<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION JUNE 21, 1996
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
(Amendment No.1)
Sierra Prime Income Fund
(Name of Issuer)
Sierra Prime Income Fund
(Name of Person(s) Filing Statement)
Class A Common Shares of Beneficial Interest with no par value
(Title of Class of Securities)
826461-105
(CUSIP Number of Class of Securities)
F. Brian Cerini
Chairman and President
Sierra Prime Income Fund
9301 Corbin Avenue, Suite 333
Northridge, CA 91324
(818) 725-0200
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person(s) Filing Statement)
Copies to:
Lawrence J. Sheehan, Esq. Richard W. Grant, Esq.
O'Melveny & Myers Jeffrey P. Burns, Esq.
1999 Avenue of the Stars Morgan, Lewis & Bockius LLP
#700 2000 One Logan Square
Los Angeles, CA 90067 Philadelphia, PA 19103
310-553-6700 215-963-5000
June 3, 1996
(Date Tender Offer First Published,
Sent or Given to Security Holders)
<PAGE>
This Amendment No. 1 to the Issuer Tender Offer Statement on Schedule 13E-4
filed on June 3, 1996 by the Sierra Prime Income Fund (the "Fund"), with respect
to the offer to purchase for cash 114,466 of the Fund's issued and oustanding
Class A Common Shares at net asset value, amends such statement on Schedule
13E-4 to revise such Offer to Purchase found in Item 9.
Item 9. Material to be Filed as Exhibits.
The following materials are hereby filed as a revised Exhibit
to the Schedule 13E-4.
(a)(1)(ii) - Offer to Purchase
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Amendment No. 1 to the Schedule 13E-4
statement is true, complete and correct.
SIERRA PRIME INCOME FUND
/s/ F. Brian Cerini
--------------------------
Chairman and President
Dated: June 21, 1996
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
(a)(1)(i) Advertisement printed in The Wall Street Journal................
*(a)(1)(ii) Offer to Purchase (including Financial Statements)..............
(a)(2) Form of Letter of Transmittal (including Guidelines for
Certification of Tax Identification Number).....................
(a)(3)(i) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees....................................
(a)(3)(ii) Form of Letter to Clients of Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees..............................
(a)(3)(iii) Form of Letter to Authorized Dealers............................
(a)(4) Form of Letter to Shareholders who have requested Offer to
Purchase........................................................
(b) Not Applicable .................................................
(c)(1) Investment Advisory Agreement between Sierra Prime Income Fund
and Sierra Investment Advisors Corporation, dated as of
February 14, 1996...............................................
(c)(2) Investment Sub-Advisory Agreement among Sierra Prime Income
Fund, Sierra Investment Advisors Corporation and Van Kampen
American Capital Management Inc., dated as of February 14,
1996............................................................
(c)(3) Administration Agreement between Sierra Prime Income Fund and
Sierra Fund Administration Corporation, dated as of February 14,
1996............................................................
(c)(4) Distribution Agreement between Sierra Prime Income Fund and
Sierra Investment Services Corporation, dated as of February 14,
1996............................................................
- ---------------
*Filed herewith
<PAGE>
EXHIBIT (a) (1) (ii)
SIERRA PRIME INCOME FUND
OFFER TO PURCHASE FOR CASH 114,466
OF ITS ISSUED AND OUTSTANDING CLASS A COMMON SHARES
AT NET ASSET VALUE PER SHARE
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 6:00 PM PACIFIC STANDARD
TIME ON JULY 5, 1996, UNLESS THE OFFER IS EXTENDED. TO ENSURE PROCESSING
OF YOUR REQUEST, A LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
OF IT (TOGETHER WITH ANY CERTIFICATES FOR CLASS A COMMON SHARES AND ALL
OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE TRANSFER AGENT (AS
DEFINED BELOW) ON OR BEFORE JULY 5, 1996.
- --------------------------------------------------------------------------------
To the Holders of Class A Common Shares of
Sierra Prime Income Fund:
Sierra Prime Income Fund, a non-diversified, closed-end management
investment company organized as a Massachusetts business trust (the "Fund"), is
offering to purchase up to 114,466 of its Class A Common Shares of beneficial
interest, with no par value ("Class A Common Shares"), for cash at a price (the
"Purchase Price") equal to their net asset value ("NAV") determined as of 2:00
PM Pacific Standard Time on the Expiration Date (as defined herein), upon the
terms and conditions set forth in this Offer to Purchase and the related Letter
of Transmittal (which together constitute the "Offer"). The Offer is scheduled
to terminate as of 6:00 PM Pacific Standard Time on July 5, 1996, unless
extended. The Class A Common Shares are not currently traded on an established
trading market. The NAV on May 21, 1996 was $10.00 per Class A Common Share. You
can obtain current NAV quotations from Sierra Shareholder Services by calling
(800) 222-5852. See Section 9.
If more than 114,466 Class A Common Shares are duly tendered prior to
the expiration of the Offer, the Fund presently intends to, subject to the
condition that there have been no changes in the factors originally considered
by the Board of Trustees when it determined to make the Offer and the other
conditions set forth in Section 6, but is under no obligation to, extend the
Offer period, if necessary, and increase the number of Class A Common Shares
that the Fund is offering to purchase to an amount which it believes will be
sufficient to accommodate the excess Class A Common Shares tendered as well as
any Class A Common Shares tendered during the extended Offer period or purchase
114,466 Class A Common Shares (or such greater number of Class A Common Shares
sought) on a pro rata basis.
THIS OFFER IS BEING MADE TO ALL SHAREHOLDERS OF THE FUND
AND IS NOT CONDITIONED UPON ANY MINIMUM NUMBER
OF CLASS A COMMON SHARES BEING TENDERED.
THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 6.
<PAGE>
IMPORTANT
If you desire to tender all or any portion of your Class A Common
Shares, you should either (1) complete and sign the Letter of Transmittal and
mail or deliver it along with any other required documents to Sierra Fund
Administration Corporation (the "Transfer Agent") or (2) request your broker,
dealer, commercial bank, trust company or other nominee to effect the
transaction for you. If your Class A Common Shares are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee, you must
contact such broker, dealer, commercial bank, trust company or other nominee if
you desire to tender your Class A Common Shares.
NEITHER THE FUND NOR ITS BOARD OF TRUSTEES MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF
SUCH SHAREHOLDER'S CLASS A COMMON SHARES. SHAREHOLDERS ARE URGED TO EVALUATE
CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX
ADVISERS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER CLASS A COMMON SHARES
AND, IF SO, HOW MANY CLASS A COMMON SHARES TO TENDER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF
THE FUND AS TO WHETHER SHAREHOLDERS SHOULD TENDER CLASS A COMMON SHARES PURSUANT
TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED
HEREIN OR IN THE LETTER OF TRANSMITTAL, IF GIVEN OR MADE, SUCH RECOMMENDATION
AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND.
Questions and requests for assistance may be directed to Sierra
Shareholder Services at the address and telephone number set forth below.
Requests for additional copies of this Offer to Purchase and the Letter of
Transmittal should be directed to Sierra Fund Administration Corporation.
June 3, 1996 SIERRA PRIME INCOME FUND
Sierra Shareholder Services SIERRA FUND ADMINISTRATION CORPORATION:
9301 Corbin Avenue, Suite 333
Northridge, CA 91324 By Mail Hand Delivery or Courier:
(800) 222-5852 9301 Corbin Avenue, Suite 333
Northridge, CA 91324
Attn: Sierra Prime Income Fund
<PAGE>
TABLE OF CONTENTS
SECTIONS PAGE
- -------- ----
1. Price; Number of Class A Common Shares .............................. 4
2. Procedure for Tendering Class A Common Shares ....................... 4
3. Early Withdrawal Charge ............................................. 6
4. Withdrawal Rights ................................................... 7
5. Payment for Shares .................................................. 7
6. Certain Conditions of the Offer ..................................... 8
7. Purpose of the Offer ................................................ 8
8. Plans or Proposals of the Fund ...................................... 9
9. Price Range of Class A Common Shares; Dividends ..................... 9
10. Interest of Trustees and Executive Officers; Transactions and
Arrangements Concerning the Class Common Shares ................... 9
11. Certain Effects of the Offer ........................................ 10
12. Source and Amount of Funds .......................................... 10
13. Certain Information about the Fund .................................. 10
14. Additional Information .............................................. 11
15. Certain Federal Income Tax Consequences ............................. 11
16. Extension of Tender Period; Termination; Amendments ................. 12
17. Miscellaneous ....................................................... 12
EXHIBIT A: UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1996
<PAGE>
1. PRICE; NUMBER OF CLASS A COMMON SHARES. The Fund will, upon the terms
and subject to the conditions of the Offer, accept for payment (and thereby
purchase) 114,466 or such lesser number of its issued and outstanding Class A
Common Shares which are properly tendered and not withdrawn in accordance with
Section 4 prior to 6:00 PM Pacific Standard Time on July 5, 1996 (such time and
date being hereinafter called the "Initial Expiration Date"). The Fund reserves
the right to extend the Offer. See Section 16. The later of the Initial
Expiration Date or the latest time and date to which the Offer is extended is
hereinafter called the "Expiration Date." The Purchase Price of the Class A
Common Shares will be their NAV determined as of 2:00 PM Pacific Standard Time
on the Expiration Date. Holders of Class A Common Shares may tender or withdraw
previously tendered shares to the Transfer Agent at the address set forth on
page 2 of this Offer to Purchase by written, telegraphic telex or facsimile
transmission of a notice of withdrawal prior to the Expiration Date. The NAV on
May 21, 1996 was $10.00 per Class A Common Share. You can obtain current NAV
quotations from Sierra Shareholder Services by calling (800) 222-5852 between
the hours of 6:00 AM and 6:00 PM Pacific Standard Time, Monday through Friday
and 6:00 AM and 6:00 PM Pacific Standard Time on Saturday, except holidays.
Shareholders tendering Class A Common Shares shall be entitled to receive all
dividends declared on or prior to settlement following the Expiration Date, but
not yet paid, on Class A Common Shares tendered pursuant to the Offer. See
Section 9. The Fund will not pay interest on the Purchase Price under any
circumstances. An Early Withdrawal Charge may be imposed on certain Class A
Common Shares accepted for payment that have been held for less than two years.
See Section 3.
The Offer is being made to all shareholders of the Fund and is not
conditioned upon any minimum number of Class A Common Shares being tendered. If
the number of Class A Common Shares properly tendered prior to the Expiration
Date and not withdrawn is less than or equal to 114,466 Class A Common Shares
(or such greater number of Class A Common Shares as the Fund may elect to
purchase pursuant to the Offer), the Fund will upon the terms and subject to the
conditions of the Offer, purchase at NAV all Class A Common Shares so tendered.
If more than 114,466 Class A Common Shares are duly tendered prior to the
expiration of the Offer and not withdrawn, the Fund presently intends to,
subject to the condition that there have been no changes in the factors
originally considered by the Board of Trustees when it determined to make the
Offer and the other conditions set forth in Section 6, but is not obligated to,
extend the Offer period, if necessary, and increase the number of Class A Common
Shares that the Fund is offering to purchase to an amount which it believes will
be sufficient to accommodate the excess Class A Common Shares tendered as well
as any Class A Common Shares tendered during the extended Offer period or
purchase 114,466 Class A Common Shares (or such greater number of Class A Common
Shares sought) on a pro rata basis.
On May 21, 1996, there were approximately 1,144,667.775 Class A Common
Shares issued and outstanding and there were approximately 395 holders of record
of Class A Common Shares. The Fund has been advised that no trustees, officers
or affiliates of the Fund intend to tender any Class A Common Shares pursuant to
the Offer.
The Fund reserves the right, in its sole discretion, at any time or
from time to time, to extend the period of time during which the Offer is open
by giving oral or written notice of such extension to the Transfer Agent and
making a public announcement thereof. See Section 16. There can be no assurance,
however, that the Fund will exercise its right to extend the Offer. If the Fund
decides, in its sole discretion, to increase (except for any increase not in
excess of 2% of the outstanding Class A Common Shares) or decrease the number of
Class A Common Shares being sought and, at the time that notice of such increase
or decrease is first published, sent or given to holders of Class A Common
Shares in the manner specified below, the Offer is scheduled to expire at any
time earlier than the tenth business day from the date that such notice is first
so published, sent or given, the Offer will be extended at least until the end
of such ten business day period.
2. PROCEDURE FOR TENDERING CLASS A COMMON SHARES.
Proper Tender of Class A Common Shares. Except as otherwise set forth
under the heading "Procedures for Authorized Dealers" below, for Class A Common
Shares to be properly tendered pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or manually signed facsimile thereof) with
any required signature guarantees and any other documents required by the Letter
of Transmittal, must be received on or before the Expiration Date by the
Transfer Agent at its address set forth on page 2 of this Offer to Purchase.
It is a violation of Section 14(e) of the Securities and Exchange Act
of 1934 (the "Exchange Act"), and Rule 14e-4 promulgated thereunder, for a
person to tender Class A Common Shares in a partial tender offer for such
person's own account unless at the time of tender and until such time as the
securities are accepted for payment the person so tendering has a net long
position equal to or greater than the amount tendered in (i) the Class A Common
Shares and will deliver or cause to be delivered such shares for purposes of
tender to the Fund prior to or on the Expiration Date, or (ii) an equivalent
security and, upon the acceptance of his or her tender will acquire the Class A
Common Shares by conversion, exchange, or exercise of such equivalent security
to the extent required by the terms of the Offer, and will deliver or cause to
be delivered the Class A Common Shares so acquired for the purpose of tender to
the Fund prior to or on the Expiration Date.
Section 14(e) and Rule 14e-4 provide a similar restriction applicable
to the tender or guarantee of a tender on behalf of another person.
The acceptance of Class A Common Shares by the Fund for payment will
constitute a binding agreement between the tendering shareholder and the Fund
upon the terms and subject to the conditions of the Offer, including the
tendering shareholder's representation that (i) such shareholder has a net long
position in the Class A Common Shares being tendered within the meaning of Rule
14e-4 promulgated under the Exchange Act and (ii) the tender of such Class A
Common Shares complies with Rule 14e-4.
Signature Guarantees and Method of Delivery. Signatures on the Letter
of Transmittal are not required to be guaranteed unless (1) the proceeds for the
tendered Class A Common Shares will amount to more than $50,000, (2) the Letter
of Transmittal is signed by someone other than the registered holder of the
Class A Common Shares tendered therewith, or (3) payment for tendered Class A
Common Shares is to be sent to a payee other than the registered owner of such
Class A Common Shares and/or to an address other than the registered address of
the registered owner of the Class A Common Shares. In those instances, all
signatures on the Letter of Transmittal must be guaranteed by a member firm of a
national securities exchange or a commercial bank or trust company having an
office, branch or agency in the United States (an "Eligible Institution"). If
Class A Common Shares are registered in the name of a person or persons other
than the signer of the Letter of Transmittal or (a) if payment is to be made to
or (b) unpurchased Class A Common Shares are to be registered in the name of any
person other than the registered owner, then the Letter of Transmittal must be
endorsed or accompanied by appropriate authorizations, in either case signed
exactly is such name or names as appear on the registration of the Class A
Common Shares with the signatures on the authorizations guaranteed by an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
Payment for Class A Common Shares tendered and accepted for payment
pursuant to the Offer will be made only after receipt by the Transfer Agent on
or before the Expiration Date of a properly completed and duly executed Letter
of Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF ANY DOCUMENTS IS AT THE ELECTION AND RISK OF
THE PARTY TENDERING CLASS A COMMON SHARES. IF DOCUMENTS ARE SENT BY MAIL, IT IS
RECOMMENDED THAT THEY BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED.
Procedures for Authorized Dealers. If you are a Authorized Dealer, in
order for you to tender any Class A Common Shares pursuant to the Offer, you may
place a confirmed wire order with the Transfer Agent. All confirmed wire orders
used to tender Class A Common Shares pursuant to this Offer must be placed on
the Expiration Date only (wire orders placed on any other date will not be
accepted by the Fund). Class A Common Shares tendered by a wire order are deemed
to be tendered when the Transfer Agent receives the order but subject to the
condition subsequent that the settlement instructions, including (with respect
to tendered Class A Common Shares for which the Authorized Dealer is not the
registered owner) a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof), any other documents required by the
Letter of Transmittal, are received by the Transfer Agent.
Determinations of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Fund, in its sole discretion, whose determination shall be
final and binding. The Fund reserves the absolute right to reject any or all
tenders determined by it not to be in appropriate form or the acceptance of or
payment for which may, in the opinion of the Fund's counsel, be unlawful. The
Fund also reserves the absolute right to waive any of the conditions of the
Offer or any defect in any tender with respect to any particular Common Share(s)
or any particular shareholder, and the Fund's interpretations of the terms and
conditions of the Offer will be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such times as the
Fund shall determine. Tendered Class A Common Shares will not be accepted for
payment unless the defects or irregularities have been cured within such time or
waived. Neither the Fund, the Transfer Agent nor any other person shall be
obligated to give notice of any defects or irregularities in tenders, nor shall
any of them incur any liability for failure to give such notice.
Federal Income Tax Withholding. To prevent backup federal income tax
withholding equal to 31% of the gross payments made pursuant to the Offer, each
shareholder who has not previously submitted a Form W-9 to the Fund or does not
otherwise establish an exemption from such withholding must notify the Transfer
Agent of such shareholder's correct taxpayer identification number (or certify
that such taxpayer is awaiting a taxpayer identification number) and provide
certain other information by completing the Form W-9 enclosed with the Letter of
Transmittal. Foreign shareholders who are individuals and who have not
previously submitted a Form W-9 to the Fund must do so in order to avoid backup
withholding.
The Transfer Agent will withhold 30% of the gross payments payable to a
foreign shareholder unless the Transfer Agent determines that a reduced rate of
withholding or an exemption from withholding is applicable. (Exemption from
backup withholding does not exempt a foreign shareholder from the 30%
withholding). For this purpose, a foreign shareholder, in general is a
shareholder that is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or (iii) an
estate or trust the income of which is subject to United States federal income
taxation regardless of the source of such income. The Transfer Agent will
determine a shareholder's status as a foreign shareholder and eligibility for a
reduced rate of, or an exemption from, withholding by reference to the
shareholder's address and to any outstanding statements concerning eligibility
for a reduced rate of, or exemption from, withholding unless facts and
circumstances indicate that reliance is not warranted. A foreign shareholder who
has not previously submitted the appropriate statements with respect to a
reduced rate of, or exemption from, withholding for which such shareholder may
be eligible should consider doing so in order to avoid over-withholding. A
foreign shareholder may be eligible to obtain a refund of tax withheld if such
shareholder meets one of the three tests for capital gain or loss treatment
described in Section 15 or is otherwise able to establish that no tax or a
reduced amount of tax was due.
For a discussion of certain other federal income tax consequences to
tendering shareholders, see Section 15.
3. EARLY WITHDRAWAL CHARGE. The Transfer Agent may impose an early
withdrawal charge (the "Early Withdrawal Charge" or "EWC") on certain Class A
Common Shares accepted for payment which have been held less than two years. An
EWC of 1.0% or 0.5% may be imposed on certain Class A Common Shares tendered and
accepted for payment within one or two years of purchase, respectively, for
those Class A Common Shares (i) purchased at NAV without a sales charge at time
of purchase (purchases of $1 million or more), (ii) acquired through an exchange
for Class A Shares of a Non-Money Fund of the Sierra Trust Funds purchased at
NAV without a sales charge at time of purchase (purchases of $1 million or
more), (iii) purchased through an employee benefit trust created pursuant to a
plan qualified under Section 401(k) of the Code ("401(k) Plan"), or (iv)
purchased through a retirement plan qualified under Section 403(b) of the Code
("403(b) Plan"). The Class A Common Shares EWC will not be imposed on Class A
Common Shares purchased by (i) a qualified retirement plan that, at the time of
purchase, had not fewer than 500 eligible employees, (ii) a qualified retirement
plan that, at the time of purchase, had assets exceeding $100 million, or (iii)
an institution investing $5 million or more in the aggregate in the portfolios
of the Fund or Sierra Trust Funds. The EWCs for Class A Common Shares are
calculated on the lower of the shares' cost or current net asset value, and in
determining whether the EWC is payable, the Fund will first redeem shares not
subject to any EWC.
Purchases of $1 million or more and certain other purchases are not subject to
the sales charge at the time of purchase, but may be subject to a 1.0% early
withdrawal charge on repurchases or tenders within one year of purchase or a
0.5% early withdrawal charge on repurchases or tenders during the second year
after purchase. No sales charge at time of purchase and no early withdrawal
charge will be assessed on the reinvestment of dividends or distributions on
Class A Common Shares or on purchases of Class A Common Shares under the 180-day
reinvestment privilege. The Early Withdrawal Charge may be imposed on the number
of Class A Common Shares (subject to the EWC as noted above) accepted for
payment from a record holder of Class A Common Shares the value of which exceeds
the aggregate value at the time the tendered Class A Common Shares are accepted
for payment of (a) all Class A Common Shares owned by such holder that were
purchased without being subject to the EWC, (b) the Class A Common Shares owned
by such holder that were acquired through reinvestment of distributions, and (c)
the increase, if any, of value of all other Class A Common Shares owned by such
holder over the purchase price of such Class A Common Shares. The Early
Withdrawal Charge will be paid to SISC on behalf of the holder of the Class A
Common Shares. In determining whether an Early Withdrawal Charge is payable,
Class A Common Shares accepted for payment pursuant to the Offer shall be deemed
to be those Class A Common Shares purchased earliest by the Shareholder.
The following example will illustrate the operation of the Early
Withdrawal Charge. Assume that an investor purchases $1,000,000 worth of the
Fund's Class A Common Shares for cash and that 9 months later the value of the
account has grown through the reinvestment of dividends and capital appreciation
to $1,050,000. The investor then may submit for repurchase pursuant to a tender
offer up to $50,000 worth of Class A Common Shares without incurring an Early
Withdrawal Charge. If the investor should submit for repurchase pursuant to a
tender offer $75,000 worth of Class A Common Shares, an Early Withdrawal Charge
would be imposed on $25,000 worth of the Class A Common Shares submitted. The
charge would be imposed at the rate of 1% because it is in the first year after
the purchase was made and the charge would be $250.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Class A Common Shares made pursuant to the Offer will be irrevocable.
You may withdraw Class A Common Shares tendered at any time prior to the
Expiration Date and, if the Class A Common Shares have not yet been accepted for
payment by the Fund, at any time after 6:00 PM Pacific Standard Time on July 5,
1996.
To be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Transfer Agent
at the address set forth on page 2 of this Offer to Purchase. Any notice of
withdrawal must specify the name of the person having tendered the Class A
Common Shares to be withdrawn and the number of Class A Common Shares to be
withdrawn.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Fund in its sole discretion,
whose determination shall be final and binding. None of the Fund, SISC, the
Transfer Agent or any other person is or will be obligated to give any notice of
any defects or irregularities in any notice of withdrawal, and none of them will
incur any liability for failure to give any such notice. Class A Common Shares
properly withdrawn shall not thereafter be deemed to be tendered for purposes of
the Offer. However, withdrawn Class A Common Shares may be retendered by
following the procedures described in Section 2 prior to the Expiration Date.
5. PAYMENT FOR SHARES. For purposes of the Offer, the Fund will be
deemed to have accepted for payment (and thereby purchased) Class A Common
Shares which are tendered and not withdrawn when, as and if it gives oral or
written notice to the Transfer Agent of its acceptance of such Class A Common
Shares for payment pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, the Fund will accept for payment (and thereby purchase)
Class A Common Shares properly tendered promptly after the Expiration Date.
Payment for Class A Common Shares purchased pursuant to the Offer will be made
by depositing the aggregate purchase price therefor with the Transfer Agent,
which will act as agent for tendering shareholders for the purpose of receiving
payment from the Fund and transmitting payment to the tendering shareholders. In
all cases, payment for Class A Common Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Transfer Agent, as
required pursuant to the Offer, of a properly, completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof), and any other
required documents.
The Fund will pay all transfer taxes, if any, payable on the transfer
to it of Class A Common Shares purchased pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or (in the circumstances
permitted by the Offer) of unpurchased Class A Common Shares are to be
registered in the name of any person other than the registered holder the amount
of any transfer taxes (whether imposed on the registered holder or such other
person) payable on account of the transfer to such person will be deducted from
the Purchase Price unless satisfactory evidence of the payment of such taxes, or
exemption therefrom, is submitted. Shareholders tendering Class A Common Shares
shall be entitled to receive all dividends declared on or prior to settlement
following the Expiration Date, but not yet paid, on Class A Common Shares
tendered pursuant to the Offer. The Fund will not pay any interest on the
Purchase Price under any circumstances. An Early Withdrawal Charge may be
imposed on certain Class A Common Shares accepted for payment that have been
held for less than two years. See Section 3. In addition, if certain events
occur, the Fund may not be obligated to purchase Class A Common Shares pursuant
to the Offer. See Section 6.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO HAS NOT PREVIOUSLY
SUBMITTED A COMPLETED AND SIGNED SUBSTITUTE FORM W-9 AND WHO FAILS TO COMPLETE
FULLY AND SIGN THE SUBSTITUTE FORM W-9 ENCLOSED WITH THE LETTER OF TRANSMITTAL
MAY BE SUBJECT TO REQUIRED FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE
SECTION 2.
6. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, the Fund shall not be required to accept for payment, purchase or
pay for any Class A Common Shares tendered, and may terminate or amend the Offer
or may postpone the acceptance for payment of, the purchase of and payment for
Class A Common Shares tendered, if at any time at or before the time of purchase
of any such Class A Common Shares, any of the following events shall have
occurred (or shall have been determined by the Fund to have occurred) which, in
the Fund's reasonable judgment and regardless of the circumstances (including
any action or omission to act by the Fund), makes it inadvisable to proceed with
the Offer or with such purchase or payment: (1) in the reasonable judgment of
the Trustees, there is not sufficient liquidity of the assets of the Fund; (2)
such transactions, if consummated, would (a) impair the Fund's status as a
regulated investment company under the Internal Revenue Code (which would make
the Fund a taxable entity, causing the Fund's taxable income to be taxed at the
Fund level) or (b) result in a failure to comply with applicable asset coverage
requirements; or (3) there is, in the Board of Trustees' judgment, any (a)
material legal action or proceeding instituted or threatened challenging such
transactions or otherwise materially adversely affecting the Fund, (b)
suspension of or limitation on prices for trading securities generally on any
United States national securities exchange or in the over-the-counter market,
(c) declaration of a banking moratorium by federal or state authorities or any
suspension of payment by banks in the United States, (d) limitation affecting
the Fund or the issuers of its portfolio securities imposed by federal or state
authorities on the extension of credit by lending institutions, (e) commencement
of war, armed hostilities or other international or national calamity directly
or indirectly involving the United States or (f) other event or condition which
would have a material adverse effect on the Fund or the holders of its Class A
Common Shares if the tendered Class A Common Shares are purchased.
The foregoing conditions are for the Fund's sole benefit and may be
asserted by the Fund regardless of the circumstances giving rise to any such
condition (including any action or inaction by the Fund), and any such condition
may be waived by the Fund in whole or in part, at any time and from time to time
in its sole discretion. The Fund's failure at any time to exercise any of the
foregoing, rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts or circumstances; and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Fund concerning the events described
in this Section 6 shall be final and shall be binding on all parties.
If the Fund determines to terminate or amend the Offer or to postpone
the acceptance for payment of or payment for Class A Common Shares tendered, it
will, to the extent necessary, extend the period of time during which the Offer
is open as provided in Section 16. Moreover, in the event any of the foregoing
conditions arc modified or waived in whole or in part at any time, the Fund will
promptly make a public announcement of such waiver and may, depending on the
materiality of the modification, or waiver, extend the Offer period as provided
in Section 16.
7. PURPOSE OF THE OFFER. The Fund currently does not believe that an
active secondary market for its Class A Common Shares exists or is likely to
develop. In recognition of the possibility that a secondary market may not
develop for the Class A Common Shares of the Fund, or, if such a market were to
develop, the Class A Common Shares might trade at a discount, the Trustees have
determined that it would be in the best interest of its shareholders for the
Fund to take action to attempt to provide liquidity to shareholders or to reduce
or eliminate any future market value discount from NAV that might otherwise
exist, respectively. To that end, the Trustees presently intend each quarter to
consider making a tender offer to purchase Class A Common Shares at their NAV.
The purpose of this Offer is to attempt to provide liquidity to the holders of
Class A Common Shares. There can be no assurance that this Offer will provide
sufficient liquidity to all holders of Class A Common Shares that desire to sell
their Class A Common Shares or that the Fund will make any such tender offer in
the future.
NEITHER THE FUND NOR ITS BOARD OF TRUSTEES MAKES ANY RECOMMENDATION TO
ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ANY OR ALL OF
SUCH SHAREHOLDER'S CLASS A COMMON SHARES AND HAS NOT AUTHORIZED ANY PERSON TO
MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL
INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE
THEIR OWN DECISIONS WHETHER TO TENDER CLASS A COMMON SHARES AND, IF SO, HOW MANY
CLASS A COMMON SHARES TO TENDER.
8. PLANS OR PROPOSALS OF THE FUND. The Fund has no present plan or
proposals which relate to or would result in any extraordinary transaction such
as a merger, reorganization or liquidation involving the Fund; a sale or
transfer of a material amount of assets of the Fund other than in its ordinary
course of business; any material changes in the Fund's present capitalization
(except as resulting from the Offer or otherwise set forth herein); or any other
material changes in the Fund's structure or business.
9. PRICE RANGE OF CLASS A COMMON SHARES; DIVIDENDS. The Fund's NAV per
Class A Common Share from February 14, 1996 through May 21, 1996 ranged from a
high of $10.00 to a low of $10.00. On May 21, 1996, the NAV was $10.00 per
Common Share. You can obtain current NAV quotations from Sierra Shareholder
Services by calling (800) 222-5852 between the hours of 6:00 AM and 6:00 PM
Pacific Standard Time, Monday through Friday and 6:00 AM to 6:00 PM Pacific
Standard Time on Saturday, except holidays. Holders of Class A Common Shares may
tender or withdraw previously tendered shares to the Transfer Agent at the
address set forth on page 2 of this Offer to Purchase by written, telegraphic
telex or facsimile transmission of a notice of withdrawal prior to the
Expiration Date. The Fund offers and sells its Class A Common Shares to the
public on a continuous basis through SISC as principal underwriter. The Fund is
not aware of any secondary market trading for the Class A Common Shares.
Dividends on the Class A Common Shares are declared daily and paid monthly.
Since the commencement of the Trust's operations in February 1996 prior
to the Offer, the Fund paid the following dividends per Class A Common Share
held for the entire respective dividend period:
AMOUNT OF DIVIDEND
DIVIDEND PAYMENT PER CLASS A
DATE COMMON SHARE
- ---------------- ------------------
February 29, 1996 $0.0115
March 29, 1996 $0.0475
April 30, 1996 $0.0528
Shareholders tendering Class A Common Shares shall be entitled to receive all
dividends declared on or prior to settlement following the Expiration Date, but
not yet paid, on Class A Common Shares tendered pursuant to the Offer.
10. INTEREST OF TRUSTEES AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING THE CLASS A COMMON SHARES. Except as set forth in this
Section 10, as of May 21, 1996, the trustees and executive officers of the Fund
as a group beneficially owned no Class A Common Shares. The Fund has been
informed that no trustee or executive officer of the Fund intends to tender any
Class A Common Shares pursuant to the Offer.
Except as set forth in this Section 10, based upon the Fund's records
and upon information provided to the Fund by its trustees, executive officers
and affiliates (as such term is used in the Securities Exchange Act of 1934),
neither the Fund nor, to the best of the Fund's knowledge, any of the trustees
or executive officers of the Fund, nor any associates of any of the foregoing,
has effected any transactions in the Class A Common Shares during the forty
business day period prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Fund nor, to
the best of the Fund's knowledge, any of its affiliates, trustees or executive
officers, is a party to any contract, arrangement, understanding or relationship
with any other person relating, directly or indirectly, to the Offer with
respect to any securities of the Fund (including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations).
The Fund currently is a party to an Investment Advisory Agreement with
Sierra Investment Advisors Corporation ("Sierra Advisors" or "Adviser") under
which the Fund accrues daily and pays monthly to Sierra Advisors an investment
management fee equal to 0.95% of the average daily net assets (i.e. the daily
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). The Fund also is a party to an Administration Agreement with Sierra Fund
Administration Corporation ("Sierra Administration") and a Distribution
Agreement with Sierra Investment Services Corporation ("SISC"). Under the
Administration Agreement, the Fund pays Sierra Administration a monthly fee at
the annualized rate of 0.35% of the Fund's average daily net assets. Under the
Distribution Agreement, the Fund offers and sells its Class A Common Shares to
the public on a continuous basis through SISC, as principal underwriter. Sierra
Administration pursuant to a Sub-Administration Agreement with State Street Bank
& Trust Company ("State Street") has delegated certain administrative and
custodial services to State Street. The Fund is also a party to a Transfer
Agency and Registrar Agreement with Sierra Administration who has delegated
certain transfer agency responsibilities to First Data Investor Services Group,
Inc. ("First Data").
11. CERTAIN EFFECTS OF THE OFFER. The purchase of Class A Common Shares
pursuant to the Offer will have the effect of increasing the proportionate
interest in the Fund of shareholders who do not tender their Class A Common
Shares. If you retain your Class A Common Shares you will be subject to any
increased risks that may result from the reduction in the Fund's aggregate
assets resulting from payment for the tendered Class A Common Shares (e.g.,
greater volatility due to decreased diversification and higher expenses).
However, the Fund believes that since the Fund is engaged in a continuous
offering of the Class A Common Shares, those risks would be reduced to the
extent new Class A Common Shares of the Fund are sold. All Class A Common Shares
purchased by the Fund pursuant to the Offer will be held in treasury pending
disposition.
12. SOURCE AND AMOUNT OF FUNDS. The total cost to the Fund of
purchasing the full 114,466 Class A Common Shares pursuant to the Offer would be
approximately $1,144,660 (assuming a NAV of $10.00 per Common Share on the
Expiration Date). The Fund anticipates that the Purchase Price for any Class A
Common Shares acquired pursuant to the Offer will first be derived from cash on
hand, such as proceeds from sales of new Class A Common Shares of the Fund and
specified pay-downs from the participation interests in senior corporate loans
which it has acquired, and then from the proceeds from the sale of cash
equivalents held by the Fund. Although the Fund is authorized to borrow money to
finance the repurchase of Class A Common Shares, the Fund believes that it has
sufficient liquidity to purchase the Class A Common Shares tendered pursuant to
the Offer without utilizing such borrowing. However, if, in the judgment of the
Trustees, there is not sufficient liquidity of the assets of the Fund to pay for
tendered Class A Common Shares, the Fund may terminate the Offer. See Section 6.
13. CERTAIN INFORMATION ABOUT THE FUND. The Fund was organized as a
Massachusetts business trust on October 4, 1995 and is a non-diversified,
closed-end management investment company under the Investment Company Act of
1940. The Fund seeks as high a level of current income as is consistent with the
preservation of capital by investing in a professionally managed portfolio of
interests in floating or variable rate senior loans ("Senior Loans") to United
States corporations, partnerships and other entities ("Borrowers"). Although the
Fund's NAV will vary, the Fund's policy of acquiring interests in floating or
variable rate Senior Loans is expected to minimize fluctuations in the Fund's
NAV as a result of changes in interest rates. Senior Loans in which the Fund
will invest generally pay interest at rates which are periodically redetermined
by reference to a base lending rate plus a premium. These base lending rates are
generally the prime rate offered by one or more major United States banks
("Prime Rate"), the London Inter-Bank Offered Rate ("LIBOR"), the certificate of
deposit rate or other base lending rates used by commercial lenders. The Fund
seeks to achieve over time a high effective yield. The Senior Loans in the
Fund's portfolio at all times have a dollar-weighted average time until next
interest rate redetermination of 90 days or less. As a result, as short-term
interest rates increase, the interest payable to the Fund from its investments
in Senior Loans should increase, and as short-term interest rates decrease, the
interest payable to the Fund on its investments in Senior Loans should decrease.
The amount of time required to pass before the Fund realizes the effects of
changing short-term market interest rates on its portfolio varies with the
dollar-weighted average time until next interest rate redetermination on
securities in the Fund's portfolio.
The Fund has registered as a "non-diversified" investment company so
that, subject to its investment restrictions, it is able to invest more than 5%
of the value of its assets in the obligations of any single issuer, including
Senior Loans of a single Borrower or participations in Senior Loans purchased
from a single lender. To the extent the Fund invests a relatively high
percentage of its assets in obligations of a limited number of issuers, the Fund
will be more susceptible than a more widely diversified investment company to
any single corporate, economic, political or regulatory occurrence.
SISC compensates Authorized Dealers participating in the continuous
offering of the Fund's Class A Common Shares pursuant to the following schedule:
Dealers' Reallowance
Amount of Transactions as a % of Offering Price
---------------------- ------------------------
Less than $50,000 4.00%
$50,000 but less than $100,000 3.50%
$100,000 but less than $250,000 3.00%
$250,000 but less than $500,000 2.50%
$500,000 but less than $1,000,000 1.75%
$1,000,000 and over 0%
SISC may pay Authorized Dealers a fee of up to 1.00% of net asset value for
Class A Common Share transactions over $1,000,000. The dealer reallowance may be
changed by SISC from time to time, and upon notice, SISC may reallow up to the
full applicable sales charge to certain Authorized Dealers. In addition, if
Class A Common Shares of the Fund are sold by an Authorized Dealer, Sierra
Advisors may in its discretion pay up to a maximum of 0.25% of the value of such
Common Shares to such Authorized Dealers. Such compensation is or will be paid
by Sierra Advisors out of its own assets, and not out of the assets of the Fund.
The compensation paid to such Authorized Dealers and to SISC, including the
compensation paid at the time of purchase, the quarterly payments, any
additional incentives paid from time to time and the EWC, if any, will not in
the aggregate exceed the applicable limit (currently 8%) imposed by the National
Association of Securities Dealers (the "NASD"), unless the approval of the NASD
has been received.
The principal executive offices of the Fund are located at 9301 Corbin
Avenue, Suite 333, Northridge, CA 91324.
Reference is hereby made to Section 9 of this Offer to Purchase and the
financial statements attached hereto as Exhibit A which are incorporated herein
by reference.
14. ADDITIONAL INFORMATION. The Fund has filed an Issuer Tender Offer
Statement on Schedule 13E-4 with the Securities and Exchange Commission (the
"Commission") which includes certain additional information relating to the
Offer. Such material may be inspected and copied at prescribed rates at the
Commission's public reference facilities at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and 5670 Wilshire Boulevard, 11th Floor, Los
Angeles, CA 90036-3648. Copies of such material may also be obtained by mail at
prescribed rates from the Public Reference Branch of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549.
15. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion
is a general summary of the federal income tax consequences of a sale of Class A
Common Shares pursuant to the Offer. Shareholders should consult their own tax
advisers regarding the tax consequences of a sale of Class A Common Shares
pursuant to the Offer, as well as the effects of state, local and foreign tax
laws.
The sale of Class A Common Shares pursuant to the Offer will be a
taxable transaction for federal income tax purposes, either as a "sale or
exchange," or under certain circumstances, as a "dividend." Under Section 302(b)
of the Internal Revenue Code of 1986, as amended (the "Code"), a sale of Class A
Common Shares pursuant to the Offer generally will be treated as a "sale or
exchange" if the receipt of cash: (a) results in a "complete termination" of the
shareholder's interest in the Fund, (b) is "substantially disproportionate" with
respect to the shareholder, or (c) is "not essentially equivalent to a dividend"
with respect to the shareholder. In determining whether any of these tests has
been met, Class A Common Shares actually owned, as well as Class A Common Shares
considered to be owned by the shareholder by reason of certain constructive
ownership rules set forth in Section 318 of the Code, generally must be taken
into account. If any of these three tests for "sale or exchange" treatment is
met, a shareholder will recognize gain or loss equal to the difference between
the amount of cash received pursuant to the Offer and the tax basis of the Class
A Common Shares sold. If such Class A Common Shares are held as a capital asset,
the gain or loss will be a capital gain or loss and will be long-term if such
Class A Common Shares have been held for more than one year.
If none of the tests set forth in Section 302(b) of the Code is met,
amounts received by a shareholder who sells Class A Common Shares pursuant to
the Offer will be taxable to the shareholder as a "dividend" to the extent of
such shareholder's allocable share of the Fund's current or accumulated earnings
and profits, and the excess of such amounts received over the portion that is
taxable as a dividend would constitute a non-taxable return of capital (to the
extent of the shareholder's tax basis in the Class A Common Shares sold pursuant
to the Offer) and any amounts in excess of the shareholder's tax basis would
constitute taxable gain. Thus, a shareholder's tax basis in the Class A Common
Shares sold will not reduce the amount of the "dividend." Any remaining tax
basis in the Class A Common Shares tendered to the Fund will be transferred to
any remaining Class A Common Shares held by such shareholder. In addition, if a
tender of Class A Common Shares is treated as a "dividend" to a tendering
shareholder, a constructive dividend under Section 305 (c) of the Code may
result to a non-tendering shareholder whose proportionate interest in the
earnings and assets of the Fund has been increased by such tender. The Fund
believes, however, that the nature of the repurchase will be such that a
tendering shareholder will qualify for "sale or exchange" treatment (as opposed
to "dividend" treatment).
16. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. The Fund
reserves the right, at any time and from time to time, to extend the period of
time during which the Offer is pending by making a public announcement thereof.
In the event that the Fund so elects to extend the tender period, the Purchase
Price for the Class A Common Shares tendered will be determined as of 2:00 PM
Pacific Standard Time on the Expiration Date, as extended, and the Offer will
terminate as of 6:00 PM Pacific Standard Time on the Expiration Date, as
extended. During any such extension, all Class A Common Shares previously
tendered and not purchased or withdrawn will remain subject to the Offer.
Holders of Class A Common Shares may tender or withdraw previously tendered
shares to the Transfer Agent at the address set forth on page 2 of this Offer to
Purchase by written, telegraphic telex or facsimile transmission of a notice of
withdrawal prior to the Expiration Date. The Fund also reserves the right, at
any time and from time to time up to and including the Expiration Date, to (a)
terminate the Offer and not to purchase or pay for any Class A Common Shares or,
subject to applicable law, postpone payment for Class A Common Shares upon the
occurrence of any of the conditions specified in Section 6, and (b) amend the
Offer in any respect by making a public announcement thereof. Such public
announcement will be issued no later than 9:00 AM Pacific Standard Time on the
next business day after the previously scheduled Expiration Date and will
disclose the approximate number of Class A Common Shares tendered as of that
date. Without limiting the manner in which the Fund may choose to make a public
announcement of extension, termination or amendment, except as provided by
applicable law (including Rule 13e-4(e) (2)), the Fund shall have no obligation
to publish, advertise or otherwise communicate any such public announcement,
other than by making a release to the Dow Jones News Service.
If the Fund materially changes the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Fund will extend the Offer to the extent required by Rule 13e-4
promulgated under the Exchange Act. These rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price
or a change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
If (i) the Fund increases or decreases the price to be paid for Class A Common
Shares, or the Fund increases the number of Class A Common Shares being sought
by an amount exceeding 2% of the outstanding Class A Common Shares, or the Fund
decreases the number of Class A Common Shares being sought and (ii) the Offer is
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that notice of such
increase or decrease is first published, sent or given, the Offer will be
extended at least until the expiration of such period of ten business days.
17. MISCELLANEOUS. The Offer is not being made to, nor will the Fund
accept tenders from, owners of Class A Common Shares in any jurisdiction in
which the Offer or its acceptance would not comply with the securities or Blue
Sky laws of such jurisdiction. The Fund is not aware of any jurisdiction in
which the making of the Offer or the tender of Class A Common Shares would not
be in compliances with the laws of such jurisdiction. However, the Fund reserves
the right to exclude holders in any jurisdiction in which it is asserted that
the Offer cannot lawfully be made. So long as the Fund makes a good-faith effort
to comply with any state law deemed applicable to the Offer, the Fund believes
that the exclusion of holders residing in such jurisdiction is permitted under
Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction the
securities or Blue Sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on the Fund's behalf by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
June 3, 1996 SIERRA PRIME INCOME FUND
<PAGE>
EXHIBIT A
SIERRA PRIME INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
ASSETS
Investments, at value (Cost 7,136,023) (Note 2)
See accompanying schedule ................................ $7,135,931
Cash ........................................................ 2,119
Receivable for Fund shares sold ............................. 97,395
Interest receivable ......................................... 5,811
Unamortized organization costs (Note 7) ..................... 180,816
Receivable from investment advisor (Note 3) ................. 22,586
----------
Total Assets ............................................. 7,444,658
----------
LIABILITIES
Deferred facility fees (Note 2) ............................. 256
Dividends payable ........................................... 6,540
Administration fee payable (Note 3) ......................... 1,312
Accrued legal and audit fees ................................ 5,779
Organization expense payable (Note 7) ....................... 185,375
Accrued expenses and other payables (Note 3) ................ 13,675
----------
Total Liabilities ........................................ 212,937
----------
NET ASSETS .................................................. $7,231,721
==========
NET ASSETS CONSIST OF:
Paid in capital ............................................. 7,231,813
Net unrealized depreciation of investments .................. (92)
----------
NET ASSETS ............................................... $7,231,721
==========
Class A Common Shares Outstanding ........................... 723,181
==========
Net asset value per share of beneficial
interest outstanding* .................................... $10.00
==========
Maximum sales charge ........................................ 4.5%
Maximum offering price per share of
beneficial interest outstanding ($10.00/0.955) ........... $10.47
==========
- ----------
* Redemption price per share is equal to Net Asset Value less any applicable
contingent deferred sales charge.
See Notes to Financial Statements.
<PAGE>
SIERRA PRIME INCOME FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FEBRUARY 16, 1996* THROUGH MARCH 31, 1996
(UNAUDITED)
INVESTMENT INCOME:
Interest ........................................................ $ 22,206
Fees ............................................................ 6
--------
Total investment income ...................................... 22,212
--------
EXPENSES:
Investment advisory fee (Note 3) ................................ 3,907
Administration fee (Note 3) ..................................... 1,439
Legal and audit fees ............................................ 5,779
Trustees' fees and expenses (Note 3) ............................ 6,332
Registration and filing fees .................................... 4,180
Tender offer fees ............................................... 7,377
Amortization of organization costs .............................. 4,559
Printing and Postage ............................................ 1,967
Other ........................................................... 2,817
--------
Subtotal ..................................................... 38,357
Fees waived and expenses absorbed
by investment advisor (Note 3) ............................... (38,357)
--------
Total expenses ............................................... 0
--------
NET INVESTMENT INCOME ........................................... 22,212
--------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS (Notes 2 and 4):
Net change in unrealized depreciation of securities ............. (92)
--------
Net realized and unrealized gain/(loss) on investments .......... (92)
--------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .................................... $ 22,120
========
- ----------
* Commencement of operations.
See Notes to Financial Statements.
<PAGE>
SIERRA PRIME INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FEBRUARY 16, 1996* THROUGH MARCH 31, 1996
(UNAUDITED)
Net investment income .......................................... $ 22,212
Net unrealized depreciation on investments during the period ... (92)
----------
Net increase in net assets resulting from operations ........... 22,120
----------
Distributions to shareholders from net investment income:
Class A Common Shares ....................................... (22,212)
Net increase in net assets from Fund share transactions:
Class A Common Shares ....................................... 7,131,813
----------
Net increase in net assets ..................................... 7,131,721
----------
NET ASSETS:
Beginning of year .............................................. 100,000
----------
End of year .................................................... $7,231,721
==========
AMOUNT
CLASS A COMMON SHARES:
Sold ...................................................... $7,116,461
Issued as reinvestment of dividends ....................... 15,352
----------
Net Increase .............................................. $7,131,813
==========
SHARES
CLASS A COMMON SHARES:
Sold ...................................................... 711,646
Issued as reinvestment of dividends ....................... 1,535
----------
Net Increase .............................................. 713,181
==========
- ----------
* Commencement of operations.
See Notes to Financial Statements.
<PAGE>
SIERRA PRIME INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD
FEBRUARY 16, 1996* TO MARCH 31, 1996
(UNAUDITED)
Net asset value, beginning of period ........................... $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................................... .06
-------
Total from investment operations ............................... .06
-------
LESS DISTRIBUTIONS:
Dividends from net investment income ........................... (.06)
-------
Total distributions ............................................ (.06)
-------
Net asset value, end of period ................................. $ 10.00
=======
TOTAL RETURN+ .................................................. .59%
=======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........................... $ 7,232
Ratio of operating expenses to average net assets .............. 0.00%**
Ratio of net investment income to average net assets ........... 5.40%**
Portfolio turnover rate ........................................ 12%
Ratio of operating expenses to average net assets without fees
waived and expenses absorbed by investment advisor ............. 9.33%**
Net investment income per share without fees waived
and expenses absorbed by investment advisor .................... $(0.04)
- ----------
* Commencement of operations.
** Annualized.
+ Total return represents aggregate total return for the period indicated.
The total return would have been lower if certain fees and expenses had not
been waived and absorbed by the investment advisor.
See Notes to Financial Statements.
<PAGE>
SIERRA PRIME INCOME FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Principal Loan Stated
Amount Borrower Rate* Type Maturity** Value
--------- -------- ----- ---- -------- -----
<C> <C> <C> <C> <C> <C>
SENIOR LOAN INTERESTS -- 32.6%
BROADCASTING -- 3.3%
$ 119,000 SKTV, Inc.................................7.438% Term 07/31/2000 $ 119,000
119,000 Westinghouse Electric Corporation.........7.172 Term 11/24/2002 119,000
-----------
238,000
-----------
CABLE -- 1.6%
119,000 Marcus Cable Operating Company, L.P.......6.865 Term 12/31/2002 118,996
-----------
FOOD & BEVERAGES -- 9.1%
261,491 SC International Services, Inc............8.461 Term 09/30/2001 261,479
325,959 SC International Services, Inc............8.448 Term 09/30/2002 325,938
71,836 SC International Services, Inc............8.698 Term 09/30/2003 71,832
-----------
659,249
-----------
FOOD STORES -- 2.5%
119,000 Brunos, Inc...............................7.987 Term 02/18/2002 118,978
60,000 Carr - Gottstein Foods....................8.344 Term 12/31/2002 59,996
-----------
178,974
-----------
HEALTHCARE -- 1.6%
119,000 Merit Behavioral Care Corporation.........8.063 Term 10/06/2003 118,998
-----------
MANUFACTURING -- 5.4%
150,000 Interco Inc...............................8.438 Term 03/29/2004 149,955
119,000 International Wire Group, Inc.............8.323 Term 09/30/2002 118,992
118,709 Thompson Minwax Company...................8.440 Term 12/31/2002 118,709
-----------
387,656
-----------
PAPER -- 5.8%
117,945 Fort Howard Corporation...................8.041 Term 03/31/2002 117,950
117,083 Jefferson Smurfit Corporation.............6.894 Term 04/30/2001 117,081
119,000 S.D. Warren Company.......................7.880 Term 12/20/2001 118,997
62,000 Stone Container Corporation...............8.502 Term 04/01/2000 62,000
-----------
416,028
-----------
RETAIL -- 3.3%
119,000 Federated Department Stores, Inc..........6.320 Term 03/31/2000 119,010
119,000 Saks & Company............................8.750 Term 06/30/2000 119,020
-----------
238,030
-----------
Total Senior Loan Interests (cost $2,356,023)............................ 2,355,931
-----------
See Notes to Financial Statements.
<PAGE>
SIERRA PRIME INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
MARCH 31, 1996 (UNAUDITED)
Principal Loan Stated
Amount Borrower Rate* Type Maturity** Value
--------- -------- ----- ---- -------- -----
U.S. GOVERNMENT AGENCY DISCOUNT NOTES -- 66.1% (cost $4,780,000)
$ 4,780,000 Federal Home Loan Bank (FHLB):
5.250% due 04/01/1996.............. $ 4,780,000
-----------
TOTAL INVESTMENTS (Cost $7,136,023+) ......................... 98.7% 7,135,931
OTHER ASSETS AND LIABILITIES (Net)............................ 1.3 95,790
----- -----------
NET ASSETS ...................................................100.0% $ 7,231,721
===== ===========
<FN>
- ----------
* Senior loans in which the Sierra Prime Income Fund invests generally pay
interest at rates which are periodically redetermined by reference to a
base lending rate plus a premium. These base lending rates are generally
(i) the prime rate offered by one or more major United States banks; (ii)
the lending rate offered by one or more major European banks, such as the
London Inter-Bank Offered Rate (LIBOR); or (iii) the certificate of deposit
ratio. Senior loans are generally considered to be restricted in that the
Fund ordinarily is contractually obligated to receive approval from the
Agent Bank and/or borrower prior to the disposition of a senior loan.
Within each loan there may be different rates due to different reset dates.
The rates disclosed for each loan are the weighted average coupon rates as
of March 31, 1996.
** Senior loans in the Sierra Prime Income Fund's portfolio generally are
subject to mandatory and/or optional prepayment. Because of these mandatory
prepayment conditions and because there may be significant economic
incentives for a Borrower to prepay, prepayments of senior loans in the
Fund's portfolio may occur. As a result, the actual remaining maturity of
senior loans held in the Fund's portfolio may be substantially less than
the stated maturities shown. Although the Fund is unable to accurately
estimate the actual remaining maturity of individual senior loans, the Fund
estimates that the actual average maturity of the senior loans held in its
portfolio will be approximately 18-24 months.
+ At March 31, 1996, the aggregate cost for federal tax purposes was
$7,136,023. The gross unrealized appreciation for all securities in which
there is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $60 and $152, respectively.
</TABLE>
See Notes to Financial Statements.
<PAGE>
SIERRA PRIME INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND BUSINESS
Sierra Prime Income Fund (the "Fund") is registered under the Investment Company
Act of 1940, as amended ("1940 Act"), as a non-diversified, closed-end
management investment company. The Fund was organized as a Massachusetts
business trust on October 4, 1995. During the period October 4, 1995 to February
15, 1996, the Fund had no operations other than those related to organizational
matters, including the initial capital contribution of $100,000 and the issuance
of 10,000 shares of beneficial interest to Sierra Fund Administration
Corporation.
The Trustees of the Fund authorized an unlimited number of Common Shares with
separate classes of beneficial interest. Currently there are only Class A Common
Shares continuously offered at a price equal to the next determined net asset
value ("NAV") per share plus a maximum sales charge based on a determined
schedule.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
Portfolio Valuation:
Because Senior Loans are not actively traded in a public market, the Advisor and
Sub-Advisor, following procedures established by the Fund's Board of
Trustees,values the Senior Loan interests held by the Fund at fair value. In
valuing a Senior Loan interest, the Advisor and Sub-Advisor considers relevant
factors, data and information, including: (i) the characteristics of and
fundamental analytical data relating to the Senior Loan, including the cost,
size, current interest rate, period until next interest rate reset, maturity and
base lending rate of the Senior Loan interest, the terms and conditions of the
Senior Loan and any related agreements, and the position of the Senior Loan in
the Borrower's debt structure; (ii) the nature, adequacy and value of the
collateral, including the Fund's rights, remedies and interests with respect to
the collateral; (iii) the creditworthiness of the Borrower's business, cash
flows, capital structure and future prospectus; (iv) information relating to the
market for Senior Loans, including price quotations for (if considered reliable)
and trading in Senior Loans and interests in similar Loans; (v) the reputation
and financial condition of the Agent and any Intermediate Participants in the
Senior Loans; and (vi) general economic and market conditions affecting the fair
value of Senior Loans.
Other Fund holdings (other than short term obligations, but including listed
issues) are valued on the basis of prices furnished by one or more pricing
services which determine prices for normal, institutional-size trading units of
such securities using market information, transactions for comparable securities
and various relationships between securities which are generally recognized by
institutional traders. In certain circumstances, portfolio securities will be
valued at the last sale price on the exchange that is the primary market for
such securities, or the average of the last quoted bid price and asked price for
those securities for which the over-the-counter market is the primary market or
for listed securities in which there were no sales during the day. The value of
interest rate swaps is determined in accordance with a discounted present value
formula and then confirmed by obtaining a bank quotation.
<PAGE>
SIERRA PRIME INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Short-term obligations which mature in 60 days or less are valued at amortized
cost, if their original term to maturity when acquired by the Portfolio was 60
days or less, or are valued at amortized cost using their value on the 61st day
prior to maturity, if their original term to maturity when acquired by the Fund
was more than 60 days, unless in each case this is determined not to represent
fair value. Repurchase agreements will be valued by the Fund at cost plus
accrued interest. Securities for which there exist no price quotations or
valuations and all other assets are valued at fair value as determined in good
faith by or on behalf of the Board of Trustees.
Illiquid Investments:
Senior Loans in which the Fund will invest presently are not readily marketable
and may be subject to restrictions on resale. Interests in Senior Loans
generally are not listed on any national securities exchange or automated
quotation system and no regular market has developed for such interests.
Although interests in Senior Loans are traded among certain financial
institutions in private transactions between buyers and sellers these loans
continue to be considered illiquid. Senior Loans' illiquidity may impair the
Fund's ability to realize the full value of its assets in the event of a
voluntary or involuntary liquidation of such assets. Liquidity relates to the
ability of the Fund to sell an investment in a timely manner. The market for
relatively illiquid securities tends to be more volatile than the market for
more liquid securities. The Fund has no limitation on the amount of its assets
which may be invested in securities which are not readily marketable or are
subject to restriction on resale. The substantial portion of the Fund's assets
invested in relatively illiquid Senior Loan interests may restrict the ability
of the Fund to dispose of its investments in Senior Loans in a timely fashion
and at a fair price, and could result in capital losses to the Fund and holders
of Common Shares. However, many of the Senior Loans in which the Fund expects to
purchase interests are of a relatively large principal amount and are held by a
relatively large number of owners which should, in the Advisor's opinion,
enhance the relative liquidity of such interests. The risks associated with
illiquidity are particularly acute in situations where the Fund's operations
require cash, such as when the Fund tenders for its Common Shares and may result
in the Fund borrowing to meet short-term cash requirements.
Repurchase Agreements:
The Fund may enter into repurchase agreements (a purchase of, and a simultaneous
commitment to resell, a financial instrument at an agreed upon price on an
agreed upon date) only with member banks of the Federal Reserve System and
member firms of the New York Stock Exchange. When participating in repurchase
agreements, the Fund buys securities from a vendor (e.g., a bank or brokerage
firm) with the agreement that the vendor will repurchase the securities at a
higher price at a later date. Such transactions afford an opportunity for the
Fund to earn a return on available cash at minimal market risk, although the
Fund may be subject to various delays and risks of loss if the vendor is unable
to meet its obligation to repurchase. Under the 1940 Act, repurchase agreements
are deemed to be collateralized loans of money by the Fund to the seller. In
evaluating whether to enter into a repurchase agreement, the Advisor will
consider carefully the creditworthiness of the vendor. If the member bank or
member firm that is the party to the repurchase agreement petitions for
bankruptcy or otherwise becomes subject to the U.S. Bankruptcy Code, the law
regarding the rights of the Fund is unsettled. The securities underlying a
repurchase agreement will be marked to market every business day so that the
value of the collateral is at least equal to the value of the loan, including
the accrued interest thereon, and the Advisor will monitor the value or the
collateral. No specific limitations exists as to the percentage of the Fund's
assets which may be used to participate in repurchase agreements.
<PAGE>
SIERRA PRIME INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Securities Transactions and Investment Income:
Securities transactions are recorded on trade date (the date the order to buy or
sell is executed). Realized gains and losses from securities sold are recorded
on the identified cost basis. Income is recorded on the accrual basis and
consists of interest accrued and discount earned less premiums amortized.
Facility fees are received upon the purchase of a new loan and are recognized as
income ratably over the expected life of the loan. The deferred facility fees
are the "unearned" portion of these facility fees. The Fund may purchase and
sell interest in Senior Loans and other portfolio securities on a "when issued"
and "delayed delivery" basis. No income accrues to the Fund on such interests or
securities in connection with such purchase transactions prior to the date the
Fund actually takes delivery of such interest or securities. When the Fund is
the buyer in such a transaction, however, it will maintain, in a segregated
account with its custodian, cash or high-grade portfolio securities having an
aggregate value equal to the amount of such purchase commitments until payment
is made.
Dividends and Distributions to Shareholders:
The Fund's policy is to declare daily and pay monthly distributions to holders
of Class A Common Shares of substantially all net investment income of the Fund.
Distributions of any net long-term capital gains earned by the Fund are made
annually. Distributions of any net short-term capital gains earned by the Fund
are distributed no less frequently than annually at the discretion of the Board
of Trustees. Additional distributions of net investment income and capital gains
for the Fund may be made at the discretion of the Board of Trustees in order to
avoid the application of a 4% non-deductible excise tax on certain undistributed
amounts of ordinary income and capital gains. Income distributions and capital
gain distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gains on
various investment securities held by the Fund, timing differences and differing
characterization of distributions made by the Fund.
Federal Income Taxes:
It is the Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by, among other
things, distributing substantially all of its taxable earnings to its
shareholders. Therefore, no Federal income tax provision is required.
Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles may require management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of these financial statements and the reported amounts of income and
expenses during the reported period. Actual results could differ from those
estimates.
3. INVESTMENT ADVISORY, SUB-ADVISORY, ADMINISTRATION FEES AND OTHER TRANSACTIONS
Sierra Advisors, an indirect wholly-owned subsidiary of Great Western Financial
Corporation ("GWFC"), is the Fund's investment advisor. Sierra Advisors is
entitled to a monthly fee at an annual rate of 0.95% of the average daily net
assets of the Fund. These fees were $3,907 for the period ended March 31, 1996
and have been voluntarily waived by Sierra Advisors. Sierra Advisors pays a
monthly fee at an annual rate of 0.475% to Van Kampen American Capital
Management Inc. for services rendered as the Sub-Advisor.
<PAGE>
SIERRA PRIME INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Sierra Fund Administration Corporation ("Sierra Administration") is the Fund's
administrator. Sierra Administration is entitled to a monthly fee at an annual
rate of 0.35% of the Fund's average daily net assets. These fees were $1,439 for
the period ended March 31, 1996. Sierra Administration pays State Street Bank &
Trust Company ("State Street") for certain administrative and custodial
services. In addition, Sierra Administration pays First Data Investor Services
Group, Inc. ("First Data") for certain transfer agency services. The Fund pays
for the sub-transfer agent, sub-administrator and custodial out-of-pocket
expenses.
Sierra Advisors has agreed to voluntarily reimburse the Fund's total operating
expenses. For the period ended March 31, 1996 the total reimbursement to the
Fund was $34,450.
The compensation of the officers and Trustees who are interested persons (as
defined in the 1940 Act) of the Advisor is paid by the Advisor or by its parent,
GWFC. The Fund pays the compensation of all other officers and Trustees of the
Fund. Trustees who are not interested persons are paid an annual fee of $5,000,
a fee of $1,000 per meeting of the Board of Trustees and a fee of $750 per
committee meeting of the Fund, plus expenses.
As of March 31, 1996 there was one shareholder who owned greater than five
percent of Class A Common Shares, representing 27.77% of the Fund at this date.
4. PURCHASE AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, excluding
U.S. Government and short-term investments for the period ended March 31, 1996
were $2,450,000 and $93,977, respectively.
5. TENDER OF SHARES
The Board of Trustees of the Fund currently intends, each quarter, to consider
authorizing the Fund to make tender offers for a portion of its outstanding
Class A Common Shares at the then current net asset value of these Common
Shares. The Fund does not intend to list its Common Shares on any national
securities exchange and none of the Fund, the Advisor or SISC intends to make a
secondary trading market in the classes of the Common Shares at any time.
Accordingly, there is not expected to be any secondary trading market in the
Common Shares and an investment in such Common Shares should be considered
illiquid. There can be no assurance that the Fund will in fact tender for any of
its Common Shares. If the Fund tenders for Common Shares there is no guarantee
that all, or any, Common Shares tendered will be purchased. An early withdrawal
charge may be charged on those repurchases or tenders done during the first or
second year after purchase.
6. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Fund to issue an unlimited number of full
and fractional Common Shares of beneficial interest with no par value. The Fund
initially is offering 5,000,000 Class A Common Shares in a continuous offering
pursuant to Rule 415 under the Securities Act of 1933, as amended.
7. ORGANIZATION COSTS
Expenses incurred in connection with the organization of the Fund, including
the fees and expenses of registering and qualifying its shares for
distribution under Federal and state securities regulations, are being amortized
on a straight-line basis over a period of five years from commencement of
operations of the Fund. In the event any of the initial shares of the Fund are
redeemed by any holder thereof during the amortization period, the proceeds
of such redemptions will be reduced by an amount equal to the pro-rata
portion of unamortized deferred organizational expenses in the same
proportion as the number of shares being redeemed bears to the number of
<PAGE>
SIERRA PRIME INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
initial shares of such Fund outstanding at the time of such redemption. To the
extent that proceeds of the redemptions are less than such pro-rata portion of
any unamortized organizational expenses, Sierra Administration has agreed to
reimburse the Fund.
8. SENIOR LOAN PARTICIPATIONS
The Fund invests primarily in participations, assignments, or acts as a party to
the primary lending syndicate of a Variable Rate Senior Loan interest to United
States corporations, partnerships, and other entities. When the Fund purchases a
participation of a Senior Loan interest, the Fund typically enters into a
contractual agreement with the lender or other third party selling the
participation, but not with the borrower directly. As such, the Fund assumes the
credit risk of the Borrower, Selling Participant or other persons
interpositioned between the Fund and the Borrower.
At March 31, 1996, the following sets forth the selling participants with
respect to interests in Senior Loans purchased by the Trust on a participation
basis.
Principal
Selling Participant Amount Value
- ------------------- ---------- ----------
Bankers Trust $ 60,000 $ 59,996
Chemical Bank 1,486,737 1,486,731
Nations Bank 150,000 149,955
Pearl Street L.P. 659,286 659,249
---------- ----------
$2,356,023 $2,355,931
========== ==========
