Exhibit (h)(9)
SUB-ADMINISTRATION AGREEMENT
SUB-ADMINISTRATION AGREEMENT as of the 11th day of April, 2001 between TD
Waterhouse Investor Services, Inc. ("TD Waterhouse"), a Delaware corporation,
and Funds Distributor, Inc. ("FDI"), a Massachusetts corporation.
WHEREAS, TD Waterhouse provides certain administrative services for certain
open-end management investment companies registered under the Investment Company
Act of 1940, as amended (the "1940 Act") (each, a "Fund" and collectively, the
"Funds"), and to certain portfolios of the Funds (each a "Portfolio",
collectively, the "Portfolios") as listed on Schedule A, as such Schedule shall
be amended from time to time by the parties;
WHEREAS, TD Waterhouse serves as administrator for the Funds pursuant to
Administration Agreements with the Funds; and
WHEREAS, TD Waterhouse desires to retain FDI to perform certain
sub-administration services with respect to the shares of common stock or
beneficial interest of each Fund (the "Shares"), and FDI is willing to perform
such services on the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual agreements herein contained, the
parties agree as follows:
1. SERVICES PROVIDED BY FDI. FDI will assist TD Waterhouse by providing services
to the Portfolios of the Funds, as listed in Exhibit A.
2. SERVICES PROVIDED BY TD WATERHOUSE. In furtherance of the responsibilities
under this Agreement TD Waterhouse will:
(a) cause the Fund's service providers to furnish any and all
information and assist FDI in taking any other actions that may be
reasonably necessary in connection with FDI providing those services
listed in Exhibit A;
(b) cause the Fund's blue sky administrator to monitor sales of the
Shares to assure compliance with applicable state securities and Blue
Sky laws;
(c) cause the Fund's transfer agent to give necessary information for
the preparation of quarterly reports in a form satisfactory to FDI
regarding Rule 12b-1 fees, shareholder servicing fees, front-end sales
loads, back-end sales loads, if applicable, and other data regarding
sales and sales loads as required by the 1940 Act or as requested by
the Board of Directors/Trustees of the Fund;
(d) cause the Fund's transfer agent to provide FDI with all necessary
historical information so that FDI can calculate the maximum sales
charges payable by the Fund
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pursuant to the Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD") and the actual sales charges paid by
the Fund, if applicable; cause the Fund's transfer agent to provide
FDI with all of the necessary information so that FDI can calculate
the maximum sales charges payable by the Fund pursuant to the Conduct
Rules of the NASD and the actual sales charges paid by the Fund, if
applicable; and cause the Fund's transfer agent to provide such
information in a form satisfactory to FDI no less often than monthly
for every Fund and on a daily basis for any Fund where FDI determines
that the remaining limit is approaching zero, if applicable; and
(e) provide FDI with copies of, or access to, any documents that FDI
may reasonably request and notify FDI as soon as possible of any
matter materially affecting FDI's performance of its services under
this Agreement.
3. COMPENSATION; REIMBURSEMENT OF EXPENSES. TD Waterhouse shall pay FDI the
following fee for the services provided under this Agreement:
(a) an annual fee of $400,000 for Routine Administrative Services, as
defined in Exhibit A, payable in equal monthly installments on the
second business day of each month; such annual fee to be increased to
$417,000 for the second year of this Agreement and to $436,000 for the
third year of this Agreement; provided, however, that the parties
hereto shall renegotiate in good faith such annual fee should the
number of Funds and/or Portfolios increase or decrease materially; and
(b) for Extraordinary Administrative Services, as defined in Exhibit
A, a flat or hourly fee to be determined after the scope of the
project has been accurately and completely defined. Only personnel
with an Assistant Vice President title or higher with FDI would xxxx
on an hourly basis.
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be paid
monthly in arrears. If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above. In
addition, TD Waterhouse agrees to reimburse FDI for FDI's reasonable
out-of-pocket expenses as mutually agreed to by the parties from time to time.
4. EFFECTIVE DATE AND TERM. This Agreement shall become effective with respect
to a Fund as of the date first written above (or, if a particular Fund or
Portfolio is not in existence on that date, on the date FDI becomes
sub-administrator to the Fund or Portfolio; Schedule A to this Agreement shall
be deemed amended to include such Fund or Portfolio from and after such date).
This Agreement shall become effective as of the date hereof and will continue
thereafter so long as such continuance is specifically approved at least
annually (i) by the Fund's Board or (ii) by a vote of a majority (as defined in
the 0000 Xxx) of the Shares of the relevant Fund or Portfolio, as the case may
be, provided that in either event its continuance also is approved by a majority
of
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the Board members who are not "interested persons" (as defined in said Act)
of any party to this Agreement and who have no direct or indirect financial
interest in this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable with respect to
any Portfolio or any Fund, without penalty, on not less than sixty days' notice,
by the Fund's Board of Directors/Trustees, by vote of a majority (as defined in
the 0000 Xxx) of the outstanding voting securities of such Fund (or Portfolio),
or by FDI. This Agreement shall terminate automatically in the event of its
"assignment" (as defined in the 1940 Act). This Agreement may be terminated by
either party, on not less than 60 days written notice, upon any material breach
of this Agreement by the other party.
5. STANDARD OF CARE AND INDEMNIFICATION.
(a) TD Waterhouse will indemnify and hold harmless FDI, its officers,
employees and agents and any persons who control FDI (together "FDI and
its employees") and hold each of them harmless from any losses, claims,
damages or liabilities, or actions in respect thereof, to which FDI and
its employees may become subject, including amounts paid in settlement
with the prior written consent of TD Waterhouse, insofar as such losses,
claims, damages or liabilities, or actions in respect thereof, arise out
of or result from the failure of TD Waterhouse to comply with the terms of
this Agreement;
(b) FDI will indemnify and hold harmless TD Waterhouse, its officers,
employees and agents and any persons who control TD Waterhouse (together
"TD Waterhouse and its employees") and hold each of them harmless from any
losses, claims, damages or liabilities, or actions in respect thereof, to
which TD Waterhouse and its employees may become subject, including
amounts paid in settlement with the prior written consent of FDI, insofar
as such losses, claims, damages or liabilities, or actions in respect
thereof, arise out of or result from the failure of FDI to comply with the
terms of this Agreement;
TD Waterhouse will reimburse FDI and its employees for reasonable legal or
other expenses reasonably incurred by FDI and its employees in connection
with investigating or defending against any such loss, claim, damage,
liability or action. TD Waterhouse shall not be liable to FDI for any
action taken or omitted by FDI in bad faith, with willful misfeasance or
gross negligence, or with reckless disregard by FDI of its obligations and
duties hereunder. The indemnities in this Section shall, upon the same
terms and conditions, extend to and inure to the benefit of each of the
employees of FDI that serve as officers or directors of the Fund and to
each of the directors and officers of FDI and any person
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controlling FDI within the meaning of Section 15 of the Securities Act of
1933 ("1933 Act") or Section 20 of the Securities Exchange Act of 1934
("1934 Act").
FDI will reimburse TD Waterhouse for reasonable legal or other expenses
reasonably incurred by TD Waterhouse in connection with investigating or
defending against any such loss, claim, damage, liability or action. FDI
shall not be liable to TD Waterhouse for any action taken or omitted by TD
Waterhouse in bad faith, with willful misfeasance or gross negligence, or
with reckless disregard by TD Waterhouse of its obligations and duties
hereunder. The indemnities in this Section shall, upon the same terms and
conditions, extend to and inure to the benefit of each of the directors
and officers of TD Waterhouse and any person controlling TD Waterhouse
within the meaning of Section 15 for the 1933 Act or Section 20 of the
1934 Act.
(c) (i) Promptly after an indemnified party (or, if such indemnified party
is not a natural person, a responsible officer of such indemnified party)
receives notice or otherwise becomes aware of the commencement of any
action or other assertion of any losses, claims, damages or liabilities by
any third party, such indemnified party shall, if a claim in respect
thereof is to be made pursuant to this Section 5, notify the indemnitor of
the same in writing (such notice, a "claim notice"); but the omission so
to notify the indemnitor will not relieve the indemnitor from any
liability that it may have to such indemnified party otherwise than under
this Section 5. In the event that the indemnified party notifies the
indemnitor in writing of its waiver of any right to indemnification
pursuant to this Section 5 in respect of any losses, claims, damages or
liabilities or portion thereof, the provisions of clause (ii) of this
Section 5(c) shall not apply.
(ii) Promptly following receipt of a claim notice, the indemnitor,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnitor may designate in contesting such losses,
claims, damages or liabilities and shall pay the reasonable fees and
disbursements of such counsel related to such contest. In any such
contest, any indemnified party shall have the right to retain its own
counsel, but the reasonable fees and expenses of such counsel shall be at
the expense of such indemnified party unless (A) the indemnitor and the
indemnified party shall have mutually agreed to the retention of such
counsel or (B) the named parties to any such contest (including any
impleaded parties) include both the indemnitor and the indemnified party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them.
It is understood that the indemnitor shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one firm for all such
indemnified parties. The indemnitor may, at its option, at any time upon
written notice to the indemnified party, assume the responsibility for
contesting any losses, claims, damages or liabilities and may designate
counsel satisfactory to the indemnitor in connection therewith provided
that the counsel so designated would have no actual or potential conflict
of interest in connection with such representation. Unless it shall assume
the responsibility for contesting any losses, claims, damages or
liabilities, the indemnitor shall not be liable for any settlement or
compromise of such losses, claims, damages or liabilities or portion
thereof which settlement or compromise is effected without its written
consent, but if settled or compromised with such consent or if there be a
final judgment for the plaintiff asserting such losses, claims or
liabilities, the indemnitor agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement, compromise
or judgment. If the indemnitor assumes responsibility for contesting any
losses, claims, damages or liabilities, it shall be entitled to settle or
compromise such losses, claims, damages or liabilities or portion thereof
with the consent of the indemnified party or, if such settlement or
compromise provides for release of the indemnified party in connection
with all matters relating to such losses, claims, damages or liabilities,
or, with respect to the settlement or compromise of a portion of such
losses, claims, damages or liabilities, all matters relating to such
portion of such losses, claims, damages or liabilities,
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that have been asserted against the indemnified party by the other parties
to such settlement or compromise, without the consent of the indemnified
party. In the event that any expense paid by the indemnitor pursuant to
this Section 6(c) is subsequently determined to not be required to be
borne by the indemnitor, the indemnified party that received such payment
shall promptly refund the amount so paid to the indemnitor. If the
indemnitor assumes responsibility for contesting any losses, claims,
damages or liabilities, the indemnitor shall keep the indemnified party
apprised, on a current basis, of matters concerning such contest,
including without limitation (i) providing the indemnified party with
reasonable notice of and opportunity to be present in person and/or by
counsel at proceedings or discussions of settlement or compromise; (ii)
providing the indemnified party with copies of and opportunity to comment
on filings, papers or settlement agreements proposed to be filed or served
by or on behalf of the indemnitor; and (iii) providing the indemnified
party with copies of filings, papers and proposed settlement agreements
received by the indemnitor from or on behalf of persons asserting such
losses, claims, damages or liabilities.
(d) The obligation to indemnify and provide contribution pursuant to this
Section 6 shall survive the termination of this Agreement.
7. RECORD RETENTION AND CONFIDENTIALITY. FDI shall keep and maintain on behalf
of the Fund all books and records which the Fund and FDI are, or may be,
required to keep and maintain in connection with the services to be provided
hereunder pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the 1940 Act. FDI further agrees
that all such books and records shall be the property of the Fund and to make
such books and records available for inspection by the Fund, by TD Waterhouse,
or by the Securities and Exchange Commission at reasonable times and otherwise
to keep confidential all books and records and other information relative to the
Fund and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
8. RIGHTS OF OWNERSHIP. All computer programs and procedures developed to
perform the services to be provided by FDI under this Agreement are the property
of FDI.
9. RETURN OF RECORDS. FDI may at its option at any time, and shall promptly upon
the demand of TD Waterhouse and/or the Fund, turn over to TD Waterhouse and/or
the Fund and cease to retain FDI's files, records and documents created and
maintained by FDI pursuant to this Agreement so long as FDI shall be able to
retain photocopies of such documents to the extent needed by FDI in the
performance of its services or for its legal protection. If not so turned over
to TD Waterhouse and/or the Fund, such documents and records will be retained by
FDI for six years from the end of the fiscal year of the Fund for which they
were created. At the end of such six-year period, such records and documents
will be turned over to TD Waterhouse and/or the Fund unless the Fund authorizes
in writing the destruction of such records and documents.
10. REPRESENTATIONS OF TD WATERHOUSE. TD Waterhouse represents and warrants to
FDI that this Agreement has been duly authorized by TD Waterhouse and, when
executed and delivered by TD Waterhouse, will constitute a legal, valid and
binding obligation of TD Waterhouse, enforceable against TD Waterhouse in
accordance with its terms, subject to bankruptcy,
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insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
11. REPRESENTATIONS OF FDI. FDI represents and warrants that this Agreement has
been duly authorized by FDI and, when executed and delivered by FDI, will
constitute a legal, valid and binding obligation of FDI, enforceable against FDI
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.
12. NOTICES. All notices or other communications hereunder to either party shall
be in writing and shall be deemed sufficient if mailed to TD Waterhouse at the
following address: TD Waterhouse Investor Services, Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: President; and to FDI at the following address:
00 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000, Attention: President with a copy
to General Counsel or at such other address as such party may designate by
written notice to the other, or in either case if sent by telex, telecopier,
telegram or similar means of same day delivery (with a confirming copy by mail
as provided herein).
13. HEADINGS. Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
14. ASSIGNMENT. This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party.
15. GOVERNING LAW. This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
TD WATERHOUSE INVESTOR SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Title: SVP
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
Title: SVP
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EXHIBIT A
ADMINISTRATIVE SERVICES
FDI will provide the following routine administrative services ("Routine
Administrative Services"):
Corporate and Secretarial Services
o Provide Secretary and the necessary complement of Assistant
Secretaries for the funds.
o Maintain general corporate calendar. Track all legal and
compliance requirements through annual cycles.
o Four quarterly board meetings per year:
o Prepare agenda and background materials for legal
approval
o Make presentations
o Monitor annual approval requirements
o Prepare extensive background material for annual review
of advisory fees
o Prepare minutes
o Follow-up on matters raised at meetings
o Maintain Articles of Incorporation (or Declaration of Trust)
and By-Laws of each Fund
o Prepare organizational board meeting materials
o Draft contracts, assisting in negotiation and planning, as
appropriate. For example negotiate, draft and keep current the
following contracts, among others: (i) investment advisory and
sub-advisory contracts; (ii) Distribution Agreement; (iii)
Bank Agreements; (iv) Broker Dealer Agreements; (v) Transfer
Agency Agreement; (vi) Custody Agreement; (vii) Administration
Agreement and Sub-Administration Agreement; (viii) 12b-1 Plans
and related agreements; (ix) Shareholder Servicing Plans and
Related Agreements; (x) XXX Custodian Agreements; (xi)
Bi-Party Repurchase Agreements; (xii) Tri-Party Repurchase
Agreements; (xiii) Futures Account Agreement and Procedural
Safekeeping Agreement; (xiv) loan agreements; and (xv) various
other agreements and amendments.
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SEC and Public Disclosure Assistance
o Prepare and file one annual amendment to each Fund's
registration statement, including updating prospectuses and
SAIs.
o Coordinate/monitor, with assistance from the fund
administrator and fund accountant and any other relevant fund
service providers, XXXXX (Electronic Data Gathering Analysis
and Retrieval System) on-line filings related to
post-effective amendments, N-SARs, 24f-2, annual and
semi-annual shareholders reports.
o Review annual and semi-annual Shareholder Reports.
o Provide legal assistance for shareholder communications.
Legal Consulting and Planning
o Provide general legal advice on matters relating to portfolio
management, fund operations, mutual fund sales, development of
advertising materials, changing or improving prospectus
disclosure, and any potential changes in a Portfolio's or
Fund's investment policies, operations, or structure.
o Maintain a continuing awareness of significant emerging
regulatory and legislative developments which may affect the
Funds, update the investment adviser on those developments,
and provide related planning assistance.
o Develop or assist in developing guidelines and procedures to
improve overall compliance by the Funds and their various
agents.
o Provide advice with regard to Fund litigation matters, routine
Fund examinations and investigations by regulatory agencies.
o Provide advice regarding long term planning for the Funds
including the creation of new funds or portfolios, corporate
structural changes, mergers, acquisitions, and other asset
gathering plans including new distribution methods.
o Maintain effective communications with Fund counsel, counsel
to the "non-interested" board members and to the Fund's local
counsel.
o Create and implement timing and responsibility system for
outside legal counsel when necessary to implement major
projects and the legal management of such projects.
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Compliance
o Review of all testing that is done by each Fund's fund
accountant to assist the investment adviser in complying with
Fund prospectus guidelines and limitations, 1940 Act
requirements, and Internal Revenue Code requirements.
o Review of monthly testing and compliance report created by fund
accountant including:
o Tax compliance testing for gross income, diversification
and single issuer tests,
o 5% diversification testing for tax and 1940 Act
compliance based on current market value and acquisition
cost testing, if required,
o Income available for distribution report, which includes
capital gains and interest income,
o Rule 2a-7 compliance,
o Net investment income calculated on per-share basis each
month, and
o Prospectus and 1940 Act compliance testing-tests are
tailored to each individual fund's prospectus and tests
against the type and amount of securities held.
o Jointly create Compliance Manuals and workshops for advisory
personnel with the fund accountant.
o Consultation and advice for resolution of compliance questions
along with each Fund's investment adviser, administrator,
counsel and fund accountant.
o Be actively involved with the management of SEC and other
regulatory examinations.
o Review with the investment adviser and fund administrator
summary reports created by the fund accountant of all
compliance issues to assure immediate compliance adjustments.
o Assist portfolio managers with compliance matters including
reviewing the Compliance Manual on a regular basis and
attending compliance meetings with the portfolio managers.
o Assist in developing guidelines and procedures to improve
overall compliance by each Fund and its various agents.
o Maintain legal liaison with and provide legal advice and
counsel to each Fund regarding its relationships, contractual
or otherwise, with the various Fund agents, such as the
adviser, custodian, transfer agents, and auditors with respect
to their activities on behalf of the Fund.
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o Advice regarding all Fund distribution arrangements for
compliance with applicable banking and broker-dealer
regulations.
o Provide other Fund officers as requested (e.g., President and
Vice President).
o Maintaining the Funds' code of ethics.
Treasury Services
o Providing each Fund's Treasurer and the appropriate complement
of Assistant Treasurers to assume certain specified
responsibilities (these functions will be based upon the day
to day work completed by knowledgeable staff assembled by TD
Waterhouse including the fund accountant).
o Coordinate/monitor, with assistance from the investment
adviser, the fund accountant and any other relevant Fund
service provider, all required financial materials for review
by the board (for example, items required by SEC Rule 2a-7,
10f-3, 17a-7, and 17e-1 reports, repurchase agreements, dealer
lists, securities transactions).
o Reviewing and monitoring xxxx-to-market comparisons for money
market funds that are generated by the fund accountant.
o Assisting (along with the Fund accountant) the Fund's
investment adviser in valuing securities that are not readily
saleable.
FDI is willing to provide any extraordinary administration services
("Extraordinary Administrative Services") to TD Waterhouse with respect to the
Funds. All of the extraordinary legal functions set forth below may be
accomplished wholly or partially by FDI depending upon the circumstances
surrounding each request. Extraordinary Administrative Services may, depending
upon the circumstances, include the following:
o Shareholder Meetings
o Draft Proxies
o Organize, attend and keep minutes
o Work with the Transfer Agent on Solicitations and Vote
Tabulation
o Provide legal presence at meetings
o Draft Proxy/Solicitation Documents on Form N-14 (Fund
Mergers).
o A Post-Effective Amendment (other than the annual amendment)
that involves major prospectus revisions or the addition of
new investment portfolios.
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o Board Meeting Materials for significant corporate
restructuring or other major changes as well as more than four
board meetings during a twelve month period.
o More than one Post-Effective Amendment per Fund in any twelve
month period.
o Advice regarding conversion of pooled funds and certain other
bank specific advice.
o Monitor and participate in the preparation of documents for
Exemptive Orders, Revenue Rulings and other state specific
regulatory orders.
o Filing advertising and sales literature with the appropriate
regulatory entities and providing all compliance review of
such materials.
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