutions of the Fund's Board of Trustees and subject to the following
understandings:
(a) The Manager shall provide supervision of the Fund's investments,
furnish a continuous investment program for the Fund's portfolio and
determine from time to time what securities will be purchased,
retained, or sold by the Fund, and what portion of the assets will be
invested or held as cash.
(b) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Agreement and
Declaration of Trust of the Fund and the investment policies of the
Fund as determined by the Board of Trustees of the Fund.
(c) The Manager shall determine the securities to be purchased or
sold by the Fund and shall place orders for the purchase and sale of
portfolio securities pursuant to its determinations with brokers or
dealers selected by the Manager. In executing portfolio
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transactions and selecting brokers or dealers, the Manager shall use
its best efforts to seek on behalf of the Fund the best overall terms
available. In assessing the best overall terms available for any
transaction, the Manager may consider all factors it deems relevant,
including the breadth of the market in the security, the price of the
security, the size of the transaction, the timing of the transaction,
the reputation, financial condition, experience, and execution
capability of a broker or dealer, the amount of commission, and the
value of any brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) provided by a broker or dealer. The Manager is authorized to
pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Fund which is in excess of the amount of commission another broker or
dealer would have charged for effecting the transaction if the
Manager determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of that particular
transaction or in terms of the overall responsibilities of the
Manager to the Fund and/or other accounts over which the Manager
exercises investment discretion.
(d) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Fund as well as other
fiduciary accounts for which it has investment responsibility, the
Manager, to the extent permitted by applicable laws and regulations,
may aggregate the securities to be so sold or purchased in order to
obtain the best execution, most favorable net price or lower
brokerage commissions.
(e) Subject to the provisions of the Agreement and Declaration of
Trust of the Fund and the Investment Company Act of 1940, as amended
(the "1940 Act"), the Manager, at its expense, may select and
contract with one or more investment advisers (the "Sub- adviser")
for the Fund to perform some or all of the services for which it is
responsible pursuant to this Section 2. The Manager shall be solely
responsible for the compensation of any Sub-adviser of the Fund for
its services to the Fund. The Manager may terminate the services of
any Sub-adviser at any time in its sole discretion, and shall at such
time assume the responsibilities of such Sub-adviser unless and until
a successor Sub-adviser is selected. To the extent that more than one
Sub- adviser is selected, the Manager shall, in its sole discretion,
determine the amount of the Fund's assets allocated to each such
Sub-adviser.
3. Services Not Exclusive. The investment management services rendered by the
Manager hereunder to the Fund are not to be deemed exclusive, and the Manager
shall have the right to render similar services to others, including, without
limitation, other investment companies.
4. Expenses. During the term of this Agreement, the Manager shall pay all
expenses incurred by it in connection with its activities under this Agreement
including the salaries and expenses of any of the officers or employees of the
Manager who act as officers, Trustees or employees of the Fund but excluding the
cost of securities purchased for the Fund and the amount of any brokerage fees
and commissions incurred in executing portfolio transactions for
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the Fund, and shall provide the Fund with suitable office space. Other expenses
to be incurred in the operation of the Fund (other than those borne by any third
party), including without limitation, taxes, interest, brokerage fees and
commissions, fees of Trustees who are not officers, directors, or employees of
the Manager, federal registration fees and state Blue Sky qualification fees,
administration fees, bookkeeping, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of maintaining the Fund's existence,
costs of independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
preparing, printing and distributing prospectuses to existing shareholders,
costs of stockholders' reports and meetings of shareholders and Trustees of the
Fund, as applicable, and any extraordinary expenses will be borne by the Fund.
5. Compensation. For the services provided pursuant to this Agreement, the Fund
shall pay to the Manager as full compensation therefor a monthly fee computed on
the average daily net assets of the Fund as stated in Schedule A attached
hereto. The Fund acknowledges that the Manager, as agent for the Fund, will
allocate a portion of the fee equal to the sub-advisory fee payable to the
sub-advisor, if any, under its sub-advisory agreement to the sub-advisor for
sub-advisory services. The Fund acknowledges that the Manager, as agent for the
Fund, may allocate a portion of the fee to Xxxxxxx Xxxxx Securities Services,
Inc. for administrative services, portfolio accounting and regulatory compliance
systems. The Manager also from time to time and in such amounts as it shall
determine in its sole discretion may allocate a portion of the fee to WM Funds
Distributor, Inc., f/k/a Composite Funds Distributor, Inc. for facilitating
distribution of the Fund. This payment would be made from revenue which
otherwise would be considered profit to the Manager for its services. This
disclosure is being made to the Fund solely for the purpose of conforming with
requirements of the Washington Department of Revenue for exclusion of revenue
from the Washington Business and Occupation Tax.
6. Limitation of Liability. The Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except 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.
7. Delivery of Documents. The Fund has heretofore delivered to the Manager true
and complete copies of each of the following documents and shall promptly
deliver to it all future amendments and supplements thereto, if any:
(a) Agreement and Declaration of Trust (presently in effect and as
amended from time to time);
(b) Bylaws of the Fund;
(c) Registration Statement under the Securities Act of 1933 and under
the 1940 Act of the Fund on Form N-2, and all amendments thereto, as
filed with the Securities and
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Exchange Commission (the "Registration Statement") relating to the Fund
and the shares of the Fund;
(d) Notification of Registration of the Fund under the 1940 Act on Form
N-8A;
(e) Prospectuses of the Fund (such prospectuses as presently in effect
and/or as amended or supplemented from time to time, the "Prospectus");
and
(f) Statement of Additional Information of the Fund (such statement as
presently in effect and/or as amended or supplemented from time to time,
the "Statement of Additional Information").
8. Duration and Termination. This Agreement shall become effective as of the
date first above-written for an initial period of two years and shall continue
thereafter so long as such continuance is specifically approved at least
annually (a) by the vote of the Board of Trustees including a majority of those
members of the Fund's Board of Trustees who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting called for
that purpose, or by vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, (a) this Agreement may be terminated at
any time, without the payment of any penalty, by either the Fund (by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund) or the Manager, on sixty (60) days prior written notice
to the other and (b) shall automatically terminate in the event of its
assignment. As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the
meanings assigned to such terms in the 1940 Act.
9. Amendments. No provision of this Agreement may be amended, modified, waived
or supplemented except by a written instrument signed by the party against which
enforcement is sought. No amendment of this Agreement shall be effective until
approved in accordance with any applicable provisions of the 1940 Act.
10. Use of Name and Logo. The Fund agrees that it shall furnish to the Manager,
prior to any use or distribution thereof, copies of all prospectuses, statements
of additional information, proxy statements, reports to stockholders, sales
literature, advertisements, and other material prepared for distribution to
stockholders of the Fund or to the public, which in any way refer to or describe
the Manager or which include any trade names, trademarks or logos of the Manager
or of any affiliate of the Manager. The Fund further agrees that it shall not
use or distribute any such material if the Manager reasonably objects in writing
to such use or distribution within five (5) business days after the date such
material is furnished to the Manager.
The Manager and/or its affiliates own the names "Sierra,"
"Composite," "WM" and any other names which may be listed from time to time on a
Schedule B to be attached hereto that they may develop for use in connection
with the Fund, which names may be used by the Fund only with the consent of the
Manager and/or its affiliates. The Manager, on behalf of
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itself and/or its affiliates, consents to the use by the Fund of such names or
any other names embodying such names, but only on condition and so long as (i)
this Agreement shall remain in full force, (ii) the Fund shall fully perform,
fulfill and comply with all provisions of this Agreement expressed herein to be
performed, fulfilled or complied with by it, and (iii) the Manager is the
manager of the Fund. No such name shall be used by the Fund at any time or in
any place or for any purposes or under any conditions except as provided in this
section. The foregoing authorization by the Manager, on behalf of itself and/or
its affiliates, to the Fund to use such names as part of a business or name is
not exclusive of the right of the Manager and/or its affiliates themselves to
use, or to authorize others to use, the same; the Fund acknowledges and agrees
that as between the Manager and/or its affiliates and the Fund, the Manager
and/or its affiliates have the exclusive right so to use, or authorize others to
use, such names, and the Fund agrees to take such action as may reasonably be
requested by the Manager, on behalf of itself and/or its affiliates, to give
full effect to the provisions of this section (including, without limitation,
consenting to such use of such names). Without limiting the generality of the
foregoing, the Fund agrees that, upon (i) any violation of the provisions of
this Agreement by the Fund or (ii) any termination of this Agreement, by either
party or otherwise, the Fund will, at the request of the Manager, on behalf of
itself and/or its affiliates, made within six months after such violation or
termination, use its best efforts to change the name of the Fund so as to
eliminate all reference, if any, to such names and will not thereafter transact
any business in a name containing such names in any form or combination
whatsoever, or designate itself as the same entity as or successor to an entity
of such names, or otherwise use such names or any other reference to the Manager
and/or its affiliates, except as may be required by law. Such covenants on the
part of the Fund shall be binding upon it, its Trustees, officers, shareholders,
creditors and all other persons claiming under or through it.
The provisions of this section shall survive termination of this
Agreement.
11. Notices. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, if to the Fund: 000 X. Xxxx Xxx., Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000; or if to the Manager: 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxx 00000; or to either party at such other address as such party shall
designate to the other by a notice given in accordance with the provisions of
this section.
12. Miscellaneous.
(a) Except as otherwise expressly provided herein or
authorized by the Board of Trustees of the Fund from time to time,
the Manager for all purposes herein shall be deemed to be an
independent contractor and shall have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the
Fund.
(b) The Fund shall furnish or otherwise make available to
the Manager such information relating to the business affairs of the
Fund as the Manager at any time or from time to time reasonably
requests in order to discharge its obligations hereunder.
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(c) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts and
shall inure to the benefit of the parties hereto and their respective
successors.
(d) If any provision of this Agreement shall be held or
made invalid or by any court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
13. Declaration of Trust and Limitation of Liability. A copy of the Agreement
and Declaration of Trust of the Fund 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 Fund on behalf of the Trustees of the
Fund, as trustees and not individually, on further behalf of the Fund, and that
the obligations of this Agreement shall be binding upon the assets and
properties of the Fund only and shall not be binding upon the assets and
properties of the Trustees, officers, employees, agents or shareholders of the
Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the date first
above-written.
WM PRIME INCOME FUND
By: __________________________________
Name:
Title:
Attest:
By: ___________________________________
Name:
Title:
WM INVESTMENT ADVISORS, INC.
By: ___________________________________
Xxxxxxx X. Xxxxxx
President
Attest:
By: ___________________________________
Xxxxxx X. Xxxxxxx
Secretary
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SCHEDULE A
WM INVESTMENT ADVISORS, INC.
ADVISORY FEES
The fees to be charged to WM Prime Income Fund for advisory services (including
any sub- advisory fees) are as follows:
All Assets
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WM Prime Income Fund ................................................ 0.950%
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