Exhibit (k.2)
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
15th day of October, 1999, by and between LCM Internet
Growth Fund, Inc., a Maryland corporation (hereinafter
referred to as the "Company") and Firstar Mutual Fund
Services, LLC, a corporation organized under the laws
of the State of Wisconsin (hereinafter referred to as
"FMFS").
WHEREAS, the Company is a closed-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, FMFS is a trust company and, among other
things, is in the business of providing fund
administration services for the benefit of its
customers; and
WHEREAS, the Company desires to retain FMFS to act
as Administrator for the Company.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and FMFS agree as
follows:
1.Appointment of Administrator
The Company hereby appoints FMFS as Administrator of
the Company on the terms and conditions set forth
in this Agreement, and FMFS hereby accepts such
appointment and agrees to perform the services and
duties set forth in this Agreement in
consideration of the compensation provided for
herein.
2.Duties and Responsibilities of FMFS
A. General Management
1. Act as liaison among all Company service providers
2. Coordinate board communication by:
a. Assisting Company 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 officer liability coverage, and making the necessary SEC
filings relating thereto
e. Preparing minutes of meetings of the board and shareholders
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 Company
5. Pay Company expenses upon written authorization from the Company
B. Compliance
1. Regulatory Compliance
a. Monitor compliance with 1940 Act requirements, including:
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 for the disinterested directors of the
Company
b. Monitor Company's compliance with the policies and
investment limitations of the Company as
set forth in its Prospectus and
Statement of Additional Information
2. SEC Registration and Reporting
a. Assist Company counsel in updating Prospectus and
Statement of Additional Information (if
necessary) and in preparing proxy statements
b. Prepare annual and semiannual reports
c. Coordinate the printing of publicly disseminated
Prospectuses and reports
d. File fidelity bond under Rule 17g-1
e. File shareholder reports under Rule 30b2-1
f. Prepare and file reports and other documents required
by U.S. stock exchanges on which the Company's shares
are listed
3. IRS Compliance
a. Monitor Company'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. Calculate required distributions (including excise
tax distributions)
C. Financial Reporting
1. Provide financial data required by Company's
Prospectus and Statement of Additional
Information
2. Prepare financial reports for shareholders, the
board, the SEC, U.S. stock exchanges on
which the Company's shares are listed and
independent auditors
3. Supervise the Company's custodian and accountants in
the maintenance of the Company's general
ledger and in the preparation of the
Company's financial statements, including
oversight of expense accruals and payments,
of the determination of net asset value of
the Company's net assets and of the
Company's shares, and of the declaration
and payment of dividends and other
distributions to shareholders
D. Tax Reporting
1. Prepare and file on a timely basis appropriate
federal and state tax returns including
Forms 1120/8610 with any necessary
schedules
2. Prepare state income breakdowns where relevant
3. File Form 1099 Miscellaneous for payments to
directors and other service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate
shareholders
3. Compensation
The Company, agrees to pay FMFS for the performance of
the duties listed in this Agreement, the fees and
reasonable out-of-pocket expenses as set forth in
the attached Exhibit A.
These fees may be changed from time to time, subject to
mutual written Agreement between the Company and
FMFS.
The Company agrees to pay all fees and reimbursable
expenses within ten (10) business days following
the receipt of the billing notice.
4. Performance of Service; Limitation of Liability
A. FMFS shall exercise reasonable care in the
performance of its duties under this Agreement.
FMFS shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the
Company in connection with matters to which this
Agreement relates, including losses resulting from
mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's
control, except a loss resulting from FMFS's
refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance
of its duties under this Agreement.
Notwithstanding any other provision of this
Agreement, the Company shall indemnify and hold
harmless FMFS from and against any and all claims,
demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which FMFS may sustain or incur
or which may be asserted against FMFS by any
person arising out of any action taken or omitted
to be taken by it in performing the services
hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or
oral instruction provided to FMFS by any duly
authorized officer of the Company, such duly
authorized officer to be included in a list of
authorized officers furnished to FMFS and as
amended from time to time in writing by resolution
of the Board of Directors of the Company.
FMFS shall indemnify and hold the Company
harmless from and against any and all claims,
demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which the Company may sustain or
incur or which may be asserted against the Company
by any person arising out of any action taken or
omitted to be taken by FMFS as a result of FMFS's
refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or
willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its
control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that
such interruption continues beyond FMFS's control.
FMFS 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
FMFS. FMFS agrees that it shall, at all times,
have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency
use of electrical data processing equipment to the
extent appropriate equipment is available.
Representatives of the Company shall be entitled
to inspect FMFS's premises and operating
capabilities at any time during regular business
hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to
reprocess and correct administrative errors at its
own expense.
B. In order that the indemnification provisions
contained in this section shall apply, it is
understood that if in any case the indemnitor may
be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning
the situation in question, and it is further
understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly
concerning any situation which presents or appears
likely to present the probability of a claim for
indemnification. The indemnitor shall have the
option to defend the indemnitee against any claim
which may be the subject of this indemnification.
In the event that the indemnitor so elects, it
will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the
claim, and the indemnitee shall in such situation
initiate
no further legal or other expenses for
which it shall seek indemnification under this
section. The indemnitee shall in no case confess
any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify
the indemnitee except with the indemnitor's prior
written consent.
5. Proprietary and Confidential Information
FMFS agrees on behalf of itself and its directors,
officers, and employees to treat confidentially
and as proprietary information of the Company all
records and other information relative to the
Company and prior, present, or potential
shareholders of the Company (and clients of said
shareholders), and not to use such records and
information for any purpose other than the
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where FMFS may be exposed to civil or
criminal contempt proceedings for failure to
comply, when requested to divulge such information
by duly constituted authorities, or when so
requested by the Company.
6. Data Necessary to Perform Services
The Company or its agent, which may be FMFS, shall
furnish to FMFS the data necessary to perform the
services described herein at times and in such
form as mutually agreed upon.
7. Term of Agreement
This Agreement shall become effective as of the date
hereof and, unless sooner terminated as provided
herein, shall continue automatically in effect for
successive annual periods. The Agreement may be
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. However, this Agreement may be
amended by mutual written consent of the parties.
8. Notices
Notices of any kind to be given by either party to the
other party shall be in writing and shall be duly
given if mailed or delivered as follows: Notice
to FMFS shall be sent to:
Xx. Xxxxx X. Xxxxx
Firstar Mutual Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Company shall be sent to:
Xx. Xxxxx X. Xxxxxxx
LCM Internet Growth Fund, Inc.
000 X. Xxxxxxxxxx Xxxx.
Xxxxxxx, XX 00000
9. Duties in the Event of Termination
In the event that, in connection with termination, a
successor to any of FMFS's duties or
responsibilities hereunder is designated by the
Company by written notice to FMFS, FMFS will
promptly, upon such termination and at the expense
of the Company, transfer to such successor all
relevant books, records, correspondence, and other
data established or maintained by FMFS under this
Agreement in a form reasonably acceptable to the
Company (if such form differs from the form in
which FMFS has maintained, the Company 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 FMFS's personnel in
the establishment of books, records, and other
data by such successor.
10. Governing Law
This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with
the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and
Exchange Commission thereunder.
11. Records
FMFS shall keep records relating to the services to be
performed hereunder, in the form and manner, and
for such period as it may deem advisable and is
agreeable to the Company but not inconsistent with
the rules and regulations of appropriate
government authorities, in particular, Section 31
of the 1940 Act and the rules thereunder. FMFS
agrees that all such records prepared or
maintained by FMFS relating to the services to be
performed by FMFS hereunder are the property of
the Company and will be preserved, maintained, and
made available in accordance with such section and
rules of the 1940 Act and will be promptly
surrendered to the Company on and in accordance
with its request.
12. Year 2000 Representation
FMFS hereby represents and warrants that it does
not anticipate that the "Year 2000 Problem" will
have a material impact on its ability to perform
its duties under this Agreement. The "Year 2000
Problem" refers to the inability of computer
systems to properly process and calculate date-
related information and data from and after
January 1, 2000.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by a duly authorized officer
on one or more counterparts as of the day and year
first written above.
LCM INTERNET GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxx Xxxxxxxxx
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Attest: /s/ Xxxxxxx X. Xxxxxx Attest: /s/ Xxxxxxxx X. Xxxxx
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Fund Administration and Compliance
Annual Fee Schedule - Domestic Funds
Exhibit A
Annual fee based upon average net fund assets
6 basis points on the first $200 million
5 basis points on the next $500 million
3 basis points on the balance
Minimum annual fee: $35,000
Plus reasonable out-of-pocket expense reimbursements, including but not
limited to:
Postage
Programming
Stationery
Proxies
Retention of records
Special reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses
Fees and reasonable out-of-pocket expense reimbursements are billed monthly
