Exhibit (h)(1)
THE GNMA FUND INVESTMENT
ACCUMULATION PROGRAM, INC.
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made as of the 22nd day of June, 2001 by and
among THE GNMA FUND INVESTMENT ACCUMULATION PROGRAM, INC., a Maryland
corporation (hereinafter called the "Company"), and XXXXXXX XXXXX INVESTMENT
MANAGERS, L.P., a Delaware partnership (hereinafter called "XXXXXXX XXXXX"),
PRUDENTIAL SECURITIES INC., a Delaware corporation (hereinafter called "PS"),
XXXXXX XXXXXXX XX, INC., a Delaware corporation (hereinafter called "MSDW")
and XXXXXXX XXXXX BARNEY INC., a Delaware corporation (hereinafter called
"SSB"). Xxxxxxx Xxxxx, XX, MSDW and SSB are hereinafter sometimes referred to
collectively as the "ADMINISTRATORS".
WHEREAS, the Company proposes to issue shares of its common stock (par
value $.01 per share) (hereinafter referred to as the "SHARES"); and
WHEREAS, the Company desires to avail itself of the experience,
assistance and facilities available to the Administrators and to have the
Administrators perform for the Company various services appropriate to the
operations of the Company pertaining to the Shares, and the Administrators
are willing to furnish such services in accordance with the terms hereinafter
set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, it is agreed as follows:
1. DEFINITIONS. The following terms are hereby defined for the purpose of
this Agreement:
(a) "THE PERIOD OF THIS AGREEMENT" means the term of this
Agreement and any renewal or extension thereof, or until any prior
termination thereof.
(b) The "1940 ACT" means the Investment Company Act of 1940, as
amended.
(c) "PERCENTAGE", with respect to each Administrator, means the
percentage set forth below opposite the name of such Administrator:
Administrator Percentage
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Xxxxxxx Xxxxx 58%
PS 16%
MSDW 16%
SSB 10%
provided, however, that if any one or more of the Administrators shall cease
to act as Administrator pursuant to Section 14 of this Agreement, then the
Percentage of such Administrator or Administrators so ceasing to act shall be
allocated, effective immediately upon such Administrator's so ceasing to act,
to the Administrator or Administrators continuing so to act, and in the event
such allocation is to two Administrators the amount to be allocated to each
of such two Administrators shall in
each case be in the proportion which the Percentage of such Administrator
bears to the aggregate of the Percentages of such two Administrators.
(d) The "VOTE OF THE MAJORITY OF SHARES" means the vote at an annual
or special meeting of shareholders of the lesser of (i) the holders of
sixty-seven percent (67%) or more of the Shares present at such meeting
if the holders of more than fifty percent (50%) of the outstanding Shares
are present in person or represented by proxy, or (ii) the holders of more
than fifty percent (50%) of the outstanding Shares.
(e) The "FUND" means the pool of assets held by the Company for the
benefit of the holders of the Shares.
2. DUTIES OF THE ADMINISTRATORS. The Company hereby retains the
Administrators, and the Administrators hereby agree, for the period of this
Agreement and under the terms and conditions set forth herein and subject at
all times to the control and direction of the Board of Directors of the
Company, to (a) supervise all aspects of the Company's operations (other than
those relating to the execution of purchase and sale transactions for
securities in the Fund), including coordinating all matters relating to the
functions of the Program Agent, the Transaction Agent, the Custodian and
other parties performing operational functions for the Company; (b) provide
the Company, at the Administrators' expense, with the services of such
persons competent to perform such administrative and clerical functions as
are necessary in order to provide effective administration of the Company,
including duties in connection with stockholder relations, reports,
redemption requests and account adjustments; (c) provide the Company, at the
Administrators' expense, with adequate office space and related services for
the performance of the foregoing duties by the Administrators, and (d) to the
extent required by then current Federal securities laws, regulations
thereunder or interpretations thereof, pay for the printing of all Company
prospectuses used in connection with the distribution and sale of the Shares.
3. RECORDS TO BE PROPERTY OF THE COMPANY. The Administrators hereby
acknowledge that all records necessary to the operation of the Company,
including records pertaining to the Company's stockholders and investments,
are the sole and exclusive property of the Company, and in the event that a
transfer of administrative services to someone other than the Administrators
should ever occur, the Administrators will promptly, and at their own cost,
take all steps necessary to segregate such records and deliver them to the
Company.
4. COMPENSATION OF ADMINISTRATORS. The Company covenants and agrees to pay
to the Administrators, and the Administrators covenant and agree to accept from
the Company as full compensation for all services furnished by the
Administrators hereunder, a monthly fee at an annual rate of 0.2% of the
average daily net asset value of the Fund from the beginning of the year to
the end of such month (hereinafter called the "ADMINISTRATIVE FEE"). The
Administrative Fee shall be computed as of the close of business on the last
business day of each month and shall be prorated for any fraction of a month
at the commencement and termination of this Agreement. The Administrative Fee
provided for herein shall be paid in cash by the Company to the
Administrators no later than the close of business on the tenth business day
of each month, provided that no
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such payment shall be made if immediately thereafter the expenses of the
Company set forth in Section 5 hereof shall exceed the limitation on expenses
set forth in such Section applicable at the time of such payment. All
payments of the Administrative Fee shall be allocated among the several
Administrators, and paid by the Company to the several Administrators, in
such Administrators' respective Percentages. "NET ASSET VALUE" of the Fund
for purposes of computing the Administrative Fee will be determined as of the
close of trading on the last business day in each month on which the
New York
Stock Exchange is open and will be computed pursuant to the provisions of the
Company's Articles of Incorporation and By-Laws and any currently effective
Prospectus of the Company with respect to the Shares.
5. EXPENSES. The Company shall pay all costs and expenses incurred in
connection with its organization, all costs and expenses incurred in
connection with the offer, sale, issue, repurchase or redemption of the
Shares (including registration fees and printing and mailing costs) and all
other costs and expenses of its operations, including fees of its directors,
legal fees, expenses of independent accountants, cost of printing
certificates for Shares, reports to stockholders, proxies, proxy statements
and mailing envelopes, postage, insurance costs, taxes, interest, stock
exchange listing fees and expenses and fees and expenses of the Company's
Program Agent, Transaction Agent, transfer agents, registrars, custodian,
dividend disbursing agent, pricing agent, and bookkeeper; provided, however,
that if the expenses of the Company payable out of the Fund (including the
Administrative Fee but excluding interest, taxes, brokerage fees and
extraordinary expenses), in any fiscal year exceed lesser of either (a) 1 1/2%
of the Fund's average daily net assets up to $30,000,000 and 1% of its
average daily net assets over $30,000,000 or (b) 25% of the total investment
income of the Fund, then the Administrators shall reimburse the Company in an
amount equal to the amount of such excess. Any reimbursement by the
Administrators pursuant to the provisions of this Section shall be made
promptly at the end of such fiscal year and shall be allocated among the
several Administrators, and paid by the several Administrators, in such
Administrators' respective Percentages.
6. USE OF NAMES NOT EXCLUSIVE. The use of the name "THE GNMA FUND
INVESTMENT ACCUMULATION PROGRAM" by the Company is non-exclusive, and the
Administrators may allow other persons, including other investment companies,
to use the name. The name may be withdrawn by Xxxxxxx Xxxxx, in which event the
Administrators agree to present the question of continuing this Agreement to
the holders of the Shares.
7. ADMINISTRATORS MAY ACT IN OTHER CAPACITIES. Nothing contained in this
Agreement shall be deemed to prohibit the Administrators and their affiliates
from acting, and being separately compensated for acting, in one or more
capacities for or on behalf of the Company, or from furnishing similar
administrative services to other clients, including other investment
accumulation programs. Whenever the Administrators shall act in multiple
capacities for or on behalf of the Company, the Administrators shall maintain
appropriate separate accounts and records for each such capacity. The Company
shall be entitled to equitable treatment under the circumstances in receiving
services pursuant to this Agreement, but the Company recognizes that it is
not entitled to receive preferential treatment as compared with the treatment
given to any other customer of one or more of the Administrators.
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8. LIMITATION ON ADMINISTRATORS' LIABILITY. The Administrators shall have
no liability to the Company or any stockholder of the Company for any error of
judgment, mistake of law or any loss arising out of any act or omission in
the performance by the Administrators of their duties hereunder, except for
liability resulting from willful misfeasance, bad faith or gross negligence
on the Administrators' part or from reckless disregard by the Administrators
of their obligations and duties under this Agreement.
9. ENTIRE AGREEMENT. No provision of this Agreement may be amended, waived
or terminated except by an instrument in writing signed by the parties hereto.
10. TERM OF AGREEMENT. This Agreement shall become effective upon its
execution and delivery and shall remain in force for two years after its date
of execution and shall continue in force from year to year thereafter,
subject to prior termination as provided herein, but only so long as its
continuance shall be specifically approved at least annually (i) by the Board
of Directors or by a vote of the majority of Shares and (ii) by the vote of a
majority of the directors who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting called
for the purpose of voting on such approval.
11. TERMINATION. This Agreement may be terminated by either the Company
on sixty (60) days' notice to the Administrators or by the Administrators,
acting as a group, on ninety (90) days' notice to the Company; provided that
any such termination shall be made without the payment of any penalty, and
provided further that such termination may be effected either by the Board of
Directors of the Company or by a vote of the majority of Shares.
12. NO ASSIGNMENT. This Agreement shall terminate automatically in the
event of its assignment.
13. ADMINISTRATORS INDEPENDENT. The Company and the Administrators, and
any of them, are not partners or joint venturers with each other, and nothing
herein shall be construed so as to make them such partners or joint venturers
or impose any liability as such on any one of them. The Administrators shall
be deemed to be independent contractors and, except as expressly provided or
authorized in this Agreement, shall have no authority to act for or represent
the Company.
14. CONCERNING THE ADMINISTRATORS. Except as set forth in Section 5, the
Administrators shall be jointly and severally liable in accordance herewith
for the obligations imposed upon and undertaken by the Administrators
hereunder, provided that, without in any way affecting or diminishing such
joint and several liability, each Administrator shall indemnify the other
Administrators and hold the other Administrators harmless from and against
any and all costs, expenses and liabilities (including attorneys' fees) which
such other Administrators may suffer or incur as a result of or by reason of
any act or failure to act hereunder on the part of the indemnifying
Administrator.
PS, MSDW and SSB (the "APPOINTING ADMINISTRATORS") hereby constitute and
appoint, at all times prior to the termination of this Agreement and while the
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Administrators shall continue to act jointly hereunder, Xxxxxxx Xxxxx the
true and lawful agent and attorney-in-fact of the Appointing Administrators
to execute and deliver for and on behalf of the Appointing Administrators any
and all notices, opinions, certificates, lists, demands, directions,
instruments, or other documents provided or permitted to be executed or
delivered by the Administrators hereunder or to take any other action in
respect hereof. This appointment shall continue in effect as to each
Appointing Administrator until written notice of revocation thereof has been
given by such Appointing Administrator to the Company. Prior to receipt of
such notice of revocation the Company shall be entitled to rely conclusively
upon the foregoing power of attorney as authorizing Xxxxxxx Xxxxx to give any
notice, opinion, certificate, list, demand, direction, instrument or other
document provided for or permitted hereunder or to take any other action in
respect hereof on behalf of the Appointing Administrators as to which such
power of attorney is in effect.
In the event that any Administrator shall fail to undertake or perform
any of the duties which by the terms of this Agreement are required by it to be
undertaken or performed and such failure shall continue for 30 days after
notice to all Administrators from the Company or if any Administrator shall
become incapable of acting or shall be adjudged a bankrupt or insolvent, or a
receiver of the property of any Administrator shall be appointed or any
public officer shall take charge or control of any Administrator or its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then such Administrator shall forthwith be and shall be deemed
to be discharged forever as an Administrator hereunder and thereupon the
remaining Administrators shall act hereunder without the necessity of any
other or further action on their part or on the part of the Company.
In the event that the power of attorney contained in the second paragraph
of this Section 14 shall be revoked by written notice given by an Appointing
Administrator and it shall not be replaced within one business day by another
power of attorney conforming with the requirements of said paragraph, the
Administrators shall be deemed to have been unable to reach agreement with
respect to action to be taken jointly by them hereunder and thereupon the
Administrators shall, by an instrument executed by at least two
Administrators, within one business day designate either one or two
Administrators to be discharged hereunder, provided that, if they are unable
to agree on such designation within one business day, all Administrators
other xxxx Xxxxxxx Xxxxx shall be deemed to have been designated to be
discharged hereunder upon the expiration of such one-day period and thereupon
each Administrator designated to be discharged or deemed to have been so
designated shall be and shall be deemed to be discharged forever as
Administrator hereunder and thereupon Xxxxxxx Xxxxx shall act hereunder
without the necessity of any other or further action on its part or on the
part of the Company.
Notwithstanding the discharge of an Administrator in accordance with this
Section 14, such Administrator shall continue to be fully liable in
accordance with the provisions hereof in respect of action taken or refrained
from under this Agreement by the Administrators before the date of such
discharge or by Xxxxxxx Xxxxx before the date of such discharge, as fully and
to the same extent as if no discharge had occurred.
If at any time any Administrator shall desire to resign its position as
Administrator hereunder and the other Administrator or Administrators are
agreeable to
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such resignation, the Administrator desiring to resign may resign by
delivering to the Company an instrument executed by such resigning
Administrator and consented to by the remaining Administrator or
Administrators and upon such delivery, the resigning Administrator shall be
discharged and shall no longer be liable in any manner hereunder except as to
acts or omissions occurring prior to such delivery and the remaining
Administrator or Administrators shall thereupon perform all duties and be
entitled to all rights under this Agreement.
15. NOTICES. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the party to this Agreement
entitled to receive such notice at such address as such other party may
designate in writing for the purpose of such notice.
16. TRANSACTIONS WITH CERTAIN PERSONS. Neither this Agreement nor any
transaction made pursuant hereto shall be invalidated or in any way affected
by the fact that directors, officers, agents and/or stockholders of the
Company are or may be interested in any of the Administrators, or any
successor or assignee thereof, as directors, officers, stockholders or
otherwise; that directors, officers, stockholders or agents of any one of the
Administrators are or may be interested in the Company as directors,
officers, stockholders or otherwise; or that any one of the Administrators or
any successor or assignee, is or may be interested in the Company as a
stockholder or otherwise.
17. PROVISIONS OF LAW TO CONTROL. This Agreement shall be subject to all
applicable provisions of law, including, without limitation, the applicable
provisions of the 1940 Act. To the extent that any provisions herein
contained conflict with any applicable provisions of law, the latter shall
control.
18. GOVERNING LAW. This Agreement is executed and delivered in the State
of
New York and shall be governed by and construed in accordance with the laws
of said State.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company and the Administrators have executed this
Agreement as of the day and year first above written.
THE GNMA FUND INVESTMENT
ACCUMULATION PROGRAM, INC.
By
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ATTEST:
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XXXXXXX XXXXX INVESTMENT
MANAGERS, L.P.
By
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ATTEST:
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PRUDENTIAL SECURITIES INC.
By
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ATTEST:
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XXXXXX XXXXXXX XX, INC.
By
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ATTEST:
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XXXXXXX XXXXX BARNEY INC.
By
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ATTEST:
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