Exhibit (h)(2)
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT ("Agreement") is made this 18th day of
February 2005 by and between Xxxxxx Xxxxxx Select Fund, Inc, a Maryland
corporation, (the "Company") having its principal place of business at 00 Xxxxx
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, on behalf of Regions Xxxxxx Xxxxxx
Select LEADER Short Term Bond Fund (the "Fund"), and Xxxxxx Xxxxxx & Company,
Inc. (the "Administrator"), a Tennessee corporation, having its principal place
of business at 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000.
WHEREAS, the Company, an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), wishes to retain the Administrator to provide administrative services to
the Fund; and
WHEREAS, the Administrator is willing to furnish such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. APPOINTMENT OF THE ADMINISTRATOR. The Company hereby appoints the
Administrator to act as the administrator for the Fund for the period, in the
manner, and on the terms set forth in this Agreement. The Administrator hereby
accepts such appointment and agrees during such period to render the services
and to assume the obligations hereinafter set forth. The Administrator shall for
all purposes herein be deemed to be an independent contractor and shall, except
as expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. ADMINISTRATIVE SERVICES. As administrator, and subject to the
supervision and control of the Board of Directors ("Board") of the Company, the
Administrator shall perform (or supervise the performance by others) and will
provide facilities, equipment and personnel to carry out the following
administrative services for operation of the business and affairs of the Fund:
(i) furnish without cost to the Fund, or pay the cost of, such office
space, office equipment and office facilities as are adequate for
the needs of the Fund;
(ii) provide, without remuneration from or other cost to the Fund, the
services of individuals competent to perform all of the executive,
administrative and clerical functions of the Fund that are not
performed by employees or other agents engaged by the Fund or by the
Administrator acting in some other capacity pursuant to a separate
agreement or arrangement with the Fund;
(iii) assist the Fund in selecting and coordinating the activities of the
other agents engaged by the Fund, including the Fund's dividend
disbursing agent, custodian, independent public accountants and
legal counsel;
(iv) authorize and permit the Administrator's directors, officers or
employees who may be elected or appointed as officers of the Company
or directors of the Company to serve in such capacities, without
remuneration from or other cost to the Fund;
(v) assure that all financial, accounting and other records required to
be maintained and preserved by the Company are maintained and
preserved by it or on its behalf in accordance with applicable laws
and regulations;
(vi) assist in the preparation of (but not pay for) all periodic reports
by the Fund to shareholders of the Fund and all reports and filings
required to maintain the registration or qualification of the Fund
and the shares of the Fund, or to meet other regulatory or tax
requirements applicable to the Fund or the shares of the Fund, under
federal and state securities and tax laws;
(vii) respond to telephonic and in-person inquiries from existing
shareholders or their representatives requesting information
regarding matters such as shareholder account or transaction status,
net asset value of Fund shares, and Fund performance, Fund services,
plans and options, Fund investment policies, Fund portfolio
holdings, and Fund distributions and classification thereof for tax
purposes;
(viii) handle shareholder complaints and correspondence directed to or
brought to the attention of the Administrator; generate or develop
and distribute special data, notices, reports, programs and
literature required by large shareholders, by shareholders with
specialized informational needs, or by shareholders generally in
light of developments, such as changes in tax laws; and
(ix) provide such other services required by the Company as the parties
may from time to time agree in writing are appropriate to be
provided under this Agreement.
The Company understands and acknowledges that the Administrator may
delegate to third parties the performance of all or part of the
administrative services required to be performed by the Administrator
hereunder.
3. BOOKS AND RECORDS. The Administrator shall maintain customary records
in connection with its duties as specified in this Agreement. Any records
required to be maintained and preserved pursuant to Rules 31a-1 and 31a-2 under
the 1940 Act which are prepared or maintained by the Administrator on behalf of
the Fund shall be the property of the Company and will be made available or
surrendered to the Company promptly upon request. In the case of any request or
demand for the inspection of such records by another party, the Administrator
shall notify the Company and follow the Company's instructions as to permitting
or refusing such inspection.
4. REPORTS. The Administrator shall furnish to or place at the disposal
of the Company such information, evaluations, analyses and opinions formulated
or obtained by the Administrator in the discharge of its duties as the Company
may, from time to time, reasonably request. The Company shall furnish the
Administrator with such documents and information with regard to its affairs as
2
the Administrator may, at any time or from time to time, reasonably request in
order to discharge its obligations under this Agreement.
5. COMPANY PERSONNEL. The Administrator agrees to permit individuals who
are directors, officers or employees of the Administrator to serve (if duly
appointed or elected) as directors, officers or employees of the Company,
without remuneration from or other cost to the Company.
6. EXPENSES. The Administrator shall be responsible for expenses incurred
in providing office space, equipment and personnel as may be necessary or
convenient to provide administrative services to the Fund, including the payment
of all fees, expenses and salaries of the directors, officers or employees of
the Company who are directors, officers or employees of the Administrator. The
Fund shall bear the expense of its operation, except those specifically
allocated to the Administrator under this Agreement or under any separate
agreement between the Company and the Administrator. Subject to any separate
agreement or arrangement between the Company and the Administrator, the expenses
hereby allocated to the Fund, and not to the Administrator, include, but are not
limited to: (i) organizational expenses; (ii) legal and audit expenses; (iii)
borrowing expenses; (iv) interest; (v) taxes; (vi) governmental fees; (vii)
fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (viii) the cost (including
brokerage commissions or charges, if any) of securities purchased or sold by the
Fund and any losses incurred in connection therewith; (ix) fees of custodians,
transfer agents, registrars or other agents; (x) expenses of preparing share
certificates; (xi) expenses relating to the redemption or repurchase of shares;
(xii) expenses of registering and qualifying shares for sale under applicable
federal law and maintaining such registrations and qualifications; (xiii)
expenses of preparing, setting in print, printing and distributing prospectuses,
proxy statements, reports, notices and dividends to shareholders; (xiv) cost of
stationery; (xv) costs of shareholders and other meetings of the Fund; (xvi)
compensation and expenses of the independent directors of the Company; and
(xvii) the Fund's portion of premiums of any fidelity bond and other insurance
covering the Fund and its officers and directors.
7. COMPENSATION. For the services and facilities to be furnished and
expenses assumed hereunder, the Administrator shall receive from the Fund an
administration fee at the annual rate listed along with the Fund's name in
Schedule A attached hereto. This administration fee shall be payable monthly as
soon as practicable after the last day of each month based on the average of the
daily values placed on the net assets of the Fund as determined at the close of
business on each day throughout the month. The assets of the Fund will be valued
separately as of the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time) on each business day throughout the month
or, if the Fund lawfully determines the value of the net assets of the Fund as
of some other time on each business day, as of such time with respect to the
Fund. The first payment of such fee shall be made as promptly as possible at the
end of the month next succeeding the effective date of this Agreement. In the
event that the Administrator's right to such fee commences on a date other than
the last day of the month, the fee for such month shall be based on the average
daily assets of the Fund in that period from the date of commencement to the
last day of the month. If the Fund determines the value of the net assets of the
Fund more than once on any business day, the last such determination on that day
shall be deemed to be the sole determination on that day. The value of net
3
assets shall be determined pursuant to the applicable provisions of the Fund's
Articles of Incorporation, its By-Laws and the 1940 Act. If, pursuant to such
provisions, the determination of the net asset value of the Fund is suspended
for any particular business day, then the value of the net assets of the Fund on
that day shall be deemed to be the value of its net assets as determined on the
preceding business day. If the determination of the net asset value of the Fund
has been suspended for more than one month, the Administrator's compensation
payable at the end of that month shall be computed on the basis of the value of
the net assets of the Fund as last determined (whether during or prior to such
month).
8. NON-EXCLUSIVE SERVICES. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of the Administrator who
may also be a director, officer or employee of the Company, to engage in any
other business or to devote his time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature, nor to limit or restrict the right of the Administrator to engage in any
other business or to render services of any kind, including administrative
services, to any other corporation, firm, individual or association, provided
that any such other services and activities do not, during the term of this
Agreement, interfere, in a material manner, with the Administrator's ability to
meet all of its obligations to the Company hereunder.
9. LIMITATION OF LIABILITY.
9.1 LIABILITY OF THE ADMINISTRATOR. Neither the Administrator nor
any director, officer or employee of the Administrator performing services for
the Fund at the direction or request of the Administrator in connection with the
Administrator's discharge of its obligations hereunder shall be liable for any
error of judgment or mistake of law or for any loss suffered by the Company or
the Fund in connection with any matter to which this Agreement relates; provided
that nothing herein contained shall be construed (i) to protect the
Administrator against any liability to the Company or the Fund or its
shareholders to which the Administrator would otherwise be subject by reason of
the Administrator's willful misfeasance, bad faith, or gross negligence in the
performance of the Administrator's duties, or by reason of the Administrator's
reckless disregard of its obligations and duties under this Agreement
("disabling conduct"), or (ii) to protect any director, officer or employee of
the Administrator who is or was a director or officer of the Company against any
liability to the Company or the Fund or its shareholders to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
person's office with the Company.
9.2 INDEMNIFICATION BY THE COMPANY. The Company will indemnify the
Administrator against, and hold it harmless from, any and all expenses
(including reasonable counsel fees and expenses) incurred investigating or
defending against claims for losses or liabilities described in Section 9.1 not
resulting from negligence, disregard of its obligations and duties under this
Agreement or disabling conduct by the Administrator. Indemnification shall be
made only following: (i) a final decision on the merits by a court or other body
before whom the proceeding was brought that the Administrator was not liable by
reason of negligence, disregard of its obligations and duties under this
Agreement or disabling conduct or (ii) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the
Administrator was not liable by reason of negligence, disregard of its
obligations and duties under this Agreement or disabling conduct by (a) the vote
4
of a majority of a quorum of directors of the Company who are neither
"interested persons" of the Company nor parties to the proceeding
("disinterested non-party directors") or (b) an independent legal counsel in a
written opinion. The Administrator shall be entitled to advances from the
Company for payment of the reasonable expenses incurred by it in connection with
the matter as to which it is seeking indemnification hereunder in the manner and
to the fullest extent permissible under the Maryland General Corporation Law.
The Administrator shall provide to the Company a written affirmation of its good
faith belief that the standard of conduct necessary for indemnification by the
Company has been met and a written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not been met.
In addition, at least one of the following additional conditions shall be met:
(a) the Administrator shall provide security in form and amount acceptable to
the Company for its undertaking; (b) the Company is insured against losses
arising by reason of the advance; or (c) a majority of a quorum of the full
Board of the Company, the members of which majority are disinterested non-party
directors, or independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to the Company at the
time the advance is proposed to be made, that there is reason to believe that
the Administrator will ultimately be found to be entitled to indemnification
hereunder.
9.3 INDEMNIFICATION BY THE ADMINISTRATOR. The Administrator shall
indemnify the Company and hold it harmless from and against any and all losses,
damages and expenses, including reasonable attorneys' fees and expenses,
incurred by the Company which result from: (i) the Administrator's failure to
comply with the terms of this Agreement; or (ii) the Administrator's lack of
good faith in performing its obligations hereunder; or (iii) the Administrator's
negligence or misconduct or that of its employees, agents or contractors in
connection herewith. The Company shall not be entitled to such indemnification
in respect of actions or omissions constituting negligence or misconduct on the
part of the Company or its employees, agents or contractors other than the
Administrator unless such negligence or misconduct results from or is
accompanied by negligence or misconduct on the part of the Administrator, any
affiliated person of the Administrator, or any affiliated person of an
affiliated person of the Administrator. Before confessing any claim against it,
which may be subject to indemnification hereunder, the Company shall give the
Administrator reasonable opportunity to defend against such claim in its own
name or in the name of the Company.
10. TERM OF AGREEMENT. The term of this Agreement shall begin on the date
first written above and, unless sooner terminated as hereinafter provided, this
Agreement shall remain in effect through August 31, 2006. Thereafter, this
Agreement shall continue in effect from year to year, subject to the termination
provisions and all other terms and conditions hereof; provided such continuance
is approved at least annually by vote or written consent of the directors,
including a majority of the directors who are not interested persons of either
party hereto ("Independent Directors"); and provided further, that the
Administrator shall not have notified the Company in writing at least sixty (60)
days prior to the first expiration date hereof or at least sixty (60) days prior
to any expiration date in any year thereafter that it does not desire such
continuation. The Administrator shall furnish the Company, promptly upon its
request, such information as may reasonably be necessary to evaluate the terms
of this Agreement or any extension, renewal or amendment thereof.
5
11. AMENDMENT OR ASSIGNMENT OF AGREEMENT. This Agreement may be amended at
any time, but only by written agreement between the Administrator and the
Company, which agreement has been authorized by the Board, including the vote or
written consent of a majority of the Independent Directors. This Agreement may
not be assigned by either party without the written consent of the other party;
provided, however, that the Administrator may, at its expense and with the
advance approval of the Board, subcontract with any entity or person concerning
the provision of administration services contemplated hereunder (a
"Sub-Administrator"). The Administrator shall not, however, be relieved of any
of its obligations under this Agreement by the appointment of any
Sub-Administrator or other subcontractor and the Administrator shall be
responsible, to the extent provided in Section 9 hereof, for all acts of any
Sub-Administrator as if such acts were its own.
12. TERMINATION OF AGREEMENT. This Agreement may be terminated at any time
by either party hereto, without the payment of any penalty, upon at least sixty
(60) days' prior written notice to the other party; provided that, in the case
of termination by the Company, such action shall have been authorized by the
Board, including the vote or written consent of a majority of the Independent
Directors.
13. INTERPRETATION AND DEFINITION OF TERMS. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any,
by the United States courts or, in the absence of any controlling decision of
any court, by rules, regulations or orders of the Securities and Exchange
Commission validly issued pursuant to the 1940 Act. Specifically, the terms
"assignment," "interested person" and "majority of the outstanding voting
securities" shall have the meanings given to them by Section 2(a) of the 1940
Act, subject to such exemptions as may be granted by the Securities and Exchange
Commission by any rule, regulation or order.
14. GOVERNING LAW. Except insofar as the 1940 Act or other federal laws
and regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Maryland.
15. NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postage prepaid to the other party to this
Agreement at its principal place of business.
16. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
17. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
6
IN WITNESS WHEREOF the parties have caused this instrument to be signed on
their behalf by their respective officers thereunto duly authorized all as of
the date first written above.
XXXXXX XXXXXX SELECT FUND, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Secretary and Assistant Treasurer
XXXXXX XXXXXX & COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing Director
7
SCHEDULE A
XXXXXX XXXXXX SELECT FUND, INC.
FEE SCHEDULE
PERCENTAGE OF AVERAGE
FUND DAILY NET ASSETS
---- ----------------
Regions Xxxxxx Xxxxxx Select LEADER 0.12%
Short Term Bond Fund
