EXHIBIT (g)(1)
SIERRA PRIME INCOME FUND
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated March __, 1998,
between the Sierra Prime Income Fund, a Massachusetts business trust, (the
"Fund"), and Composite Research & Management Co., a Washington corporation (the
"Manager").
W I T N E S S E T H
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WHEREAS, the Fund is a closed-end management investment company, registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Manager to render investment
management services to the Fund, and the Manager is willing to render such
services;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Appointment. The Fund hereby appoints the Manager to act as investment
manager to the Fund for the period and on the terms set forth in this Agreement.
The Manager accepts such appointment and agrees to render the services herein
described, for the compensation herein provided.
2. Management. Subject to the supervision of the Board of Trustees of the
Fund, the Manager shall manage the investment operations of the Fund and the
composition of the Fund's portfolio, including the purchase, retention and
disposition of securities therefor, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus and Statement
of Additional Information (as such terms are hereinafter defined) and
resolutions of the Fund's Board of Trustees and subject to the following
understandings:
(a) The Manager shall provide supervision of the Fund's investments,
furnish a continuous investment program for the Fund's portfolio and
determine from time to time what securities will be purchased, retained, or
sold by the Fund, and what portion of the assets will be invested or held
as cash.
(b) The Manager, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Agreement and Declaration
of Trust of the Fund and the investment policies of the Fund as determined
by the Board of Trustees of the Fund.
(c) The Manager shall determine the securities to be purchased or sold by
the Fund and shall place orders for the purchase and sale of portfolio
securities pursuant to its determinations with brokers or dealers selected
by the Manager. In executing portfolio transactions and selecting brokers
or dealers, the Manager shall use its best efforts to seek on behalf of the
Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Manager may consider all
factors it deems relevant, including the breadth of the market in the
security, the price of the security, the size of the transaction, the
timing of the transaction, the reputation, financial condition, experience,
and execution capability of a broker or dealer, the amount of commission,
and the value of any brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) provided by a broker or dealer. The Manager is authorized to pay
to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting the transaction if the Manager determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed
in terms of that particular transaction or in terms of the overall
responsibilities of the Manager to the Fund and/or other accounts over
which the Manager exercises investment discretion.
(d) On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of the Fund as well as other fiduciary accounts
for which it has investment responsibility, the Manager, to the extent
permitted by applicable laws and regulations, may aggregate the securities
to be so sold or purchased in order to obtain the best execution, most
favorable net price or lower brokerage commissions.
(e) Subject to the provisions of the Agreement and Declaration of Trust of
the Fund and the Investment Company Act of 1940, as amended (the "1940
Act"), the Manager, at its expense, may select and contract with one or
more investment advisers (the "Sub-adviser") for the Fund to perform some
or all of the services for which it is responsible pursuant to this Section
2. The Manager shall be solely responsible for the compensation of any
Sub-adviser of the Fund for its services to the Fund. The Manager may
terminate the services of any Sub-adviser at any time in its sole
discretion, and shall at such time assume the responsibilities of such Sub-
adviser unless and until a successor Sub-adviser is selected. To the
extent that more than one Sub-adviser is selected, the Manager shall, in
its sole discretion, determine the amount of the Fund's assets allocated to
each such Sub-adviser.
3. Services Not Exclusive. The investment management services rendered by the
Manager hereunder to the Fund are not to be deemed exclusive, and the Manager
shall have the right to render similar services to others, including, without
limitation, other investment companies.
4. Expenses. During the term of this Agreement, the Manager shall pay all
expenses incurred by it in connection with its activities under this Agreement
including the salaries and expenses of any of the officers or employees of the
Manager who act as officers, Trustees or employees of the Fund but excluding the
cost of securities purchased for the Fund and the amount of any brokerage fees
and commissions incurred in executing portfolio transactions for the Fund, and
shall provide the Fund with suitable office space. Other expenses to be
incurred in the operation of the Fund (other than those borne by any third
party), including without
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limitation, taxes, interest, brokerage fees and commissions, fees of Trustees
who are not officers, directors, or employees of the Manager, federal
registration fees and state Blue Sky qualification fees, administration fees,
bookkeeping, charges of custodians, transfer and dividend disbursing agents'
fees, certain insurance premiums, industry association fees, outside auditing
and legal expenses, costs of maintaining the Fund's existence, costs of
independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
preparing, printing and distributing prospectuses to existing shareholders,
costs of stockholders' reports and meetings of shareholders and Trustees of the
Fund, as applicable, and any extraordinary expenses will be borne by the Fund.
5. Compensation. For the services provided pursuant to this Agreement, the
Fund shall pay to the Manager as full compensation therefor a monthly fee
computed on the average daily net assets of the Fund as stated in Schedule A
attached hereto. The Fund acknowledges that the Manager, as agent for the Fund,
will allocate a portion of the fee equal to the sub-advisory fee payable to the
sub-advisor, if any, under its sub-advisory agreement to the sub-advisor for
sub-advisory services. The Fund acknowledges that the Manager, as agent for the
Fund, may allocate a portion of the fee to Xxxxxxx Xxxxx Securities Services,
Inc. for administrative services, portfolio accounting and regulatory compliance
systems. The Manager also from time to time and in such amounts as it shall
determine in its sole discretion may allocate a portion of the fee to Composite
Funds Distributor, Inc. for facilitating distribution of the Fund. This payment
would be made from revenue which otherwise would be considered profit to the
Manager for its services. This disclosure is being made to the Fund solely for
the purpose of conforming with requirements of the Washington Department of
Revenue for exclusion of revenue from the Washington Business and Occupation
Tax.
6. Limitation of Liability. The Manager shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund 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.
7. Delivery of Documents. The Fund has heretofore delivered to the Manager
true and complete copies of each of the following documents and shall promptly
deliver to it all future amendments and supplements thereto, if any:
(a) Agreement and Declaration of Trust (presently in effect and as amended
from time to time);
(b) Bylaws of the Fund;
(c) Registration Statement under the Securities Act of 1933 and under the
1940 Act of the Fund on Form N-2, and all amendments thereto, as filed with
the Securities and Exchange Commission (the "Registration Statement")
relating to the Fund and the shares of the Fund;
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(d) Notification of Registration of the Fund under the 1940 Act on Form N-
8A;
(e) Prospectuses of the Fund (such prospectuses as presently in effect
and/or as amended or supplemented from time to time, the "Prospectus"); and
(f) Statement of Additional Information of the Fund (such statement as
presently in effect and/or as amended or supplemented from time to time,
the "Statement of Additional Information").
8. Duration and Termination. This Agreement shall become effective as of the
date first above-written for an initial period of two years and shall continue
thereafter so long as such continuance is specifically approved at least
annually (a) by the vote of the Board of Trustees including a majority of those
members of the Fund's Board of Trustees who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting called for
that purpose, or by vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, (a) this Agreement may be terminated at
any time, without the payment of any penalty, by either the Fund (by vote of the
Fund's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund) or the Manager, on sixty (60) days prior written notice
to the other and (b) shall automatically terminate in the event of its
assignment. As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the
meanings assigned to such terms in the 1940 Act.
9. Amendments. No provision of this Agreement may be amended, modified,
waived or supplemented except by a written instrument signed by the party
against which enforcement is sought. No amendment of this Agreement shall be
effective until approved in accordance with any applicable provisions of the
1940 Act.
10. Use of Name and Logo. The Fund agrees that it shall furnish to the
Manager, prior to any use or distribution thereof, copies of all prospectuses,
statements of additional information, proxy statements, reports to stockholders,
sales literature, advertisements, and other material prepared for distribution
to stockholders of the Fund or to the public, which in any way refer to or
describe the Manager or which include any trade names, trademarks or logos of
the Manager or of any affiliate of the Manager. The Fund further agrees that it
shall not use or distribute any such material if the Manager reasonably objects
in writing to such use or distribution within five (5) business days after the
date such material is furnished to the Manager.
The Manager and/or its affiliates own the names "Sierra," "Composite" and
any other names which may be listed from time to time on a Schedule B to be
attached hereto that they may develop for use in connection with the Fund, which
names may be used by the Fund only with the consent of the Manager and/or its
affiliates. The Manager, on behalf of itself and/or its affiliates, consents to
the use by the Fund of such names or any other names embodying such names, but
only on condition and so long as (i) this Agreement shall remain in full force,
(ii) the Fund shall fully perform, fulfill and comply with all provisions of
this Agreement
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expressed herein to be performed, fulfilled or complied with by it, and (iii)
the Manager is the manager of the Fund. No such name shall be used by the Fund
at any time or in any place or for any purposes or under any conditions except
as provided in this section. The foregoing authorization by the Manager, on
behalf of itself and/or its affiliates, to the Fund to use such names as part of
a business or name is not exclusive of the right of the Manager and/or its
affiliates themselves to use, or to authorize others to use, the same; the Fund
acknowledges and agrees that as between the Manager and/or its affiliates and
the Fund, the Manager and/or its affiliates have the exclusive right so to use,
or authorize others to use, such names, and the Fund agrees to take such action
as may reasonably be requested by the Manager, on behalf of itself and/or its
affiliates, to give full effect to the provisions of this section (including,
without limitation, consenting to such use of such names). Without limiting the
generality of the foregoing, the Fund agrees that, upon (i) any violation of the
provisions of this Agreement by the Fund or (ii) any termination of this
Agreement, by either party or otherwise, the Fund will, at the request of the
Manager, on behalf of itself and/or its affiliates, made within six months after
such violation or termination, use its best efforts to change the name of the
Fund so as to eliminate all reference, if any, to such names and will not
thereafter transact any business in a name containing such names in any form or
combination whatsoever, or designate itself as the same entity as or successor
to an entity of such names, or otherwise use such names or any other reference
to the Manager and/or its affiliates, except as may be required by law. Such
covenants on the part of the Fund shall be binding upon it, its Trustees,
officers, shareholders, creditors and all other persons claiming under or
through it.
The provisions of this section shall survive termination of this Agreement.
11. Notices. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, if to the Fund: 000 X. Xxxx Xxx., Xxxxx 000,
Xxxxxxx, Xxxxxxxxxx 00000; or if to the Manager: 0000 Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx 00000; or to either party at such other address as
such party shall designate to the other by a notice given in accordance with the
provisions of this section.
12. Miscellaneous.
(a) Except as otherwise expressly provided herein or authorized by the
Board of Trustees of the Fund from time to time, the Manager for all
purposes herein shall be deemed to be an independent contractor and shall
have no authority to act for or represent the Fund in any way or otherwise
be deemed an agent of the Fund.
(b) The Fund shall furnish or otherwise make available to the Manager
such information relating to the business affairs of the Fund as the
Manager at any time or from time to time reasonably requests in order to
discharge its obligations hereunder.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts and shall inure to the
benefit of the parties hereto and their respective successors.
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(d) If any provision of this Agreement shall be held or made invalid
or by any court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
13. Declaration of Trust and Limitation of Liability. A copy of the Agreement
and Declaration of Trust of the Fund is on file with the Secretary of State of
The Commonwealth of Massachusetts, and notice is hereby given that this
Agreement is executed by an officer of the Fund on behalf of the Trustees of the
Fund, as trustees and not individually, on further behalf of the Fund, and that
the obligations of this Agreement shall be binding upon the assets and
properties of the Fund only and shall not be binding upon the assets and
properties of the Trustees, officers, employees, agents or shareholders of the
Fund individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first above-written.
SIERRA PRIME INCOME FUND
By:
---------------------------------
Name:
Title:
Attest:
By:
--------------------------
Name:
Title:
COMPOSITE RESEARCH &
MANAGEMENT CO.
By:
---------------------------------
Xxxxxxx X. Xxxxxx
President
Attest:
By:
--------------------------
Xxxxxx X. Xxxxxxx
Secretary
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SCHEDULE A
COMPOSITE RESEARCH & MANAGEMENT CO.
ADVISORY FEES
The fees to be charged to Sierra Prime Income Fund for advisory services
(including any sub-advisory fees) are as follows:
All Assets
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Sierra Prime Income Fund............................... 0.950%
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