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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.
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
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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
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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