1
EXHIBIT (C)(7)
WM PRIME INCOME FUND
ADMINISTRATION AGREEMENT
March __, 1998
WM Shareholder Services, Inc.
000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
The WM Prime Income Fund, formerly known as the Sierra Prime Income
Fund (the "Trust"), an unincorporated business trust organized under the laws of
the Commonwealth of Massachusetts, confirms its agreements with WM Shareholder
Services, Inc. f/k/a Xxxxxxx Xxxxx Securities Services, Inc. ("WMSS"), a
corporation organized under the laws of the state of Washington, regarding
administrative services to be provided by WMSS in connection with the Trust.
WMSS agrees to provide services upon the following terms and conditions:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
(a) in investments of the kind, and in accordance with the limitations,
specified in (i) the Agreement and Declaration of Trust dated October 4, 1995
and the Amended Agreement and Declaration of Trust dated January 18, 1996, as
amended from time to time (the "Declaration of Trust"), and (ii) the prospectus
(the "Prospectus") and statement of additional information (the "Statement")
relating to the Trust contained in the Registration statement on Form N-2, File
No. 33-98824, filed with the Securities and Exchange Commission (the
"Registration Statement") and (b) in such manner and to such extent as may from
time to time be approved by the Trust's Board of Trustees. Copies of the
Prospectus, the Statement and the Declaration of Trust have been submitted to
WMSS. The Trust desires to employ and hereby appoints WMSS to act as its
administrator. WMSS accepts this appointment and agrees to furnish the services
described herein for the compensation set forth below.
2. Services as Administrator
Subject to the supervision and direction of the Board of Trustees,
WMSS is responsible for all administrative functions with respect to the Trust
and will (a) assist in supervising all aspects of the operations of the Trust
except those performed by the investment advisor and sub-advisors under their
respective investment management and sub-advisory agreements; (b)
2
supply the Trust with office facilities which may be in WMSS's own offices,
statistical and research data, data processing services, clerical, accounting
and bookkeeping services (including, but not limited to, the calculation of the
no asset value of shares of the Trust), internal auditing and legal services,
internal executive and administrative services, and stationery and office
supplies; (c) prepare reports to the Trust's shareholders and materials for the
Board of Trustees; (d) prepare tax returns; (e) prepare reports to and filings
with the Securities and Exchange Commission and state regulatory authorities;
(f) cooperate with the Trust's transfer agent for the purpose of establishing
and implementing procedures to ensure that the Trust's transfer agency and
shareholder relations functions are efficiently carried out; and (g) provide
such other similar services as the Trust may reasonably request to the extent
permitted under application statutes, rules and regulations. The services to be
performed by WMSS hereunder may be delegated by it, in whole or in part, to one
or more sub-administrators provided that any delegation of duties to a
sub-administrator shall not relieve WMSS of its responsibilities hereunder.
Notwithstanding anything to the contrary in this Agreement, WMSS shall not be
responsible for the performance of any duties which are required to be performed
by the Trust's transfer agent.
3. Compensation
a. In consideration of services rendered pursuant to this Agreement,
the Trust will pay WMSS on the first business day of each month a fee for the
previous month at an annual rate of 0.25% of the Trust's average daily net
assets, out of which fee WMSS shall pay expenses as described in Section 4.
b. Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be prorated according to the
proportion which 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 WMSS, the value of the Trust's net assets shall be
computed at the times and in the manner specified in the Prospectus and/or the
Statement of Additional Information as from time to time in effect.
4. Expenses
WMSS will bear all expenses in connection with the performance of its
services under this Agreement, including, without limitation, payment of the fee
to the custodian and any sub-administrator described in Paragraph 2 above. The
Trust will bear certain other expenses to be incurred in its operation,
including: organizational expenses; taxes, interest, brokerage fees and
commissions, if any; fees of trustees of the Trust who are not officers,
directors, or employees of WM Investment Advisors, Inc., the Trust's
sub-administrator or any of their affiliates; federal regulatory fees and state
Blue Sky qualification fees; fees and out-of-pocket expenses of custodians and
the Trust's sub-administrator; 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
2
3
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.
5. Standard of Care
WMSS shall exercise its best judgment in rendering the services
listed in Paragraph 2 above. WMSS shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust 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.
6. Term of Agreement
This Agreement shall become effective as of the execution date and
shall continue for an initial two-year term and shall continue automatically
from year-to-year thereafter unless terminated in accordance with the following
sentence. This Agreement is terminable at any time, without penalty, on 60 days'
written notice, by the Board of Trustees of the Trust or upon 90 days' written
notice, by WMSS.
7. Service to Other Companies or Accounts
The Trust understands that WMSS may act in the future as
administrator to other investment companies or series of investment companies,
and the Trust has no objection to WMSS's so acting. The Trust understands that
the persons employed by WMSS to assist in the performance of WMSS's duties under
this Agreement will not devote their full time to such services and nothing
contained in this Agreement shall be deemed to limit or restrict the right of
WMSS or any affiliate of WMSS to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
8. Representations of the Trust and WMSS
The Trust represents that (a) a copy of the Declaration of Trust is
on file in the office of the Secretary of the Commonwealth of Massachusetts, (b)
the appointment of WMSS has been duly authorized and (c) it has acted and will
continue to act in conformity with the 1940 Act and other applicable laws. WMSS
represents that it is authorized to perform the services described herein.
3
4
9. Limitation of Liability
This Agreement has been executed on behalf of the Trust by the
undersigned officer of the Trust in his capacity as an officer of the Trust. The
obligations of this Agreement shall be binding only upon the assets and property
of the Trust and shall not be binding upon any Trustee, officer, or Trustee,
officer, or shareholder of the Trust individually.
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
11. Governing Law
This Agreement shall be governed in accordance with the laws of the
Commonwealth of Massachusetts.
12. Counterparts
This Agreement may be executed in any number of counterpart, 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 PRIME INCOME FUND
By: ________________________
President
Accepted:
WM SECURITIES SERVICES, INC.
By: ________________________
First Vice President
4
