ADMINISTRATION AGREEMENT
This Agreement, dated as of the 1st day of August, 1995, made by and
between IAA Trust Growth Fund, Inc. ("The Growth Fund"), a corporation duly
organized and existing under the laws of the state of Maryland, operating as a
registered investment company under the Investment Company Act of 1940, as
amended (the "Act"), and Fund/Plan Services, Inc. ("Fund/Plan"), a corporation
duly organized and existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Parties desire to enter into an agreement whereby
Fund/Plan will provide certain administration services to the Growth Fund on the
terms and conditions set forth in this Agreement; and
WHEREAS, Fund/Plan is willing to serve in such capacity and perform
such administrative services under the terms and conditions set forth below; and
WHEREAS, the Growth Fund will provide all necessary information to
Fund/Plan concerning the Fund so that Fund/Plan may appropriately execute its
responsibilities hereunder;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
Section 1. Appointment The Growth Fund hereby appoints Fund/Plan as
administrator and Fund/Plan hereby accepts such appointment.
Section 2. Duties and Obligations of Fund/Plan
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Directors of the Growth
Fund, Fund/Plan shall provide to the Fund all administrative services as set
forth in Schedule "A" attached hereto and incorporated by reference in its
entirety into this Agreement. In addition to the obligations set forth in
Schedule "A", Fund/Plan shall (i) provide its own office space, facilities,
equipment and personnel for the performance of its duties under this Agreement;
and (ii) take all actions it deems necessary to properly execute the
administrative responsibilities of the Growth Fund.
(b) So that Fund/Plan may perform its duties under the terms
of this Agreement,
the Board of Directors of the Growth Fund shall direct the officers, investment
advisor, distributor, legal counsel, independent accountants and custodian of
the Growth Fund to cooperate fully with Fund/Plan and to provide such
information, documents and advice relating to the Growth Fund as is within the
possession or knowledge of such persons provided that no such person need
provide any information to Fund/Plan if to do so would result in the loss of any
privilege or confidential treatment with respect to such information. In
connection with its duties, Fund/Plan shall be entitled to rely, and shall be
held harmless by the Growth Fund when acting in reasonable reliance upon the
instruction, advice or any documents as provided by the Growth Fund to Fund/Plan
by any of the aforementioned persons. All fees charged by any such persons shall
be deemed an expense of the Growth Fund.
(c) Any activities performed by Fund/Plan under this Agreement shall
conform to the requirements of:
(1) the provisions of the Investment Company Act of 1940, as
amended (the "Act") and the Securities Act of 1933, as amended, and of any rules
or regulations in force thereunder;
(2) any other applicable provision of state and federal law;
(3) the provisions of the Articles of Incorporation and
By-Laws of the Growth Fund as amended from time to time;
(4) any policies and determinations of the Board of Directors
of the Growth Fund; and
(5) the fundamental policies of the Growth Fund as reflected
in the registration statement under the Act.
Fund/Plan acknowledges that all records that it maintains for the
Growth Fund are the property of the Growth Fund and will be surrendered promptly
to the Growth Fund upon written request. Fund/Plan will preserve, for the
periods prescribed under Rule 31a-2 under the Act, all such records required to
be maintained under Rule 31a-1 of the Act.
(d) Nothing in this Agreement shall prevent Fund/Plan or any officer
thereof from acting as administrator for or with any other person, firm or
corporation. While the administrative services supplied to the Growth Fund may
be different than those supplied to other persons, firms or corporations,
Fund/Plan shall provide the Growth Fund equitable treatment in supplying
services. The Growth Fund recognizes that it will not receive
preferential treatment from Fund/Plan as compared with the treatment
provided to other Fund/Plan clients. Fund/Plan agrees to maintain the records
and all other information of the Growth Fund in a confidential manner and shall
not use such information for any purpose other than the performance of
Fund/Plan's duties under this Agreement.
Section 3. Allocation of Expenses All costs and expenses of the Growth
Fund shall be paid by the Growth Fund including, but not limited to:
(a) fees paid to an investment adviser (the "Adviser");
(b) interest and taxes;
(c) brokerage fees and commissions;
(d) insurance premiums;
(e) compensation and expenses of its Directors who are not
affiliated persons of the Adviser;
(f) legal, accounting and audit expenses;
(g) custodian and transfer agent, or shareholder servicing
agent, fees and expenses;
(h) fees and expenses incident to the registration of the
shares of the Growth Fund under Federal or state
securities laws;
(i) expenses related to preparing, setting in type,
printing and mailing prospectuses, statements of
additional information, reports and notices and proxy
material to shareholders of the Growth Fund;
(j) all expenses incidental to holding meetings of
shareholders and Directors of the Growth Fund;
(k) such extraordinary expenses as may arise, including
litigation, affecting the Growth Fund and the legal
obligations which the Growth Fund may have regarding
indemnification of its officers and directors; and
(l) fees and out-of-pocket expenses paid on behalf of the
Growth Fund by Fund/Plan.
Section 4. Compensation of Fund/Plan The Growth Fund agrees to pay
Fund/Plan compensation for its services and to reimburse it for expenses
incurred and paid by Fund/Plan on behalf of the Growth Fund, at the rates and
amounts as set forth in Schedule "B" attached hereto, and as shall be set forth
in any amendments to such Schedule "B" approved by the Growth Fund and
Fund/Plan. The Growth Fund agrees and understands that Fund/Plan's compensation
be comprised of two components, payable on a monthly basis, as follows:
(i) A combined asset-based fee subject to a minimum amount will be
billed monthly to the Growth Fund. These fees are to be paid by the Growth Fund
within ten calendar days after receipt of an invoice from Fund/Plan.
(ii) reimbursement of any out-of-pocket expenses paid by Fund/Plan on
behalf of the Growth Fund, which out-of-pocket expenses will be billed to the
Growth Fund within the
first ten calendar days of the month following the month in which such
out-of-pocket expenses were incurred. The Growth Fund agrees to reimburse
Fund/Plan for such expenses within ten calendar days of receipt of such xxxx.
For the purpose of determining fees payable to Fund/Plan, the value of
the Growth Fund's net assets shall be computed at the times and in the manner
specified in the Growth Fund's Prospectus and Statement of Additional
Information then in effect.
During the term of this Agreement, should the Growth Fund seek services
or functions in addition to those outlined above or in Schedule "A" attached, a
written amendment to this Agreement specifying the additional services and
corresponding compensation shall be executed by both Fund/Plan and the Growth
Fund.
Section 5. Duration
(a) The term of this Agreement shall be for a period of three (3)
years, commencing on the date hereinabove first written ("Effective Date") and
shall continue thereafter on a year to year term subject to termination by
either Party set forth in (c) below.
(b) The fee schedule set forth in Schedule "B" attached shall be fixed
for three (3) years commencing on the Effective Date of this Agreement.
(c) After the initial term of this Agreement, the Growth Fund or
Fund/Plan may give written notice to the other of the termination of this
Agreement, such termination to take effect at the time specified in the notice,
which date shall not be less than one hundred twenty (120) days after the date
of receipt of such notice. Upon the effective termination date, the Growth Fund
shall pay to Fund/Plan such compensation as may be due as of the date of
termination and shall likewise reimburse Fund/Plan for any out-of-pocket
expenses and disbursements reasonably incurred by Fund/Plan to such date.
(d) If a successor to any of Fund/Plan's duties or responsibilities
under this Agreement is designated by the Growth Fund by written notice to
Fund/Plan in connection with the termination of this Agreement, Fund/Plan shall
promptly upon such termination and at the expense of the Growth Fund, transfer
all required records and shall cooperate in the transfer of such duties and
responsibilities.
Section 6. Amendment No provision of this Agreement may be amended or
modified, in any manner except by a written agreement properly authorized and
executed by Fund/Plan and the Growth Fund.
Section 7. Applicable Law This Agreement shall be governed by the
laws of the Commonwealth of Pennsylvania and the venue of any action arising
under this Agreement shall be Xxxxxxxxxx County, Commonwealth of Pennsylvania.
Section 8. Limitation of Liability
(a) The execution and delivery of this Agreement has been duly
authorized by the Board of Directors of the Growth Fund and executed on behalf
of the Growth Fund by the undersigned officer, in that officer's capacity as an
officer of the Growth Fund. The obligations under this Agreement shall be
binding upon the assets and property of the Growth Fund and shall not be binding
upon any director, officer or shareholder of the Fund individually.
(b) Fund/Plan, its directors, officers, employees, shareholders and
agents shall only be liable for any error of judgment or mistake of law or for
any loss suffered by the Growth Fund in connection with the performance of this
Agreement that result from willful misfeasance, bad faith or negligence on the
part of Fund/Plan in the performance of its obligations and duties under this
Agreement.
(c) Any person, even though a director, officer, employee, shareholder
or agent of Fund/Plan, who may be or become an officer, director, employee or
agent of the Growth Fund, shall be deemed when rendering services to such entity
or acting on any business of such entity (other than services or business in
connection with Fund/Plan's duties under the Agreement), to be rendering such
services to or acting solely for the Growth Fund and not as a director, officer,
employee, shareholder or agent of, or under the control or direction of
Fund/Plan even though such person may receive compensation from Fund/Plan.
(d) Notwithstanding any other provision of this Agreement, the Growth
Fund shall indemnify and hold harmless Fund/Plan, its directors, officers,
employees, shareholders and agents from and against any and all claims, demands,
expenses and liabilities (whether with or without basis in fact or law) of any
and every nature which Fund/Plan may sustain or incur or which may be asserted
against Fund/Plan by any person by reason of, or as a result of (i) any action
taken or omitted to be taken by Fund/Plan in good faith, (ii) any action taken
or omitted to be taken by Fund/Plan in good faith in reliance upon any
certificate, instrument, order or stock certificate or other document reasonably
believed by Fund/Plan to be genuine and to be signed, countersigned or executed
by any duly authorized person, upon the oral instructions or
written instruction of an authorized person of the Growth Fund or upon the
opinion of legal counsel for the Growth Fund; or (iii) any action taken in good
faith or omitted to be taken by Fund/Plan in connection with its appointment in
reliance upon any law, act, regulation or interpretation of the same even though
the same may thereafter have been altered, changed, amended or repealed.
Indemnification under this subparagraph shall not apply, however, to actions or
omissions of Fund/Plan or its directors, officers, employees, shareholders or
agents in cases of its or their willful misfeasance, bad faith, negligence or
reckless disregard of its or their duties hereunder.
(e) Fund/Plan shall give written notice to the Growth Fund within ten
(10) business days of receipt by Fund/Plan of a written assertion or claim of
any threatened or pending legal proceeding which may be subject to this
indemnification. The failure to notify the Growth Fund of such written assertion
or claim shall not, however, operate in any manner whatsoever to relieve the
Growth Fund of any liability arising under this Section or otherwise, unless
such failure prejudices the Growth Fund.
(f) For any legal proceeding giving rise to this indemnification, the
Growth Fund shall be entitled to defend or prosecute any claim in the name of
Fund/Plan at its own expense and through counsel of its own choosing if it gives
written notice to Fund/Plan within ten (10) business days of receiving notice of
such claim. Notwithstanding the foregoing, Fund/Plan may participate in the
litigation at its own expense through counsel of its own choosing. If the Growth
Fund does choose to defend or prosecute such claim, then the parties shall
cooperate in the defense or prosecution thereof and shall furnish such records
and other information as are reasonably necessary.
(g) The terms of this Section 8 shall survive the termination of this
Agreement.
Section 9. Notices Except as otherwise provided in this Agreement, any
notice or other communication required by or permitted to be given in connection
with this Agreement shall be in writing, and shall be delivered in person or
sent by first class mail, postage prepaid to the respective parties as follows:
If to IAA Trust Growth Fund, Inc.: If to Fund/Plan:
IAA Trust Growth Fund, Inc. Fund/Plan Services, Inc.
000 XXX Xxxxx 0 Xxxx Xxx Xxxxxx
Xxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx Attention: Xxxxxxx X. Xxxxx,
Vice President President
Section 10. Severability If any part, term or provision of this
Agreement is held by any court to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be considered
severable and not affected, and the rights and obligations of the parties shall
be construed and enforced as if the Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
Section 11. Section Headings Section and Paragraph headings are for
convenience only and shall not be construed as part of this Agreement.
Section 12. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
consisting of seven typewritten pages, together with Schedules "A" and "B" to be
signed by their duly authorized officers as of the day and year first above
written.
IAA Trust Growth Fund, Inc. Fund/Plan Services, Inc.
-------------------------------------- ------------------------------------
By: Xxxx X. Xxxx, Vice President By: Xxxxxxx X. Xxxxx, President
SCHEDULE "A"
FUND ADMINISTRATION SERVICES
FOR
IAA TRUST GROWTH FUND, INC.
I. Regulatory Compliance
A. Compliance - Federal Investment Company Act of 1940
1. Review, report and renew
a. Investment advisory contracts
b. Fidelity bond (if requested)
c. Underwriting contracts
d. Distribution (12b-1) plans
e. Administration contracts
f. Accounting contracts
g. Custody contracts
h. Transfer agent and shareholder services contract
2. Filings
a. N-SAR (semi-annual report)
b. N-1A (prospectus), post effective amendments and
supplements ("stickers")
c. 24f-2 indefinite registration of shares
d. Filing shareholder reports under 30b2-1
e. Notify frequency capital gains under 19b-1
f. Coordination of XXXXX filings
3. Annual up-dates of biographical information and
questionnaires for Directors and Officers (if requested)
4. Monitor money market funds under Rule 2A-7
B. Compliance - State "Blue Sky"
Blue Sky (state registration)
a. Registration shares (initial/renewal)
b. Monitor sale shares over/under
c. Report shares sold
d. Filing of federal prospectus and contracts
e. Filing annual and semi-annual reports with states
C. Compliance - Prospectus
1. Analyze and review portfolio reports from advisor
regarding:
a. compliance with investment objectives
b. maximum investment by company/industry size
D. Compliance - Other
1. Applicable state tax laws
II. Corporate Business and Shareholder/Public Information
A. Directors/Management
1. Preparation of meetings
a. Agendas - all necessary items of compliance
b. Preparation of Board packages
c. Assist with arranging and conducting meetings
d. Prepare minutes (if requested)
e. Keep attendance records (if requested)
f. Maintain certain board records as requested
2. Preparation and distribution of periodic operation reports to
management
B. Coordinate Proposals for Service Agents
1. Suppliers
2. Printers
3. Fulfillment of literature requests
4. Underwriters
C. Maintain Corporate Calendars
1. General
2. Blue sky
D. Shareholder Meeting - maximum one per year
1. Preparation of Proxy
2. Conduct Meeting
3. Record Ballot Results
E. Maintain certain Corporate Files as requested
F. Release Corporate Information
1. To shareholders
2. To financial and general press
3. To industry publications
a. distributions (dividends and capital gains)
b. tax information
c. changes to prospectus
d. letters from management
e. funds' performance
4. Respond to:
a. financial press
b. miscellaneous shareholder inquiries
c. industry questionnaires
5. Prepare, maintain and update monthly information manual
F. Communications to Shareholders
1. Coordinate printing and distribution of annual and semi-
annual reports and prospectus
III. Financial and Management Reporting
A. Income and Expenses
1. Expense figures calculated and accrual levels set
2. Monitoring of expenses, accruals monthly
3. Approve and coordinate payment of expenses
4. Projection of income and expenses (with regards to B(2)) -
ex-date will determine if projection will apply
5. Calculation of advisory fee, 12b-1 fee
6. Calculation of average net assets
B. Distributions to Shareholders
1. Calculations of dividends and capital gain distributions (in
conjunction with the Fund and their auditors)
a. compliance with income tax provisions
b. compliance with excise tax provisions
c. compliance with Investment Company Act of 1940
C. Financial Reporting
1. Liaison between Fund management, independent auditors and
printers for shareholder reports
2. Preparation of semi-annual and annual reports to shareholders
3. 60-day delivery to SEC and shareholders
4. Preparation of semi-annual and annual NSAR's (financial data)
D. Subchapter M Compliance (monthly)
1. Asset diversification test
2. Short/short test
3. Income Qualification Test
E. Other Financial Analyses
1. Upon request from fund management, other budgeting and
analyses can be constructed to meet a fund's specific needs
(additional fees may apply)
2. Sales information, portfolio turnover (monthly)
3. Work closely with independent auditors on return of capital
presentation, excise tax calculation
4. Performance (total return) calculation (monthly)
5. Analysis of interest derived from various Government
obligations (annual)(if interest income was distributed in a
calendar year) for reporting to Shareholders
F. Review and Monitoring Functions (monthly)
1. Review expense and reclassification entries to ensure proper
update
2. Perform various reviews to ensure accuracy of subscription/
liquidation schedules, accounting (the monthly expense
analysis)
3. Review all accruals and expenditures where applicable
G. Preparation and distribution of monthly operational reports to
management by 10th Business Day
1. Management Statistics (Recap)
- portfolio
- book gains/losses/per share
- net income, book income per share
- capital stock activity
- distributions
2. Performance Analysis
- total return
- monthly, year to date, average annual (1, 5, 10
yrs), 5 yr cumulative, since inception cumulative
3. Expense Analysis
- schedule
- expenses paid
- accrual monitoring
- advisory fee
4. Short-Short Analysis
- short-short income
- gross income (components)
5. Portfolio Turnover
- cost of purchases
- net proceeds of sales
- average market value
6. Asset Diversification Test
- gross assets
- non-qualifying assets
7. Activity Summary
- shares sold, redeemed and reinvested
- change in investment
8. Summary of Dividends paid for each Fund.
H. Provide rating agencies statistical data as requested
(monthly/quarterly)
I. Standard schedules for Board Package (quarterly)
1. Activity Summary (III-G-7 from above)
2. Other schedules can be provided (additional fees may
apply)
3. Statistical Report
SCHEDULE "B"
ADMINISTRATION SERVICES FEE SCHEDULE
FOR
IAA TRUST GROWTH FUND, INC.
This Fee Schedule is fixed for a period of three (3) years from the Effective
Date as that term is defined in the Agreement.
I. Administration Expense
.0015 On the First $ 50 Million of Average Net Assets
.0010 On the Next $ 50 Million of Average Net Assets
.0005 Over $100 Million of Average Net Assets
The above fee schedule is applicable to total net assets of all four
portfolios within the IAA Trust family of Funds. A minimum annual fee
of $50,000 will be charged to the Growth Fund and a minimum annual fee
of $80,000 applies in total to the group of four IAA Trust Funds. New
portfolios added shall bear an annual minimum fee of $10,000.
II. Out-of-Pocket Expenses
The Fund(s) will reimburse Fund/Plan Services monthly for all
reasonable out-of-pocket expenses, including telephone, postage,
telecommunications, special reports, all currently required tax return
preparation ($3500 per year, total all Funds), record retention, script
fees, stamp duty, special transportation costs as incurred, and copying
and sending materials to auditors.
III. Additional Services
Activities of a non-recurring nature including but not limited to fund
consolidations, mergers, acquisitions, reorganizations, the addition or
deletion of a fund, and shareholder meetings/proxies, are not included
herein, and will be quoted separately. To the extent the Growth Fund
should decide to issue multiple/separate classes of shares, additional
fees will apply. Any additional/enhanced services or reports will be
quoted upon request.
