1
EXHIBIT (k(1))
ADMINISTRATION AGREEMENT
Agreement made as of September 27, 1989, between VAN XXXXXX XXXXXXX
PRIME RATE INCOME TRUST, a Massachusetts business trust (the "Fund"), and
VAN XXXXXX XXXXXXX INC., a Delaware corporation (the "Administrator").
WHEREAS, the Fund intends to operate as a closed-end management
investment company, and is so registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Fund wishes to retain the Administrator to provide certain
administrative services to the Fund, under the terms and conditions stated
below, and the Administrator is willing to provide such services for the
compensation set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties agree as follows:
1. Appointment. The Fund hereby appoints the Administrator to administer the
Fund, and the Administrator accepts such appointment and agrees that it will
furnish the services set forth in paragraph 2 below.
2. Services and Duties of the Administrator. Subject to the supervision of
the Fund's Board of Trustees ("Board"), the Administrator will:
(a) Monitor the provisions of the loan agreements and any agreements
with respect to participations and assignments and be responsible for
recordkeeping with respect to senior loans in the Fund's portfolio;
(b) Prepare all reports required to be sent to Fund shareholders, and
arrange for the printing and dissemination of such reports to
shareholders;
(c) Arrange for the dissemination to shareholders of the Fund's proxy
materials and oversee the tabulation of proxies by the Fund's
transfer agent;
(d) Negotiate the terms and conditions under which custodian services
will be provided to the Fund
2
and the fees to be paid by the Fund to its custodian (which may or may
not be an affiliate of the Fund's investment adviser), in connection
therewith;
(e) Negotiate the terms and conditions under which dividend disbursing
services will be provided to the Fund, and the fees to be paid by the
Fund in connection therewith; review the provision of dividend
disbursing services to the Fund;
(f) Determine the amounts available for distribution as dividends and
distributions to be paid by the Fund to its shareholders; prepare and
arrange for the printing of dividend notices to shareholders; and
provide the Fund's dividend disbursing agent and custodian with such
information as is required for such parties to effect the payment of
dividends and distributions and to implement the Fund's dividend
reinvestment plan;
(g) Make such reports and recommendations to the Board as the Board
reasonably requests or deems appropriate; and
(h) Provide shareholder services to holders or potential holders of the
Fund's securities including but not limited to responding to
shareholder requests for information.
3. Public Inquiries. The Fund and the Administrator agree that the
Administrator will not be responsible for replying to questions or requests for
information concerning the Fund from shareholders, brokers or the public. The
Fund will inform the Administrator of the party or parties to whom any such
questions or requests should be directed, and the Administrator will refer such
questions and requests to such party or parties.
4. Compliance with the Fund's Governing Documents and Applicable Law. In all
matters relating to the performance of this Agreement, the Administrator will
act in conformity with the Declaration of Trust, By-Laws and registration
statement of the Fund and with the directions of the Board and Fund executive
officers and will conform to and comply with the requirements of the 1940
2
3
Act and all other applicable federal or state laws and regulations.
5. Services Not Exclusive. The Administrator's services hereunder are not
deemed to be exclusive, and the Administrator is free to render administrative
or other services to other funds or clients so long as the Administrator's
services under this Agreement are not impaired thereby.
6. Compensation. For the services provided and expenses assumed by the
Administrator under this Agreement, the Fund will pay the Administrator a fee,
accrued daily and paid monthly, at the annualized rate of .25% of the Fund's
average weekly managed assets (which, for the purposes of determining such fee,
shall mean the average weekly value of the total assets of the Fund, minus the
sum of the accrued liabilities of the Fund other than the aggregate amount of
any borrowings undertaken by the Fund).
7. Limitation of Liability of the Administrator. The Administrator will not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Fund or its shareholders in connection with the performance of its duties
under this Agreement, 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 duties under this Agreement.
8. Limitation of Liability of the Trustees and Shareholders of the Fund.
Pursuant to the provisions of Article V, Section 5.5 of the Declaration of
Trust as amended or restated as of the date hereof, this Agreement is entered
into by the Board not individually, but as trustees under such Declaration of
Trust and the obligations of the Fund hereunder are not binding upon any such
trustees or shareholders of the Fund, but bind only the trust estate.
9. Duration and Termination. This Agreement will become effective upon the
date hereabove written and shall continue in effect thereafter until terminated
without penalty by the Administrator or the Fund upon 30 days' written notice
to the other and shall automatically terminate in the event of its assignment
as that term is defined in the 1940 Act.
3
4
10. 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.
11. Governing Law. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts and the 1940 Act. To the extent that
the applicable laws of the Commonwealth of Massachusetts conflict with the
applicable provisions of the 1940 Act, the latter shall control.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Attest: VAN XXXXXX XXXXXXX
PRIME RATE INCOME TRUST
/s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxx III
--------------------------------- -----------------------------
Xxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxx III,
Assistant Secretary Vice President & Treasurer
Attest: VAN XXXXXX XXXXXXX INC.
/s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------- -----------------------------
Xxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxxxx,
Assistant Secretary President
4
