ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of April 15, 2004 by and between PFPC INC., a
Massachusetts corporation ("PFPC"), and FIRST TRUST / VALUE LINE(R) & IBBOTSON
EQUITY ALLOCATION FUND, a Massachusetts business trust (the "Fund").
WITNESSETH:
WHEREAS, the Fund is registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to provide administration and
accounting services and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby the parties
hereto agree as follows: 1. DEFINITIONS. As used in this Agreement:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of the Fund and any other
person duly authorized by the Fund to give Oral Instructions and
Written Instructions on behalf of the Fund. An Authorized Person's
scope of authority may be limited by setting forth such limitation
in a written document signed by both parties hereto.
(d) "Shares" mean the shares of beneficial interest of the Fund.
(e) "Oral Instructions" mean oral instructions received by PFPC from
an Authorized Person or from a person reasonably believed by PFPC
to be an Authorized Person. PFPC may, in its sole discretion in
each separate instance, consider and rely upon instructions it
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receives from an Authorized Person via electronic mail as Oral
Instructions.
(f) "SEC" means the Securities and Exchange Commission.
(g) "Securities Laws" means the 1933 Act, the 1934 Act and the
1940 Act.
(h) "Written Instructions" mean (i) written instructions signed by an
Authorized Person and received by PFPC or (ii) trade instructions
transmitted (and received by PFPC) by means of an electronic
transaction reporting system access to which requires use of a
password or other authorized identifier. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide administration
and accounting services to the Fund, in accordance with the terms set
forth in this Agreement. PFPC accepts such appointment and agrees to
furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC with the following:
(a) at PFPC's request, certified or authenticated copies of the
resolutions of the Fund's board of directors, approving the
appointment of PFPC or its affiliates to provide services to the
Fund and approving this Agreement;
(b) a copy of Fund's most recent effective registration statement;
(c) a copy of the Fund's advisory agreement or agreements;
(d) a copy of the distribution/underwriting agreement with respect
to each class of Interests representing an interest in the
Fund;
(e) a copy of each additional administration agreement with
respect to the Fund;
(f) a copy of each distribution and/or shareholder servicing plan
and agreement made in respect of the Fund; and
(g) copies (certified or authenticated, where applicable) of any
and all amendments or supplements to the foregoing.
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4. COMPLIANCE WITH RULES AND REGULATIONS.
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be
performed by PFPC hereunder. Except as specifically set forth herein,
PFPC assumes no responsibility for such compliance by the Fund or other
entity.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act
only upon Oral Instructions or Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives from an Authorized Person (or
from a person reasonably believed by PFPC to be an Authorized
Person) pursuant to this Agreement. PFPC may assume that any
Oral Instruction or Written Instruction received hereunder is
not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote,
resolution or proceeding of the Fund's board of directors or
of the Fund's shareholders, unless and until PFPC receives
Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions (except where such Oral
Instructions are given by PFPC or its affiliates) so that PFPC
receives the Written Instructions by the close of business on
the same day that such Oral Instructions are received. The
fact that such confirming Written Instructions are not
received by PFPC or differ from the Oral Instructions shall in
no way invalidate the transactions or enforceability of the
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transactions authorized by the Oral Instructions or PFPC's
ability to rely upon such Oral Instructions.
6. RIGHT TO RECEIVE ADVICE.
(a) Advice of the Fund. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or
advice, including Oral Instructions or Written Instructions,
from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any
question of law pertaining to any action it should or should
not take, PFPC may request advice from counsel of its own
choosing (who may be counsel for the Fund, the Fund's
investment adviser or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between
directions or advice or Oral Instructions or Written
Instructions PFPC receives from the Fund and the advice PFPC
receives from counsel, PFPC may rely upon and follow the
advice of counsel.
(d) Protection of PFPC. PFPC shall be indemnified by the Fund and
without liability for any action PFPC takes or does not take in
reliance upon directions or advice or Oral Instructions or Written
Instructions PFPC receives from or on behalf of the Fund or from
counsel and which PFPC believes, in good faith, to be consistent
with those directions or advice and Oral Instructions or Written
Instructions. Nothing in this section shall be construed so as to
impose an obligation upon PFPC (i) to seek such directions or
advice or Oral Instructions or Written Instructions, or (ii) to
act in accordance with such directions or advice or Oral
Instructions or Written Instructions.
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7. RECORDS; VISITS.
(a) The books and records pertaining to the Fund which are in the
possession or under the control of PFPC shall be the property
of the Fund. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable
securities laws, rules and regulations. The Fund and
Authorized Persons shall have access to such books and records
at all times during PFPC's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by PFPC to the Fund or to an
Authorized Person, at the Fund's expense.
(b) PFPC shall keep the following records:
(i) all books and records with respect to the Fund's books of
account;
(ii) records of the Fund's securities transactions; and
(iii) all other books and records as PFPC is required to
maintain pursuant to Rule 31a-1 of the 1940 Act in
connection with the services provided hereunder.
8. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that
is competitively sensitive material, and not generally known to the
public, including, but not limited to, information about product plans,
marketing strategies, finances, operations, customer relationships,
customer profiles, customer lists, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Fund or PFPC, their respective subsidiaries
and affiliated companies and the customers, clients and suppliers of
any of them; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially
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valuable and secret in the sense that its confidentiality affords the
Fund or PFPC a competitive advantage over its competitors; (c) all
confidential or proprietary concepts, documentation, reports, data,
specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, and trade secrets, whether or
not patentable or copyrightable; and (d) anything designated as
confidential. Notwithstanding the foregoing, information shall not be
subject to such confidentiality obligations if: (a) release of such
information is necessary or desirable in connection with PFPC's
provision of services under this Agreement; (b) it is already known to
the receiving party at the time it is obtained; (c) it is or becomes
publicly known or available through no wrongful act of the receiving
party; (d) it is rightfully received from a third party who, to the
best of the receiving party's knowledge, is not under a duty of
confidentiality; (e) it is released by the protected party to a third
party without restriction; (f) it is required to be disclosed by the
receiving party pursuant to a requirement of a court order, subpoena,
governmental or regulatory agency or law (provided the receiving party
will provide the other party written notice of such requirement, to the
extent such notice is permitted); (g) it is relevant to the defense of
any claim or cause of action asserted against the receiving party; or
(h) it has been or is independently developed or obtained by the
receiving party.
9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide account analyses,
fiscal year summaries, and other audit-related schedules with respect
to the Fund. PFPC shall take all reasonable action in the performance
of its duties under this Agreement to assure that the necessary
information is made available to such accountants for the expression of
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their opinion, as required by the Fund.
10. PFPC SYSTEM. PFPC shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions,
discoveries, patentable or copyrightable matters, concepts, expertise,
patents, copyrights, trade secrets, and other related legal rights
utilized by PFPC in connection with the services provided by PFPC to
the Fund.
11. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of
equipment failures, PFPC shall, at no additional expense to the Fund,
take reasonable steps to minimize service interruptions. PFPC shall
have no liability with respect to the loss of data or service
interruptions caused by equipment failure, provided such loss or
interruption is not caused by PFPC's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties or obligations
under this Agreement.
12. COMPENSATION. As compensation for services rendered by PFPC during the
term of this Agreement, the Fund will pay to PFPC a fee or fees as may
be agreed to in writing by the Fund and PFPC.
13. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend and hold harmless PFPC and its
affiliates, including their respective officers, directors, agents
and employees, from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, reasonable
attorneys' fees and disbursements and liabilities arising under the
Securities Laws and any state and foreign securities and blue sky
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laws) ("Claims") arising directly or indirectly from any action or
omission to act which PFPC takes in connection with the provision
of services to the Fund. Neither PFPC, nor any of its affiliates,
shall be indemnified against any liability (or any expenses
incident to such liability) caused by PFPC's or its affiliates' own
willful misfeasance, bad faith, negligence or reckless disregard in
the performance of PFPC's activities under this Agreement. The
provisions of this Section 13 shall survive termination of this
Agreement.
(b) Indemnification of the Fund. PFPC agrees to defend, indemnify and
hold the Fund and its officers, directors and employees harmless
from any and all Claims arising directly or indirectly from the
negligence, bad faith or willful misfeasance of PFPC in the
performance of its duties hereunder. Notwithstanding the foregoing,
the Fund shall not be indemnified against any Claim caused by the
Fund's or the Fund's other service providers' willful misfeasance,
bad faith or negligence.
(c) Indemnification Procedure.
(i) Notice of the Action. A party that seeks indemnification
under this Agreement must promptly give the other party
notice of any legal action; provided, however, that a delay
in notice does not relieve an indemnifying party of any
liability to an indemnified party, except to the extent the
indemnifying party shows that the delay prejudiced the
defense of the action.
(ii) Participating in or Assuming the Defense. The indemnifying
party may participate in the defense at any time or it may
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assume the defense by giving notice to the other party. After
assuming the defense, the indemnifying party:
(1) must select an attorney that is satisfactory to the
other party;
(2) is not liable to the other party for any later attorney's
fees or for any other later expenses that the other party
incurs, except for reasonable investigation costs;
(3) must not compromise or settle the action without the
other party's consent (but the other party must not
unreasonably withhold its consent); and
(4) is not liable for any compromise or settlement made
without its consent.
(iii) Failing to Assume the Defense. If the indemnifying party
fails to participate in or assume the defense within 15 days
after receiving notice of the action, the indemnifying party
is bound by any determination made in the action or by any
compromise or settlement made by the other party.
14. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action hereunder on behalf
of the Fund except as specifically set forth herein or as may be
specifically agreed to by PFPC and the Fund in a written amendment
hereto. PFPC shall be obligated to exercise care and diligence in
the performance of its duties hereunder and to act in good faith in
performing services provided for under this Agreement. PFPC shall
be liable only for any damages arising out of PFPC's failure to
perform its duties under this Agreement to the extent such damages
arise out of PFPC's willful misfeasance, bad faith, negligence or
reckless disregard of such duties.
(b) Notwithstanding anything in this Agreement to the contrary,
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(i) PFPC shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire;
flood; sabotage; epidemics; labor disputes; civil commotion;
interruption, loss or malfunction of utilities, transportation,
computer or communications capabilities; insurrection; elements of
nature; or non-performance by a third party; and (ii) PFPC shall
not be under any duty or obligation to inquire into and shall not
be liable for the validity or invalidity, authority or lack
thereof, or truthfulness or accuracy or lack thereof, of any
instruction, direction, notice, instrument or other information
which PFPC reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or
not the likelihood of such losses or damages was known by PFPC or
its affiliates.
(d) Each party shall have a duty to mitigate damages for which the
other party may become responsible.
(e) The provisions of this Section 14 shall survive termination of
this Agreement.
15. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following accounting services with respect to
the Fund:
(i) Journalize investment, capital share and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received from the
investment adviser for the Fund (the "Adviser") and transmit
trades to the Fund's custodian (the "Custodian") for proper
settlement;
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(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund with the
Custodian, and provide the Adviser with the beginning cash
balance available for investment purposes;
(vi) Update the cash availability throughout the day as required by
the Adviser;
(vii) Post to and prepare the Statement of Assets and Liabilities
and the Statement of Operations;
(viii) Calculate various contractual expenses (e.g., advisory and
custody fees);
(ix) Monitor the expense accruals and notify an officer of the Fund
of any proposed adjustments;
(x) Control all disbursements and authorize such disbursements
upon Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing
services approved by the Adviser, or if such quotes are
unavailable, then obtain such prices from the Adviser, and in
either case calculate the market value of the Fund's
Investments;
(xiv) Transmit or mail a copy of the daily portfolio valuation to
the Adviser;
(xv) Compute net asset value; and
(xvi) As appropriate, compute yields, total return, expense ratios,
portfolio turnover rate, and, if required, portfolio average
dollar-weighted maturity.
16. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following administration services with respect to
the Fund:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
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(iii) Supply various normal and customary Fund statistical data as
requested on an ongoing basis;
(iv) Prepare for execution and file the Fund's Federal and state tax
returns;
(v) Monitor the Fund's status as a regulated investment company
under Sub-chapter M of the Internal Revenue Code of 1986, as
amended;
(vi) Prepare the Fund's annual and semi-annual shareholder reports;
(vii) Prepare and coordinate with the Fund's counsel post-effective
amendments to the Fund's registration statement on Form N-2, as
needed, and coordinate with the Fund's financial printer to file
such amendments; and prepare and file semi-annual reports on
Form N-SAR, subject to the review of Fund management;
(viii) Assist in the preparation of notices of annual or special
meetings of shareholders and proxy materials relating to such
meetings;
(ix) Assist in obtaining the fidelity bond and directors' and
officers'/errors and omissions insurance policies for the Fund
in accordance with the requirements of Rule 17g-1 and
17d-1(d)(7) under the 1940 Act as such bond and policies are
approved by the Fund's board of directors;
(x) Monitor the Fund's assets to assure adequate fidelity bond
coverage is maintained;
(xi) Draft agendas, resolutions and materials for quarterly and
special board meetings and draft written consents of the board;
(xii) Coordinate the preparation, assembly and mailing of board
materials;
(xiii) Attend board meetings and draft minutes thereof;
(xiv) Maintain a calendar to assure compliance with various SEC filing
and board approval deadlines;
(xv) Assist the Fund in the handling of SEC examinations and
responses thereto;
(xvi) If the chief executive officer or chief financial officer of the
Fund is required to provide a certification as part of the
Fund's Form N-SAR or Form N-CSR filing pursuant to regulations
promulgated by the Securities and Exchange Commission under
Section 302 of the Xxxxxxxx-Xxxxx Act of 2002, PFPC will provide
(to such person or entity as agreed between the Fund and PFPC) a
sub-certification in support of certain matters set forth in the
aforementioned certification, such sub-certification to be in
such form and relating to such matters as agreed between the
Fund and PFPC from time to time. PFPC shall be required to
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provide the sub-certification only during the term of the
Agreement and only if it receives such cooperation as it may
request to perform its investigations with respect to the
sub-certification. For clarity, the sub-certification is not
itself a certification under the Xxxxxxxx-Xxxxx Act of 2002 or
under any other regulatory requirement; and
(xvii) Coordinate contractual relationships and communications between
the Fund and its contractual service providers.
17. DURATION AND TERMINATION.
(a) This Agreement shall be effective on the date first written
above and shall continue until June 12, 2008 (the "Initial
Term").
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or PFPC provides written
notice to the other of its intent not to renew. Such notice must
be received not less than ninety (90) days prior to the
expiration of the Initial Term or the then current Renewal Term.
(c) In the event a termination notice is given by the Fund, all
expenses associated with movement of records and materials and
conversion thereof to a successor accounting and administration
services agent(s) (and any other service provider(s)), and all
trailing expenses incurred by PFPC, will be borne by the Fund.
(d) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the
other party (the "Non-Defaulting Party") may give written notice
thereof to the Defaulting Party, and if such material breach
shall not have been remedied within thirty (30) days after such
written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written
notice of such termination to the Defaulting Party. In all
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cases, termination by the Non-Defaulting Party shall not
constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against
the Defaulting Party.
18. NOTICES. Notices shall be addressed (a) if to PFPC, at 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President; (b) if to
the Fund, at 0000 Xxxxxxxxxxx Xxxx, Xxxxx, XX 00000, Attention: W.
Xxxxx Xxxxxxx or (c) if to neither of the foregoing, at such other
address as shall have been given by like notice to the sender of any
such notice or other communication by the other party. If notice is
sent by confirming telegram, cable, telex or facsimile sending device,
it shall be deemed to have been given immediately. If notice is sent by
first-class mail, it shall be deemed to have been given three days
after it has been mailed. If notice is sent by messenger, it shall be
deemed to have been given on the day it is delivered.
19. AMENDMENTS. This Agreement, or any term thereof, may be changed or
waived only by written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
20. ASSIGNMENT. PFPC may assign its rights hereunder to any majority-owned
direct or indirect subsidiary of PFPC or of The PNC Financial Services
Group, Inc., provided that PFPC gives the Fund 30 days prior written
notice of such assignment.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
22. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
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23. MISCELLANEOUS.
(a) Notwithstanding anything in this Agreement to the contrary, the
Fund agrees not to make any modifications to its registration
statement or adopt any policies which would affect materially the
obligations or responsibilities of PFPC hereunder without the prior
written approval of PFPC, which approval shall not be unreasonably
withheld or delayed.
(b) Except as expressly provided in this Agreement, PFPC hereby
disclaims all representations and warranties, express or implied,
made to the Fund or any other person, including, without
limitation, any warranties regarding quality, suitability,
merchantability, fitness for a particular purpose or otherwise
(irrespective of any course of dealing, custom or usage of trade),
of any services or any goods provided incidental to services
provided under this Agreement. PFPC disclaims any warranty of title
or non-infringement except as otherwise set forth in this
Agreement.
(c) This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that
the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties. The captions
in 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. Notwithstanding any
provision hereof, the services of PFPC are not, nor shall they be,
construed as constituting legal advice or the provision of legal
services for or on behalf of the Fund or any other person.
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(d) This Agreement shall be deemed to be a contract made in Delaware
and governed by Delaware law, without regard to principles of
conflicts of law.
(e) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(f) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such party.
(g) The Fund and PFPC agree that the obligations of the Fund under the
Agreement shall not be binding upon any of the directors,
shareholders, nominees, officers, employees or agents, whether
past, present or future, of the Fund individually, but are binding
only upon the assets and property of the Fund (or applicable series
thereof), as provided in the Declaration of Trust. The execution
and delivery of this Agreement have been authorized by the
directors of the Fund, and signed by an authorized officer of the
Fund, acting as such, and neither such authorization by such
directors nor such execution and delivery by such officer shall be
deemed to have been made by any of them or any shareholder of the
Fund individually or to impose any liability on any of them or any
shareholder of the Fund personally, but shall bind only the assets
and property of the Fund (or applicable series thereof), as
provided in the Articles of Incorporation or Declaration of Trust.
(h) To help the U.S. government fight the funding of terrorism and
money laundering activities, U.S. Federal law requires each
financial institution to obtain, verify, and record certain
information that identifies each person who initially opens an
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account with that financial institution on or after October 1,
2003. Certain of PFPC's affiliates are financial institutions, and
PFPC may, as a matter of policy, request (or may have already
requested) the Fund's name, address and taxpayer identification
number or other government-issued identification number, and, if
such party is a natural person, that party's date of birth. PFPC
may also ask (and may have already asked) for additional
identifying information, and PFPC may take steps (and may have
already taken steps) to verify the authenticity and accuracy of
these data elements.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: /s/ Xxxx X. Xxxxxxx
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Title: Senior Vice President
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FIRST TRUST/VALUE LINE(R)& IBBOTSON
EQUITY ALLOCATION FUND
By: /s/ Xxxxx X. Xxxxx
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Title: President
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