Exhibit 9.1
Fund Administration Servicing Agreement
This Agreement is made and entered into on this ________ day of
_______, 1995, by and between The Prudent Bear Fund, Inc., (hereinafter
referred to as the "Fund") and Firstar Trust Company, a corporation
organized under the laws of the State of Wisconsin (hereinafter referred
to as "FTC").
WHEREAS, The Fund is an open-ended management investment company
which is registered under the Investment Company Act of 1940;
WHEREAS, FTC is a trust company and, among other things, is in the
business of providing fund administration services for the benefit of its
customers;
NOW, THEREFORE, the Fund and FTC do mutually promise and agree as follows:
I. Duties and Responsibilities of FTC
A. General Fund Management
1. Act as liaison among all fund service providers
2. Coordinate board communication by:
a. Assisting fund counsel in establishing meeting agendas
b. Preparing board reports based on financial and
administrative data
c. Evaluating independent auditor
d. Securing and monitoring fidelity bond and director and
officers liability coverage, if requested.
3. Audits
a. Prepare appropriate schedules and assist independent
auditors
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
4. Assist in overall operations of the Fund
B. Compliance
1. Regulatory Compliance
a. Periodically monitor compliance with Investment Company Act
of 1940 requirements
1) Asset diversification tests
2) Total return and SEC yield calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of ethics
b. Periodically monitor prospectus investment limitation
2. Blue Sky Compliance
a. File initial state application and all subsequent reports
b. Monitor status in each state
3. SEC Registration and Reporting
a. Assisting Fund's counsel in updating prospectus, statement
of additional information, proxy statements, and Rule 248-2
notice,
b. Annual and semiannual reports
4. IRS Compliance
a. Periodically monitor Fund's status as a regulated
investment company under Subchapter M through review of the
following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short short testing
c. Calculate required distributions (including excise tax
distributions)
C. Financial Reporting
1. Provide financial data required by fund prospectus and
statement of additional information
2. Prepare financial reports for shareholders, the board, the
SEC, and independent auditors
3. Monitor expense accruals and payments
D. Tax Reporting
1. Prepare appropriate federal and state tax returns including
forms 1120/8610 with any necessary schedules
2. Prepare state income breakdowns where relevant
3. File 1099 Miscellaneous for payments to directors and other
service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate shareholders
II. Compensation
The Fund agrees to pay FTC for performance of the duties listed in
this Agreement and the fees and out-of-pocket expenses as set forth
in the attached Schedule A.
These fees may be changed from time to time, subject to mutual
written Agreement between the Fund and FTC.
The Fund agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
III. Performance of Service; Limitation of Liability
FTC shall exercise reasonable care in the performance of its duties
under the Agreement. The Fund agrees to reimburse and make FTC whole
for any loss or damages (including reasonable fees and expenses of
legal counsel) arising out of or in connection with its actions under
this Agreement so long as FTC acts in good faith and is not negligent
or guilty of any willful misconduct.
FTC shall not be liable or responsible for delays or errors occurring
by reason of circumstances beyond its control, including acts of
civil or military authority, natural or state emergencies, fire,
mechanical breakdown, flood or catastrophe, act of God, insurrection,
war, riots, or failure of transportation, communication, or power
supply.
In the event of a mechanical breakdown beyond its control, FTC shall
take all reasonable steps to minimize service interruptions for any
period that such interruption continues beyond FTC's control. FTC
will make every reasonable effort to restore any lost or damaged data
and correct any errors resulting from such a breakdown at the expense
of FTC. FTC agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable
provisions for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of
the Fund shall be entitled to inspect FTC's premises and operating
capabilities at any time during regular business hours of FTC, upon
reasonable notice to FTC.
This indemnification includes any act, omission to act, or delay by
FTC in reliance upon, or in accordance with, any written or oral
instruction it receives from any duly authorized officer of the Fund.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
IV. Confidentiality
FTC shall handle, in confidence, all information relating to the
Fund's business which is received by FTC during the course of
rendering any service hereunder.
V. Data Necessary to Perform Service
The Fund or its agent, which may be FTC, shall furnish to FTC the
data necessary to perform the services described herein at times and
in such form as mutually agreed upon.
VI. Terms of Agreement
This Agreement shall become effective as of the date hereof.
Thereafter, if not terminated, this Agreement shall continue
automatically in effect for successive annual periods unless
otherwise terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter period as is
mutually agreed upon by the parties. In the event that the Fund
elects to terminate its relationship with FTC prior to the first
anniversary of this Agreement, the Fund agrees to reimburse FTC for
those fees representing a discount to the Agent's standard fee
schedule as provided to the Fund and given as a concession to the
Fund as part of a one year fee arrangement.
VII. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any
of FTC's duties or responsibilities hereunder is designated by the
Fund by written notice to FTC, FTC will promptly, upon such
termination and at the expense of the Fund, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by FTC under this Agreement in a form
reasonably acceptable to the Fund (if such form differs from the
form in which FTC has maintained, the Fund shall pay any expenses
associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities,
including provision for assistance from FTC's personnel in the
establishment of books, records, and other data by such successor.
VIII. Choice of Law
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin.
The Prudent Bear Fund, Inc. FIRSTAR TRUST COMPANY
By: By:
Attest: Attest:
