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EXHIBIT (C)(3)
ADMINISTRATION AGREEMENT
July 1, 1996
Sierra Fund Administration Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 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 Sierra Fund Administration Corporation ("Sierra
Administration"), a corporation organized under the laws of the state of
California, regarding administrative services to be provided by Sierra
Administration in connection with the Trust. Sierra Administration 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 Sierra Administration. The Trust
desires to employ and hereby appoints Sierra Administration to act as its
administrator. Sierra Administration 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,
Sierra Administration 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 Sierra
Administration's own offices, statistical and research data, data processing
services, clerical, accounting and bookkeeping services (including, but not
limited to, the calculation of the net 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 Sierra Administration hereunder may
be delegated by it, in whole or in part, to a sub-administrator provided that
any delegation of duties to the sub-administrator shall not relieve Sierra
Administration of its responsibilities hereunder. Notwithstanding anything to
the contrary in this Agreement, Sierra Administration 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 Sierra Administration 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 Sierra Administration shall pay expenses as
described in Section 5 including, without limitation, fees of any
sub-administrator engaged by Sierra Administration and the base fees and charges
(but not transaction-based fees and out-of-pocket expenses) of the Trust's
custodian. The fee for the period from the date the Trust commences operations
to the end of that month shall be prorated according to the proportion such
period bears to the full monthly period.
(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 Sierra Administration, 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
Sierra Administration 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 4 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 Sierra Investment Advisors Corporation, the
Trust's sub-adviser or sub-administrator or any of their affiliates; Securities
and Exchange Commission fees and state Blue Sky qualification fees;
out-of-pocket expenses of custodians and the Trust's sub-administrator or
sub-transfer agent 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.
5. Standard of Care
Sierra Administration shall exercise its best judgment in rendering the
services listed in Paragraph 2 above. Sierra Administration 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 date the Trust
commences its investment operations 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 Sierra
Administration.
7. Service to Other Companies or Accounts
The Trust understands that Sierra Administration may act in the future
as administrator to other investment companies or series of investment
companies, and the Trust has no objection to Sierra Administration's so acting.
The Trust understands that the persons employed by Sierra Administration to
assist in the performance of Sierra Administration'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 Sierra
Administration or any affiliate of Sierra Administration to engage in and devote
time and attention to other businesses or to render services of whatever kind or
nature.
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8. Representations of the Trust and Sierra Administration
The Trust represents that (i) a copy of the Declaration of Trust is on
file in the office of the Secretary of the Commonwealth of Massachusetts, (ii)
the appointment of Sierra Administration has been duly authorized and (iii) it
has acted and will continue to act in conformity with the 1940 Act and other
applicable laws. Sierra Administration represents that it is authorized to
perform the services described herein.
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 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 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,
SIERRA PRIME INCOME FUND
By /s/ F. Xxxxx Xxxxxx
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F. Xxxxx Xxxxxx
Chairman and President
Accepted:
SIERRA FUND ADMINISTRATION CORPORATION
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Chief Financial Officer,
Treasurer and Secretary
