EXHIBIT (h)(3)
+ADMINISTRATION AGREEMENT
AGREEMENT made as of April 1, 2002 by and between XXXXXX ASSOCIATES
INVESTMENT TRUST, a business trust organized under the laws of the Commonwealth
of Massachusetts (the "Fund"), and INVESTORS BANK & TRUST COMPANY, a
Massachusetts trust company (the "Bank").
WHEREAS, the Fund, a registered investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), consisting of the
separate portfolios listed on APPENDIX A hereto; and
WHEREAS, the Fund desires to retain the Bank to render certain
administrative services to the Fund and the Bank is willing to render such
services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints the Bank to act as
Administrator of the Fund on the terms set forth in this Agreement. The Bank
accepts such appointment and agrees to render the services herein set forth for
fees that may be agreed to from time to time in writing between the parties.
2. DELIVERY OF DOCUMENTS. The Fund has furnished the Bank with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Trustees authorizing the
appointment of the Bank to provide certain administrative services to the Fund
and approving the form of this Agreement;
(b) The Fund's Agreement and Declaration of Trust dated February
1, 1991, filed with the Commonwealth of Massachusetts on February 1, 1991 and
all amendments thereto (the "Declaration");
(c) The Fund's by-laws and all amendments thereto (the
"By-Laws");
(d) The Fund's agreements with all service providers which
include any investment advisory agreements, sub-investment advisory agreements,
custody agreements, distribution agreements and transfer agency agreements
(collectively, the "Agreements");
(e) The Fund's most recent post-effective amendment to its
Registration Statement on Form N-1A (the "Registration Statement") under the
Securities Act of 1933 and under the 1940 Act; and
(f) The Fund's most recent prospectus and statement of additional
information and all supplements thereto (the "Prospectus"); and
(g) Such other certificates, documents or opinions as may
mutually be deemed necessary or appropriate for the Bank in the proper
performance of its duties hereunder.
The Fund will promptly furnish the Bank with copies of all
amendments of or supplements to the foregoing. Furthermore, the Fund will notify
the Bank as soon as practicable of any matter which may materially affect the
performance by the Bank of its services under this Agreement.
3. DUTIES OF ADMINISTRATOR. Subject to the supervision and direction
of the Board of Trustees of the Fund, the Bank, as Administrator, will assist in
conducting various aspects of the Fund's administrative operations and
undertakes to perform the services described in APPENDIX B hereto. The Bank may,
from time to time, perform additional duties and functions which shall be set
forth in an amendment to such APPENDIX B executed by both parties.
In performing all services under this Agreement, the Bank shall
act in conformity with the Fund's Declaration and By-Laws and the 1940 Act, as
the same may be amended from time to time, and the investment objectives,
investment policies and other practices and policies set forth in the Fund's
Registration Statement, as the same may be amended from time to time.
Notwithstanding any item discussed herein, the Bank has no discretion over the
Fund's assets or choice of investments and cannot be held liable for any problem
relating to such investments.
4. DUTIES OF THE FUND.
(a) The Fund is solely responsible (through its transfer agent or
otherwise) for (i) providing timely and accurate reports ("Daily Sales Reports")
which will enable the Bank as Administrator to monitor the total number of
shares sold in each state on a daily basis and (ii) identifying any exempt
transactions ("Exempt Transactions") which are to be excluded from the Daily
Sales Reports.
(b) The Fund agrees to make its legal counsel available to the
Bank for instruction with respect to any matter of law arising in connection
with the Bank's duties hereunder, and the Fund further agrees that the Bank
shall be entitled to rely on such instruction without further investigation on
the part of the Bank.
5. FEES AND EXPENSES.
(a) For the services rendered by the Bank hereunder, the Fund
will pay to the Bank such fees at such rate as shall be agreed upon in writing
by the parties from time to time. The Fund will also pay or reimburse the Bank
from time to time for any transfer taxes payable upon any transfers made
hereunder, and for all necessary proper disbursements, expenses and charges
reasonably made or reasonably incurred by the Bank in the performance of this
Agreement (including any duties listed on any Schedule hereto, if any) including
any indemnities for any loss, liabilities or expense to the Bank as provided
herein. The Bank will also be entitled to reimbursement by the Fund for all
reasonable expenses incurred in conjunction with termination of this Agreement
and any conversion or transfer work done in connection therewith unless the Fund
terminates this Agreement pursuant to Sections 7(c) or 7(d).
(b) Fees and expenses will be calculated monthly. Fees and
expenses owed to the Bank for any month may be charged against any cash balance
held by the Fund beginning on the first (1st) business day after the end of such
month based on information then available. Fees charged to an account may result
in an overdraft that will be subject to normal interest charges. The Fund will
have thirty (30) days after the receipt of an invoice to dispute any charge that
appears on such invoice. After such thirty (30) day period, the invoice will be
deemed to be complete and accurate and may no longer be disputed.
(c) The Bank shall not be required to pay any expenses incurred
by the Fund.
(d) In the case of the following transactions, not in the
ordinary course of business, namely, the merger of a series of the Fund into or
the consolidation of a series of the Fund with another investment company or
series thereof, the sale by a series of the Fund of all, or substantially all,
of its assets to another investment company or series thereof, or the
liquidation or dissolution of a series of the Fund and distribution of its
assets, upon the payment of the fees, disbursements and expenses of the Bank
through the then remaining term of this Agreement, the Bank will complete all
actions reasonably necessary to implement such merger, consolidation, or sale
upon the order of the Fund set forth in an Officers' Certificate, accompanied by
a certified copy of a resolution of the Board authorizing any of the foregoing
transactions. Upon completion of such actions and the payment of all such fees,
disbursements and expenses of the Bank, this Agreement will terminate and the
Bank shall be released from any and all obligations hereunder.
6. LIMITATION OF LIABILITY.
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(a) The Bank, its directors, officers, employees and agents shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of its obligations and
duties under this Agreement, except if such error of judgment, mistake of law or
loss results from the willful misfeasance, bad faith or negligence of the Bank
or its directors, officers, employees or agents in the performance of its or
their obligations and duties, or by reason of its or their reckless disregard
thereof. The Fund will indemnify the Bank, its directors, officers, employees
and agents against and hold it and them harmless from any and all losses,
claims, damages, liabilities or expenses (including legal fees and expenses)
resulting from any claim, demand, action or suit (a "Claim") (i) arising out of
the willful misfeasance, bad faith or negligence of the Fund, including, but not
limited to, inaccurate Daily Sales Reports and misidentification of Exempt
Transactions; (ii) arising out of the offer or sale of any securities of the
Fund in violation of (x) any requirement under the federal securities laws or
regulations, (y) any requirement under the securities laws or regulations of any
state, or (z) any stop order or other determination or ruling by any federal or
state agency with respect to the offer or sale of such securities or (iii) not
resulting from the willful misfeasance, bad faith or negligence of the Bank or
its directors, officers, employees or agents in the performance of its or their
obligations and duties, or by reason of its or their reckless disregard thereof.
(b) The Bank may apply to the Fund at any time for instructions
and may consult counsel for the Fund, or its own counsel, and with accountants
and other experts with respect to any matter arising in connection with its
duties hereunder. The Bank shall not be liable or accountable for any action
taken or omitted by it in good faith in accordance with any written instruction
from counsel for the Fund, or with the written opinion of such counsel. The Bank
shall not be liable for any act or omission taken or not taken in reliance upon
any document, certificate or instrument provided in writing by the Fund or its
authorized agent which it reasonably believes to be genuine and to be signed or
presented by the proper person or persons. The Bank shall not be held to have
notice of any change of authority of any officers, employees, or agents of the
Fund until receipt of written notice thereof has been received by the Bank from
the Fund.
(c) Notwithstanding anything in this Agreement to the contrary,
in no event shall the Fund or any of its officers, trustees, employees or agents
be liable to the Bank or any third party for, and the Bank shall indemnify and
hold the Fund and any of its officers, trustees, employees or agents harmless
from and against any Claim to the extent arising from the willful misfeasance,
bad faith or negligence of the Bank or its directors, officers, employees or
agents in the performance of its or their obligations and duties, or by reason
of its or their reckless disregard thereof provided that the Bank's
indemnification obligation with respect to the acts or omissions of its
subcustodians shall not exceed the indemnification provided by the applicable
subcustodian to the Bank. The Bank shall provide the Fund copies of the
applicable subcustody agreements, and any amendments to such agreements, that
will in reasonable detail describe such subcustodians' obligation(s) to
indemnify the Bank, if any.
(d) In the event either party is unable to perform, or is delayed
in performing, its obligations under the terms of this Agreement because of acts
of God, strikes, legal constraint, government actions, war, emergency
conditions, interruption of electrical power or other utilities, equipment or
transmission failure or damage reasonably beyond its control or other causes
reasonably beyond its control, such party shall not be liable to the other party
for any damages resulting from such failure to perform, delay in performance, or
otherwise from such causes; provided, however, that each party shall use its
best efforts to ameliorate the effects of such failure or delay and each party
shall use its commercially reasonable efforts to not discriminate against the
other in favor of any other customer or client in performing the services
contemplated by this Agreement.
(e) Notwithstanding anything to the contrary in this Agreement,
in no event shall either party be liable for special, incidental or
consequential damages, even if advised of the possibility of such damages.
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7. TERMINATION OF AGREEMENT.
(a) The term of this Agreement shall be three years commencing
upon the date hereof (the "Initial Term"), unless earlier terminated as provided
herein. After the expiration of the Initial Term, the term of this Agreement
shall automatically renew for successive one-year terms (each a "Renewal Term")
unless notice of non-renewal is delivered by the non-renewing party to the other
party no later than ninety days prior to the expiration of the Initial Term or
any Renewal Term, as the case may be. If a majority of the Board of Trustees
reasonably determines that the performance of the Bank under this Agreement by
and between the Bank and the Fund does not meet industry standards, written
notice of such determination setting forth the reasons for such determination
shall be provided to the Bank. In the event the Bank shall not, within sixty
(60) days thereafter, cure identified deficiencies to the reasonable
satisfaction of the Board of Trustees, the Fund, with the authorization of the
Board, may terminate this Agreement.
(b) Either party hereto may terminate this Agreement prior to the
expiration of the Initial Term or any Renewal Term in the event the other party
violates any material provision of this Agreement, provided that the violating
party does not cure such violation within ninety days of receipt of written
notice from the non-violating party of such violation.
(c) The Fund may terminate this Agreement at any time without
notice in the event of an appointment of a conservator or receiver for the
Administrator by regulatory authorities or the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
(d) At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of the Bank
relating to its performance of its duties as Administrator.
8. MISCELLANEOUS.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or the Bank shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
Xxxxxx Associates Investment Trust
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
With a copy to:
Xxxx, Xxxx & Xxxxx LLC
00 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
To the Bank:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. X'Xxxxxxx, Senior Director, Client
Management
With a copy to: Xxxx X. Xxxxx, General Counsel
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(b) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable without the written consent of the
other party.
(c) This Agreement shall be construed in accordance with the laws
of the Commonwealth of Massachusetts, without regard to its conflict of laws
provisions.
(d) This Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
9. CONFIDENTIALITY. All books, records, information and data,
including all nonpublic personal information (as defined by Rule 3(t) of
Regulation S-P under the federal securities laws), pertaining to the business of
the other party which are exchanged or received pursuant to the negotiation or
the carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required in the
performance of duties hereunder or as otherwise required by law.
10. USE OF NAME. Neither party shall use the name of the other party
or any of its affiliates in any prospectus, sales literature or other material
in a manner not approved by the other party prior thereto in writing; provided
however, that the approval of the Bank shall not be required for any use of its
name which merely refers in accurate and factual terms to its appointment
hereunder or which is required by the Securities and Exchange Commission or any
state securities authority or any other appropriate regulatory, governmental or
judicial authority; PROVIDED FURTHER, that in no event shall such approval be
unreasonably withheld or delayed.
11. BINDING OF TRUST PROPERTY ONLY. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of State of the
Commonwealth of Massachusetts. Notice is hereby given that the execution and
delivery of this Agreement have been authorized by the trustees of the Fund, and
this Agreement has been signed and delivered by an officer of the Fund, acting
as such, and neither such authorization by the trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
XXXXXX ASSOCIATES INVESTMENT TRUST
By:/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Treasurer
INVESTORS BANK & TRUST COMPANY
By:/s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President
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APPENDICES
Appendix A Portfolios
Appendix B Services
APPENDIX A
THE OAKMARK FAMILY OF FUNDS
The Oakmark Fund
The Oakmark Select Fund
The Oakmark Small Cap Fund
The Oakmark Equity and Income Fund
The Oakmark Global Fund
The Oakmark International Fund
The Oakmark International Small Cap Fund
APPENDIX B
INVESTORS BANK & TRUST
SUMMARY OF ADMINISTRATION FUNCTIONS
OAKMARK FAMILY OF FUNDS
SUGGESTED FUND AUDITOR
FUNCTION INVESTORS BANK & TRUST XXXXXX ASSOCIATES AND/OR COUNSEL
------------------------------------- --------------------------------- ----------------------------- -------------------------
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION
-------------------------------------
Monitor portfolio compliance in Perform tests of certain specific Continuously monitor A/C - Provide
accordance with the current portfolio activity designed from portfolio activity and Fund consultation as needed on
Prospectus and SAI. provisions of the Fund's operations in conjunction compliance issues.
Prospectus and SAI. Follow-up on with 1940 Act, Prospectus,
potential violations. SAI and any other
applicable laws and
regulations. Monitor
testing results and approve
resolution of compliance
FREQUENCY: MONTHLY issues.
Provide compliance summary package. Provide a report of compliance Review report. A/C - Provide
testing results. consultation as needed.
FREQUENCY: MONTHLY
Perform asset diversification testing Perform asset diversification Continuously monitor A - Provide consultation
to establish qualification as a RIC. tests at each tax quarter end. portfolio activity in as needed in establishing
Follow-up on issues. conjunction with IRS positions to be taken in
requirements. Review test tax treatment of
results and take any particular issues. Review
necessary action. Approve quarter end tests on a
tax positions taken. current basis.
FREQUENCY: QUARTERLY
Perform qualifying income testing to Perform qualifying income testing Continuously monitor A- Consult as needed on
establish qualification as a RIC. (on book basis income, unless portfolio activity in tax accounting positions
material differences are conjunction with IRS to be taken. Review in
anticipated) on quarterly basis requirements. Review test conjunction with year-end
and as may otherwise be results and take any audit.
necessary. Follow-up on necessary action. Approve
FREQUENCY: QUARTERLY issues. tax positions taken.
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION
(CONT.)
-------------------------------------
Prepare the Fund's annual expense Prepare preliminary expense Provide asset level
budget. Establish daily accruals. budget. Notify fund accounting projections. Approve
of new accrual rates. expense budget.
FREQUENCY: ANNUALLY
1
SUGGESTED FUND AUDITOR
FUNCTION INVESTORS BANK & TRUST XXXXXX ASSOCIATES AND/OR COUNSEL
------------------------------------- --------------------------------- ----------------------------- -------------------------
Monitor the Fund's expense budget. Monitor actual expenses, updating Provide asset level
Review the Fund's net expense ratios, budgets/ expense accruals. projections. Provide vendor
including multi-class expense Review expense differentials information as necessary.
differentials. among classes. Review expense analysis and
approve budget revisions.
FREQUENCY: MONTHLY
Receive and coordinate payment of Propose allocations of invoices Approve invoices and
fund expenses. among Funds and obtain authorized allocations of payments.
approval to process payment. Send invoices to IBT in a
FREQUENCY: AS OFTEN AS NECESSARY timely manner.
Calculate periodic dividend rates to Calculate amounts available for Review and approve dividend C/A - Review and approve
be declared in accordance with distribution. Calculate rates calculation methodologies dividend calculation
management guidelines. Review the for each class in accordance with for each class. Approve methodology for each
Fund's multi-class dividend approved methodology. Coordinate dividend rate per share and class of shares. Provide
calculation procedures. review by management and aggregate amounts. Obtain consultation as
auditors. Notify custody and Board approval when required. requested.
transfer agent of authorized
dividend rates. Report dividends
to Board as required.
FREQUENCY: ACCORDING TO DIVIDEND
POLICY
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION
(CONT.)
-------------------------------------
Prepare responses to major industry Prepare, coordinate as necessary, Identify the services to
questionnaires. and submit responses to the which the Funds report.
appropriate agency. Provide information as
FREQUENCY: AS OFTEN AS NECESSARY requested.
Prepare disinterested Summarize amounts paid to Provide social security
director/trustee Form 1099-Misc. directors/trustees during the numbers and current mailing
calendar year. Prepare and mail address for trustees.
Form 1099-Misc. Review and approve
FREQUENCY: ANNUALLY information provided for
Form 1099-Misc.
2
SUGGESTED FUND AUDITOR
FUNCTION INVESTORS BANK & TRUST XXXXXX ASSOCIATES AND/OR COUNSEL
------------------------------------- --------------------------------- ----------------------------- -------------------------
Preparation and filing of 24f-2 Accumulate capital stock Review and approve filing. C - Approve 24f-2 Notice.
Notice. information and draft Form 24f-2
Notice. File approved Form with
FREQUENCY: ANNUALLY SEC via Xxxxx.
-------------------------------------
FINANCIAL REPORTING
-------------------------------------
Prepare financial information for Prepare selected financial Review financial
presentation to Fund Management, information for client internal information.
Board of Directors and shareholders. use, inclusion in board material
and distribution to
shareholders. Financial
information limited to Schedule
of Investments and other related
tables.
FREQUENCY: MONTHLY/QUARTERLY
-------------------------------------
FINANCIAL REPORTING (CONT.)
-------------------------------------
Coordinate the annual audit and Coordinate the creation of Provide past financial A - Perform audit and
semi-annual preparation and printing templates reflecting statements and other issue opinion on annual
of financial statements and notes client-selected standardized information required to financial statements.
with management, fund accounting and appearance and text of financial create templates, including
the fund auditors. statements and footnotes. Draft report style and graphics. A/C - Review reports.
and manage production cycle. Approve format and text as
Coordinate with IBT fund standard. Approve
accounting the electronic production cycle and assist
receipt of portfolio and general in managing to the cycle.
ledgar information. Assist in Coordinate review and
resolution of accounting issues. approval by portfolio
Using templates, draft financial managers of portfolio
statements, coordinate auditor listings to be included in
and management review, and clear financial statements.
comments. Coordinate transmission Prepare appropriate
of draft files to Xxxxxxx to management letter and
typeset. Coordinate printing of coordinate production of
reports and XXXXX conversion with Management Discussion and
outside printer and filing with Analysis. Review and
the SEC via XXXXX. approve entire report. Make
appropriate representations
in conjunction with audit.
FREQUENCY: ANNUALLY/SEMI-ANNUALLY
3
SUGGESTED FUND AUDITOR
FUNCTION INVESTORS BANK & TRUST XXXXXX ASSOCIATES AND/OR COUNSEL
------------------------------------- --------------------------------- ----------------------------- -------------------------
Prepare and file Form N-SAR. Prepare form for filing. Obtain Provide appropriate C - Provide consultation
any necessary supporting responses. Review and as needed.
documents. File with SEC via authorize filing. A - Provide annual audit
XXXXX. internal control letter
TO BE PERFORMED BY R&C. to accompany the annual
FREQUENCY: SEMI-ANNUALLY filing.
-------------------------------------
TAX
-------------------------------------
Prepare income tax provisions. Calculate investment company Provide transaction A - Provide consultation
taxable income, net tax exempt information as requested. as needed in establishing
interest, net capital gain and Identify Passive Foreign positions to be taken in
spillback dividend requirements. Investment Companies tax treatment of
Identify book-tax accounting (PFICs). Approve tax particular issues.
differences. Track required accounting positions to be Perform review in
information relating to taken. Approve provisions. conjunction with the
FREQUENCY: ANNUALLY accounting differences. year-end audit.
TAX (CONT.)
-------------------------------------
Calculate excise tax distributions Calculate required distributions Provide transaction A - Provide consultation
to avoid imposition of excise tax. information as requested. as needed in establishing
- Calculate capital gain net Identify Passive Foreign positions to be taken in
income and foreign currency Investment Companies tax treatment of
gain/loss through October 31. (PFICs). Approve tax particular issues.
- Calculate ordinary income accounting positions to be Review and concur with
and distributions through a taken. Review and approve proposed distributions
specified cut off date . all income and distribution per share.
- Project ordinary income calculations, including
from cut off date to projected income and
December 31. TO BE PERFORMED dividend shares. Approve
BY R&C. distribution rates per share
- Ascertain dividend shares. and aggregate amounts.
TO BE PERFORMED BY R&C. Obtain Board approval when
Identify book-tax accounting required.
differences. Track required
information relating to
accounting differences.
Coordinate review by management
FREQUENCY: ANNUALLY and fund auditors.
Prepare Form 1099 Obtain yearly distribution Review and approve
information. Calculate 1099 information provided for
reclasses and coordinate with Form 1099.
FREQUENCY: ANNUALLY transfer agent.
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SUGGESTED FUND AUDITOR
FUNCTION INVESTORS BANK & TRUST XXXXXX ASSOCIATES AND/OR COUNSEL
------------------------------------- --------------------------------- ----------------------------- -------------------------
Prepare other year-end tax-related Obtain yearly income Review and approve
disclosures distribution information. information provided.
Calculate disclosures
(i.e., dividend received
deductions, foreign tax credits,
tax-exempt income, income by
jurisdiction) and coordinate
with transfer agent.
FREQUENCY: ANNUALLY
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