Exhibit (h)(4)
FORM OF SUB-ADMINISTRATION AGREEMENT
SUB-ADMINISTRATION AGREEMENT made this ____ day of November, 1999 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") (the "Trust"), and to certain
portfolios of the Trust (each a "Fund", collectively, the "Funds"), as listed on
Schedule A, as such Schedule shall be automatically amended from time to time,
subject to Board of Director approval;
WHEREAS, TD Waterhouse serves as administrator for the Trust pursuant to an
Administration Agreement dated as of _________, 1999, as amended from time to
time;
WHEREAS, TD Waterhouse desires to retain FDI to assist it in performing
administrative services with respect to the shares of the beneficial interest
(the "Shares") of the Trust 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 Funds of the Trust, 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 Trust'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 Trust's blue sky administrator to monitor sales of the
Shares to assure compliance with applicable state securities and Blue
Sky laws;
(c) cause the Trust's transfer agent to give necessary information for
the preparation of quarterly reports in a form satisfactory to FDI
regarding Rule 12b-1 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 Trustees of
the Trust;
(d) cause the Trust's transfer agent to provide FDI with all necessary
historical information so that FDI can calculate the maximum sales
charges payable by the Trust pursuant to the Conduct Rules of the
National Association of Securities Dealers, Inc. ("NASD") and the
actual sales charges paid by the Trust, if applicable; cause the
Trust's transfer agent to provide FDI with all of the necessary
information so that FDI can calculate the maximum sales charges payable
by the Trust pursuant to the Conduct Rules of the NASD and the actual
sales charges paid by the Trust, if applicable; and cause the Trust'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 will 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. For the services rendered by FDI
hereunder, FDI shall receive a fee from TD Waterhouse as agreed by TD Waterhouse
and FDI from time to time as set forth in Schedule B attached hereto. This fee
will be payable in equal monthly installments on the second business day of each
month.
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 is not in
existence on that date, on the date Funds Distributor, Inc. becomes
sub-administrator to the Trust; Schedule A to this Agreement shall be deemed
amended to include such Fund from and after such date).
This Agreement shall become effective as of the date hereof and will continue
for an initial two-year term and will continue thereafter so long as such
continuance is specifically approved at least annually (i) by the Trust's Board
or (ii) by a vote of a majority (as defined in the 0000 Xxx) of the Shares of
the Trust or the relevant Fund, as the case may be, provided that in either
event its continuance also is approved by a majority of the Board members who
are not "interested persons" (as defined in the 0000 Xxx) 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 Fund or any
Trust, without penalty, on not less than sixty days' notice, by the Trust's
Board of Trustees, by vote of a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of such Trust, or by you. 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.
If FDI ceases to be the Sub-Administrator of any Fund before the fifth
anniversary of the date the Trust began its investment activities, TD Waterhouse
shall reimburse FDI an amount equal to the number resulting from multiplying the
Trust's total unamortized organizational expenses by a fraction, the numerator
of which is equal to the number of initial shares redeemed by FDI or its
affiliate and the denominator of which is equal to the number of initial shares
still outstanding as of the date of such redemption, as long as the
administrative position of the staff of the Securities and Exchange Commission
requires FDI to reimburse the Trust such amount. (Initial shares shall mean the
shares purchased by FDI or an affiliate to provide the initial seed capital to a
Trust pursuant to Section 14 of the 1940 Act.)
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 trustees of the Trust and to each of the directors and officers of
FDI and any person 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, 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 Trust all books and records which the Trust 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 Trust and to make
such books and records available for inspection by the Trust, 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
Trust 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 Trust, turn over to TD Waterhouse and/or
the Trust 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 Trust, such
documents and records will be retained by FDI for six years from the end of the
fiscal year of the Trust 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 Trust unless the Trust 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, 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: ___________________________
Title: ________________________
FUNDS DISTRIBUTOR, INC.
By: ___________________________
Title: ________________________
Dated: November __, 1999
SCHEDULE A TO THE
SUB-ADMINISTRATION AGREEMENT
BETWEEN
TD WATERHOUSE INVESTOR SERVICES, INC.
AND
FUNDS DISTRIBUTOR, INC.
NAME OF FUND
TD WATERHOUSE TRUST
XX Xxxxxxxxxx Xxx 30 Fund
TD WATERHOUSE INVESTOR SERVICES, INC.
By: __________________________
Title: ______________________
FUNDS DISTRIBUTOR, INC.
By: _________________________
Title: ________________________
Dated: November __, 1999
SCHEDULE B
TO THE AGREEMENT
BETWEEN
TD WATERHOUSE INVESTOR SERVICES, INC.
AND
FUNDS DISTRIBUTOR, INC.
FDI's annual fee charged to and payable by TD Waterhouse as defined below is its
share of an annual complex-wide charge. The annual complex-wide charge is:
(a) an annual fee of $250,000 for all Covered Entities for Routine
Administrative Services, as defined in Exhibit A, payable in
equal monthly installments on the second business day of each
month; and
(b) for Extraordinary Administrative Services, as defined in Exhibit A,
for any Covered Entity:
(i) a flat fee to be negotiated after the scope of the project
has been accurately and completely defined; or
(ii) a fee for a particular project based on a blended hourly
rate of $75.00 per person. Only personnel with an Assistant
Vice President title or higher with FDI would xxxx on an
hourly basis.
Except as previously 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.
A Covered Entity is any series of TD Waterhouse Family of Funds, Inc., National
Investors Cash Management Fund, Inc. and TD Waterhouse Trust and each other
future mutual fund (or series thereof) for which FDI provides administrative
services.
EXHIBIT A
Administrative Services
Funds Distributor will provide the following administrative services:
Corporate and Secretarial Services
o Provide Secretary and the necessary complement of Assistant
Secretaries for the fund. These services will be provided
consistent with the procedures listed in Exhibit B.
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 Agreement and Declaration of Trust and By-Laws of the
Trust
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: (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.
SEC and Public Disclosure Assistance
o Prepare and file one annual amendment to the Trust'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.
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 Monitor and participate in the preparation of documents for
Exemptive Orders (e.g., Joint Repurchase Account), Revenue
Rulings (e.g., Multi-Class) and other state specific regulatory
orders (e.g., Florida Request for Technical Assistance).
o Filing advertising and sales literature with the appropriate
regulatory entities and providing all compliance review of such
materials.
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 the fund's investment
policies, operations, or structure.
o Maintain a continuing awareness of significant emerging regulatory
and legislative developments which may affect the fund, update the
advisor on those developments, and provide related planning
assistance.
o Develop or assist in developing guidelines and procedures to
improve overall compliance by the fund and its 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 Trust
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.
o Monitor activities and billing practices of outside counsel
performing services for the fund or in connection with related
fund activities.
Compliance
o Review of all testing that is done by fund accountant to assist
the advisor 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, short three,
diversification, and single issuer,
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 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 the investment advisor, the fund administrator, the
fund counsel and the fund accountant.
o Be actively involved with the management of SEC and other
regulatory examinations.
o Review with the investment advisor 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 the fund and its various agents.
o Maintain legal liaison with and provide legal advice and counsel
to 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.
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 fund's code of ethics.
Treasury Services
o Providing the Trust'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 Determining properly chargeable expenses and authorizing payment
of bills for each fund.
o Monitoring and recommending changes to expense accrual rates.
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 Recommending dividends to be voted by the board
o Reviewing and monitoring xxxx-to-market comparisons for money
market funds that are generated by the fund accountant.
o Reviewing, signing off and filing all fund tax returns after such
returns have been prepared and signed by the fund's independent
auditors.
o Assisting (along with the fund accountant) the fund's advisor in
valuing securities which are not readily salable.
o Function as a liaison with the fund's custodian, fund accountant,
outside auditors and regulators, including managing the planning
and conducting of audits and examinations.
