SELECT ASSET FUND III
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made as of the 24th day of August,
2000, between Select Asset Fund III, a Delaware business trust (the
"Company"), and Comerica Bank & Trust, National Association, a national
banking association (the "Administrator"). When used with reference to a
particular series of the Company's preferred shares, initially capitalized
terms not defined herein shall have the respective meanings ascribed to
such terms in the Statement of Preferences of the Company relating to such
series of preferred shares.
WITNESSETH:
WHEREAS, the Company desires to retain the Administrator as its
agent for certain administrative services, and the Administrator is willing
to furnish such administrative services on the terms and conditions
hereinafter set forth,
NOW, THEREFORE, the parties agree as follows:
1. The Company hereby appoints the Administrator as its agent
to provide the services set forth below, subject to the overall supervision
and approval of the Board of Trustees of the Company for the period and on
the terms set forth in this Agreement. The Administrator hereby accepts
such appointment and agrees during such period to render the services
herein described and to assume the obligations herein set forth, for the
compensation herein provided.
2. Subject to the supervision, direction and control of the
Board of Trustees and officers of the Company, the Administrator shall
provide facilities for meetings of the Board of Trustees and shareholders
of the Company and personnel to assist the officers of the Company in the
performance of the following services:
(a) Oversee the determination, pursuant to Schedule I
hereto, and publication of, the Company's net asset value in accordance
with the Company's policy as adopted from time to time by the Board of
Trustees;
(b) Oversee the maintenance of certain books and records
of the Company as required under Rule 31a-1(b)(1)-(4) of the Investment
Company Act;
(c) Arrange for preparation by the Company's independent
accountants, for review, approval and execution by officers of the Company,
the Company's federal, state and local income tax returns, reporting forms,
and any other required tax returns, as may be determined by the Company and
the Board of Trustees;
(d) Arrange for payment of the Company's expenses;
(e) Prepare for review and approval by officers of the
Company financial information for the Company's reports required to be
filed with the Securities and Exchange Commission ("SEC") and its semi-
annual and annual reports, proxy statements and other communications with
shareholders required or otherwise to be sent to Company shareholders, and
arrange for the printing and dissemination of such reports and
communications to shareholders;
(f) Prepare for review by an officer of the Company the
Company's periodic financial reports required to be filed with the SEC on
such forms, or other filings, as may be determined by the Company and the
Board of Trustees;
(g) Prepare reports relating to the activities and
affairs of the Company as may be mutually agreed upon and not otherwise
appropriately prepared by the Company or by the Company's custodian,
counsel or auditors;
(h) Implement the accounting policies of the Company
established by the Company;
(i) Provide such assistance to the Company's custodian
and the Company's counsel and auditors as generally may be reasonably
requested in carrying on the activities and operations of the Company;
(j) Respond to, or refer to the Company's officers or
transfer agent, shareholder inquiries relating to the Company;
(k) Provide to Standard & Poor's Ratings Services ("S&P")
and/or Xxxxx'x Investors Service, Inc. ("Moody's"), as the case may be,
such copies of information (including notices and certificates in
connection with Required Asset Coverage as detailed in Schedule II) in the
Administrator's possession as may reasonably be requested by S&P and/or
Moody's to assist in the rating of the Company's preferred shares;
provided, however, that such providing of information shall be limited to
information in the form maintained by the Administrator at the time of such
request;
(l) Perform required asset coverage tests and
calculations for S&P and/or Moody's, as the case may be, as detailed in
Schedule II; and
(m) Perform the functions of notes transfer agent and
notes paying agent for the Floating Rate Notes due 2025 ("Notes") issued by
the Company. As transfer agent, the Administrator shall receive on behalf
of the Company the cash investment from each prospective holder of a Note
and shall issue Notes in book-entry form to Noteholders who are acceptable
under the terms and conditions set forth in the Private Placement
Memorandum describing the Notes. In order to facilitate record keeping for
the issuance, transfer and redemption of the book-entry Notes, the Transfer
Agent, as agent for the Company, shall establish a separate custody account
("Note Account") for each Note. As notes paying agent, the Administrator
shall receive funds from the Company payable to Noteholders, credit
appropriate amounts from such funds to the Note Accounts and disperse funds
from the Note Accounts to the Noteholders according to their instructions.
The Administrator shall file reports, make tax withholdings and otherwise
comply with applicable laws and regulations with respect to such
disbursements. The Administrator may, in conformity with administration
agreements with other registered investment companies, utilize any Note
Account for the crediting and disbursement of funds from such other
registered investment companies to the individual who is the Noteholder
with respect to the Note Account. In such case the Administrator shall act
as the agent of the Company with respect to the Note Account only with
respect to amounts equal to the pro rata portion of funds which have been
received by the Administrator from the Company and credited to the Note
Account by the Administrator from time to time.
All services are to be furnished through the medium of any
directors, officers or employees of the Administrator as the Administrator
deems appropriate in order to fulfill its obligations hereunder.
Each party shall bear all its own expenses incurred in
connection with this Agreement. Printing and dissemination expenses, such
as those for reports to shareholders and proxy statements, shall be
expenses of the Company, as shall fees of the Company's independent
accountants but only in connection with (i) the preparation of the tax
returns and reporting forms referred to in Section 2(c) hereof, (ii) the
preparation of any accountant's certificates required in connection with
calculations of the required asset coverage of any outstanding preferred
stock of the Company, (iii) the annual audit of the Company's financial
statements, it being understood that the Administrator shall bear all other
accounting fees and expenses, (iv) periodic security counts as required by
the SEC, and (v) the auditor's report on internal control.
3. The Company will pay the Administrator a fee as detailed in
Schedule III attached hereto, which may be amended from time to time with
the written consent of the parties hereto.
4. The Administrator assumes no responsibility under this
Agreement other than to render the services called for hereunder, and
specifically assumes no responsibilities for investment advice or the
investment or reinvestment of the Company's assets.
5. (a) In the absence of bad faith or negligence on its part,
the Administrator shall not be liable for any action taken, suffered or
omitted or for any error of judgment made by it in the performance of its
duties under this Agreement. In no event shall the Administrator be liable
to the Company or any third party for special, indirect, or consequential
damages, or lost profits or loss of business arising under or in connection
with this Agreement, even if informed of the possibility of such damages
and regardless of the form of action. The Administrator shall not be liable
for any error of judgment made in good faith unless the Administrator shall
have been negligent in ascertaining or failing to ascertain the pertinent
facts.
(b) As used in this Paragraph 5, the term "Administrator"
shall include any affiliates of the Administrator performing services for
the Company contemplated hereby, and directors, officers, agents and
employees of the Administrator and such affiliates.
(c) The Administrator may, with respect to questions of
law, apply for and obtain the advice and opinion of legal counsel
satisfactory to the Administrator, which may include counsel to the Company
(which shall be at the expense of the Company within a reasonable budget
established by the Company after consultation with the Administrator) or
counsel to the Administrator (which shall be at the expense of the
Administrator), and with respect to the application of generally accepted
accounting principles, apply for and obtain the advice and opinion of the
Company's accounting experts, which shall be at the expense of the Company
if in connection with the matters referred to in clauses (i), (ii), (iii),
(iv) or (v) of the last paragraph of Section 2 hereof. The Administrator
shall be fully protected with respect to any action taken or omitted by it
in good faith in conformity with such advice or opinion.
(d) The Company shall indemnify and hold harmless the
Administrator from and against any and all costs, expenses, damages,
liabilities and claims, and reasonable attorneys' and accountants' fees
relating thereto, which are sustained or incurred or which may be asserted
against the Administrator, by reason of or as a result of any action taken
or omitted to be taken by the Administrator in good faith hereunder or in
reliance upon (i) any law, act, regulation or interpretation of the same
even though the same may thereafter have been altered, changed, amended or
repealed after such action was taken or omitted, (ii) any offering
materials of the Company, in connection with the sale of securities of the
Company, (iii) any instructions of an officer of the Company, or (iv) any
opinion of legal counsel for the Company, or the Administrator (if a copy
of such opinion is provided to the Company before such action was taken or
omitted), or arising out of transactions or other activities of the Company
which occurred prior to the commencement of this Agreement; provided, that
the Company shall not indemnify the Administrator for costs, expenses,
damages, liabilities or claims arising out of the Administrator's own
negligence, bad faith or willful misconduct. This indemnity shall be a
continuing obligation of the Company, its successors and assigns,
notwithstanding the termination of this Agreement.
(e) Actions taken or omitted in reliance on oral or
written instructions, or upon any information, order, indenture, stock
certificate, power of attorney, assignment, affidavit or other instrument
believed by the Administrator to be genuine or bearing the signature of a
person or persons believed to be authorized to sign, countersign or execute
the same, or upon the opinion of legal counsel for the Company or its own
counsel, shall be conclusively presumed to have been taken or omitted in
good faith.
6. At any time the Administrator may apply to an officer of the
Company for written instructions with respect to any matter arising in
connection with the Administrator's duties and obligations under this
Agreement, and the Administrator shall not be liable for any action taken
or omitted to be taken by the Administrator in good faith in accordance
with such instructions. Such application by the Administrator for
instructions from an officer of the Company may, at the option of the
Administrator, set forth in writing any action proposed to be taken or
omitted to be taken by the Administrator with respect to its duties or
obligations under this Agreement and the date on and/or after which such
action shall be taken, and the Administrator shall not be liable for any
action taken or omitted to be taken in accordance with a proposal included
in any such application on or after the date specified therein unless,
prior to taking or omitting to take any such action, the Administrator has
received written instructions in response to such application specifying
the action to be taken or omitted. The Administrator may
consult counsel to the Company at the expense of the Company (within a
reasonable budget established by the Company after consultation with the
Administrator), or its own counsel at its own expense, and shall be fully
protected with respect to anything done or omitted by it in good faith in
accordance with the advice or opinion of such counsel.
7. This Agreement shall become effective immediately and shall
continue in effect unless terminated as herein provided. This Agreement may
be terminated by either party hereto (without penalty) at any time upon not
less than 30 days' prior written notice to the other party hereto.
8. The services of the Administrator to the Company hereunder
are not exclusive and nothing in this Agreement shall limit or restrict the
right of the Administrator to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association. The Administrator shall be deemed to be an independent
contractor, unless otherwise expressly provided or authorized by this
Agreement.
9. During the term of this Agreement, the Company agrees to
furnish the Administrator at the principal office of the Administrator
prior to use thereof drafts and final copies of all placement memoranda,
prospectuses, proxy statements, reports to shareholders, sales literature,
or other material prepared for distribution to shareholders of the Company
or the public that refer in any way to the Administrator. If the
Administrator reasonably objects to such references within five business
days (or such other time as may be mutually agreed) after receipt thereof,
the Company will modify such references in a manner reasonably satisfactory
to the Administrator. In the event of termination of this Agreement, the
Company will continue to furnish to the Administrator copies of any of the
above-mentioned materials that refer in any way to the Administrator. The
Company shall timely furnish or otherwise make available to the
Administrator such other information relating to the business affairs of
the Company, its trustees, officers, and service providers, as the
Administrator at any time, or from time to time, reasonably requests in
order to discharge its obligations hereunder.
10. This Agreement may be amended only by mutual written
consent.
11. Any notice of other communication required to be given in
writing pursuant to this Agreement shall be deemed duly given if delivered
or mailed by registered mail, postage prepaid, (l) to the Administrator at
Comerica Bank & Trust, National Association, 000 X. Xxxxxxxxx Xxxxxxxxx,
Mail Code 3460, Xxxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxx III,
Administrator; (2) to the Company at Select Asset Fund III, c/o Xxxxxx
Xxxxxxxx, 4 World Financial Xxxxxx Xxxxx 00, Xxx Xxxx XX 00000.
12. This Agreement sets forth the agreement and understanding
of the parties hereto solely with respect to the matters covered hereby and
the relationship between the Company and Comerica Bank & Trust, National
Association as Administrator. Nothing in this Agreement shall govern,
restrict or limit in any respect any other business dealings between the
parties hereto unless otherwise expressly provided herein.
13. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to
choice of law principles thereof and in accordance with the Investment
Company Act of 1940 (the "Investment Company Act"). In the case of any
conflict, the Investment Company Act shall control.
14. This Agreement may be executed by the parties hereto in
counterparts, and if executed in more than one counterpart, the separate
instruments shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
SELECT ASSET FUND III
By: /s/
--------------------------------------
Name: Xxxxx X. XxXxxxxx
Title: President
COMERICA BANK & TRUST, NATIONAL
ASSOCIATION, as Administrator
By: /s/
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Schedule I
The net asset value of a share of the Common Stock as at the
time of a particular determination shall be calculated by subtracting the
Company's liabilities (including accrued expenses and declared dividends)
and the liquidation value of any preferred stock outstanding from the
Company's total assets (the value of the securities the Company holds plus
cash or other assets, including interest and dividends accrued but not yet
received) and dividing the result by the total number of shares of Common
Stock-outstanding. The value of the securities the Company holds shall be
based on the closing prices quoted by Interactive Data Corporation or any
other pricing service approved by Standard & Poor's Ratings Services.
Expenses are to be accrued as directed by the Board of Trustees of the
Company.
Schedule II
Certificate of S&P Required Asset Coverage.
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For each series of the Company's preferred shares which is
rated by S&P the Administrator shall determine, as of each Business Day and
each Cure Date, the aggregate Adjusted Value of all S&P Eligible Assets on
that day and whether such aggregate Adjusted Value on such date equals or
exceeds the S&P Required Asset Coverage on such date. The calculations of
the Adjusted Value of all S&P Eligible Assets and S&P Required Asset
Coverage, and whether the aggregate Adjusted Value of S&P Eligible Assets
equals or exceeds the S&P Required Asset Coverage shall be set forth in a
certificate (a "Certificate of S&P Required Asset Coverage"), dated as of
each such Business Day and Cure Date and signed by an Authorized Custodian
Officer. The Administrator shall deliver (by facsimile or otherwise) a
Certificate of S&P Required Asset Coverage to the Company by 11:00 a.m. New
York time on the Business Day to which such certificate relates. With
respect to the Certificate of S&P Required Asset Coverage relating to (1)
each Business Day which is the first Business Day in the months of January,
April, July and October of each year, and (2) another day during each
calendar quarter, which day shall be selected at random by the independent
accountants signing the Accountant's Certificate referred to below, the
Administrator shall deliver to the Company, within three Business Days of
each such date, an Accountant's Certificate certifying as to (i) the
mathematical accuracy of the calculations reflected in the related
Certificate of S&P Required Asset Coverage, including the calculation of
the Adjusted Value of the S&P Eligible Assets referred to therein and
confirming that the S&P Eligible Assets referred to therein conform to the
definition of S&P Eligible Assets set forth in the Statement of
Preferences, (ii) that the methodology used by the Administrator in
determining whether the Adjusted Value of S&P Eligible Assets equals or
exceeds the S&P Required Asset Coverage is in accordance with the
applicable requirements of the Statement of Preferences, and (iii) that the
written or published price quotations used in such determination conform to
such written or published quotations and that the S&P Eligible Assets
listed in such Certificate of S&P Required Asset Coverage constitute S&P
Eligible Assets as defined in the Statement of Preferences.
Notices to S&P.
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For each series of the Company's preferred shares which is
rated by S&P the Administrator shall:
(a) deliver to S&P, as soon as practicable (but in no
event later than the close of business on the second Business Day next
succeeding the following dates) the Certificate of S&P Required Asset
Coverage with respect to each of the following dates: (i) the Date of
Original Issue, (ii) each date as of which the Adjusted Value of all S&P
Eligible Assets is less than the S&P Required Asset Coverage, (iii) each
Cure Date, (iv) each date as of which the Adjusted Value of all S&P
Eligible Assets is less than or equal to 105% of the S&P Required Asset
Coverage, (v) each Business Day which is the first Business Day in the
months of January, April, July and October, and (vi) the date on which any
Common Stock is redeemed by the Company and (vii) whenever requested by
S&P.
(b) deliver to S&P, promptly after same become available,
the following: (i) a copy of each Accountant's Certificate which differs
from the Administrator's calculations of S&P Required Asset Coverage; (ii)
a copy of each Accountant's Certificate relating to the Certificates of S&P
Required Asset Coverage with respect to (1) the Date of Original Issue for
each Series of preferred shares; (2) each Cure Date; (3)(A) each business
day which is the first business day in the months of January, April, July
and October and (B) another day during each calendar quarter, which day
shall be selected at random by the independent accountant's signing the
Accountant's Certificate; (iii) a copy of each amendment to the Statement
of Preferences; (iv) notice of the failure to distribute the full Dividend
Amount payable on any Dividend Distribution Date; (v) notice of the
inability of the Pricing Service to price, or the unavailability of price
quotes with respect to, any issue of common stock included in the S&P
Eligible Assets; and (vi) a copy of each written notice from the
Broker-Dealer changing any previously scheduled Dividend Distribution Date.
Notices to Company and Broker-dealer.
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The Administrator will direct the independent
auditors to distribute such certifications as follows: In
addition to providing the required asset coverage
certifications to S&P.
Company: Select Asset Fund III
c/o Xxxxxx Xxxxxxxx
4 World Financial Xxxxxx Xxxxx 00
Xxx Xxxx XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Broker/dealer: Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated
4 World Financial Xxxxxx Xxxxx 0
Xxx Xxxx XX 00000
Attention: Auction Market
Securities Desk
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
The Administrator will promptly notify the Company and the
Broker-dealer as enumerated above in case of any failure to meet the
required asset coverage.
Schedule III
The Company will pay the Administrator an annual fee for its
services under this Agreement and the Custodian Contract, dated as of
August 24, 2000, in an amount calculated by multiplying (i) the average of
the Fund's monthly Net Asset Value (i.e., total assets less total
liabilities with liquidation preference of preferred stock not being
treated as a liability) over the course of the relevant fiscal year of the
Fund, by (ii) .25 percent. Such fee shall be paid monthly in arrears within
ten days after receipt of an invoice therefor.
