EXHIBIT (k)(1)
SIERRA PRIME INCOME FUND
ADMINISTRATION AGREEMENT
March __, 1998
Xxxxxxx Xxxxx Securities Services, Inc.
000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
The Sierra Prime Income Fund (the "Trust"), an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts, confirms
its agreements with Xxxxxxx Xxxxx Securities Services, Inc. ("Xxxxxxx Xxxxx"), a
corporation organized under the laws of the state of Washington, regarding
administrative services to be provided by Xxxxxxx Xxxxx in connection with the
Trust. Xxxxxxx Xxxxx agrees to provide services upon the following terms and
conditions:
1. Investment Description; Appointment
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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 Xxxxxxx Xxxxx. The Trust desires to
employ and hereby appoints Xxxxxxx Xxxxx to act as its administrator. Xxxxxxx
Xxxxx 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, Xxxxxxx
Xxxxx 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 adviser and sub-advisers under their
respective investment management and sub-advisory agreements; (b) supply the
Trust with office facilities which may be in Xxxxxxx Xxxxx'x 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 Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx of its responsibilities
hereunder. Notwithstanding anything to the contrary in this Agreement, Xxxxxxx
Xxxxx shall not be responsible for the performance of any duties which are
required to be performed by the Trust's transfer agent.
3. Compensation
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a. In consideration of services rendered pursuant to this Agreement, the
Trust will pay Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx shall pay expenses as described in
Section 5 including, without limitation, fees of any sub-administrator engaged
by Xxxxxxx Xxxxx and the base fees and charges (but not transaction-based fees
and out-of-pocket expenses) of the Trust's custodian.
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 Xxxxxxx Xxxxx, 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
--------
Xxxxxxx Xxxxx 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 Composite Research & Management Co., the Trust's sub-
administrator or any of their affiliates; federal regulatory fees and state Blue
Sky qualification fees; out-of-pocket expenses of custodians 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
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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.
5. Standard of Care
----------------
Xxxxxxx Xxxxx shall exercise its best judgment in rendering the services
listed in Paragraph 2 above. Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx.
7. Service to Other Companies or Accounts
--------------------------------------
The Trust understands that Xxxxxxx Xxxxx may act in the future as
administrator to other investment companies or series of investment companies,
and the Trust has no objection to Xxxxxxx Xxxxx'x so acting. The Trust
understands that the persons employed by Xxxxxxx Xxxxx to assist in the
performance of Xxxxxxx Xxxxx'x 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 Xxxxxxx Xxxxx or any affiliate of
Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx
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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 Xxxxxxx Xxxxx has been duly authorized and (c) it has acted and
will continue to act in conformity with the 1940 Act and other applicable laws.
Xxxxxxx Xxxxx represents that it is authorized to perform the services described
herein.
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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,
SIERRA PRIME INCOME FUND
By:
---------------------------------
President
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Accepted:
XXXXXXX XXXXX SECURITIES SERVICES, INC.
By:
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Executive Vice President
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