1
EXHIBIT (c)(2)
ADMINISTRATION AGREEMENT
Agreement made as of Sept. 27, 1989, between
VAN XXXXXX XXXXXXX PRIME RATE INCOME TRUST, a Massachu-
setts 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 reg-
istered under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Fund wishes to retain the Adminis-
trator 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 prem-
ises and mutual covenants contained herein, the parties
agree as follows:
1. Appointment. The Fund hereby appoints the Adminis-
trator 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 participa-
tions 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 connec-
tion 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 provi-
sion of dividend disbursing services to the
Fund;
(f) Determine the amounts available for distribu-
tion 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 infor-
mation as is required for such parties to ef-
fect the payment of dividends and distributions
and to implement the Fund's dividend reinvest-
ment 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 con-
cerning the Fund from shareholders, brokers or the pub-
lic. 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 ques-
tions and requests to such party or parties.
4. Compliance with the Fund's Governing Documents and
Applicable Law. In all matters relating to the perfor-
xxxxx 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 direc-
tions 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 Admin-
istrator is free to render administrative or other ser-
vices to other funds or clients so long as the Adminis-
trator'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 judg-
ment or mistake of law or for any loss suffered by the
Fund or its shareholders in connection with the perfor-
xxxxx 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 Share-
holders of the Fund. Pursuant to the provisions of Arti-
cle 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 trust-
ees 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 con-
tinue in effect thereafter until terminated without pen-
alty by the Administrator or the Fund upon 30 days' writ-
ten 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 terminat-
ed orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiv-
er, discharge or termination is sought.
11. Governing Law. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachu-
setts and the 1940 Act. To the extent that the applica-
ble laws of the Commonwealth of Massachusetts conflict
with the applicable provisions of the 1940 Act, the lat-
ter 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 other-
wise affect their construction or effect. If any provi-
sion 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 writ-
ten.
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, President
Assistant Secretary
