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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.
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3. Compensation
(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.
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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.
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
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By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Chief Financial Officer, Treasurer and
Secretary
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