Exhibit 23(H)(4)
INVESTMENT COMPANY SERVICES AGREEMENT
FOR AVALON TRUST COMPANY
THIS AGREEMENT, dated as of the 15th day of October, 1999, is made by and
between Declaration Trust ("Trust"), a Pennsylvania unincorporated business
trust operating as an open-end, management investment company registered under
the Investment Company Act of 1940, as amended (the "Act"), on behalf of the
Water Fund, a separate series of the Trust, Avalon Trust Company ("Adviser"), an
independent trust company duly organized as a corporation under the laws of the
State of New Mexico, and Declaration Service Company ("Declaration"), a
corporation duly organized under the laws of the Commonwealth of Pennsylvania
(collectively, the "Parties").
RECITALS
WHEREAS, Trust is authorized by its Declaration of Trust and By- Laws to
issue separate series of shares representing interests in separate investment
portfolios, each of which is a mutual Trust; and
WHEREAS, Trust presently issues shares representing interests in, among
others, a series of Trust known as the Water Fund (the "Portfolio"); and
WHEREAS, the Parties desire to enter into an agreement whereby Declaration
will provide the services to the Portfolio as specified herein and set forth in
particular in Schedule "A" which is attached hereto and made a part hereof.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange for good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
Section 1. Appointment.
Trust hereby appoints Declaration as servicing agent to the Portfolio, and
Declaration hereby accepts such appointment.
In order that Declaration may perform its duties under the terms of this
Agreement, the Board of Trustees of Trust warrant, covenant and agree that they
shall direct the officers, investment adviser, legal counsel, independent
accountants and custodian of the Portfolio to cooperate fully with Declaration
and, upon reasonable request of Declaration, to provide such information,
documents and advice relating to the Portfolio which Declaration requires to
execute its responsibilities hereunder.
In connection with its duties under this Agreement on behalf of the
Portfolio, Declaration shall be entitled to rely, and will be held harmless by
Trust when acting in reasonable reliance, upon any instruction, advice or
document relating to the Portfolio provided to Declaration by any Party to this
Agreement.
All services performed by Declaration on behalf of the Portfolio under this
Agreement will conform to the requirements of:
(a) the provisions of the Act and the Securities Act of 1933, as amended,
and any rules or regulations in force thereunder;
(b) any other applicable provision of state and federal law;
(c) the provisions of the Declaration of Trust and the by-laws of Trust, as
amended from time to time and delivered to Declaration;
(d) any policies and determinations of the Board of Trustees of Trust which
are communicated to Declaration; and
(e) the policies of the Portfolio as reflected in the Portfolio's then
current prospectus and statement of additional information as filed with the
U.S. Securities and Exchange Commission.
Nothing in this Agreement will prevent Declaration or any officer thereof
from providing the same or comparable services for or with any other person,
firm or corporation. While the services supplied to the Trust may be different
than those supplied to other persons, firms or corporations, Declaration will
provide the Trust equitable treatment in supplying services. Trust recognizes
that it will not receive preferential treatment from Declaration on behalf of
the Portfolio as compared with the treatment provided to other Declaration
clients.
Section 2. Duties and Obligations of Declaration.
Subject to the provisions of this Agreement, Declaration will provide to
the Portfolio the specific services as set forth in Schedule "A" attached
hereto.
Section 3. Definitions. For purposes of this Agreement:
"Certificate" will mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement. To be effective, such
Certificate shall be given to and received by the custodian and shall be signed
on behalf of Trust by any two of its designated officers, and the term
Certificate shall also include instructions communicated to the custodian by
Declaration.
"Custodian" will refer to that agent which provides safekeeping of the
assets of the Trust.
"Instructions" will mean communications containing instructions transmitted
by electronic or telecommunications media including, but not limited to,
Industry Standardization for Institutional Trade Communications,
computer-to-computer interface, dedicated transmission line, facsimile
transmission (which may be signed by an officer or unsigned) and tested telex.
"Oral Instruction" will mean an authorization, instruction, approval, item
or set of data, or information of any kind transmitted to Declaration in person
or by telephone, telegram, telecopy or other mechanical or documentary means
lacking original signature, by a person or persons reasonably identified to
Declaration to be a person or persons so authorized by a resolution of the Board
of Trustees of Trust to give Oral Instructions to Declaration on behalf of the
Portfolio.
"Shareholders" will mean the registered owners of the shares of the
Portfolio in accordance with the share registry records maintained by
Declaration for the Portfolio.
"Shares" will mean the issued and outstanding shares of the Portfolio.
"Signature Guarantee" will mean the guarantee of signatures by an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Broker-dealers guaranteeing signatures must be members of a clearing corporation
or maintain net capital of at least $100,000. Signature guarantees will be
accepted from any eligible guarantor institution which participates in a
signature guarantee program.
"Written Instruction" will mean an authorization, instruction, approval,
item or set of data or information of any kind transmitted to Declaration in an
original writing containing an original signature or a copy of such document
transmitted by telecopy including transmission of such signature reasonably
identified to Declaration to be the signature of a person or persons so
authorized by a resolution of the Board of Trustees of Trust, or so identified
by Trust to give Written Instructions to Declaration on behalf of the Portfolio.
Concerning Oral and Written Instructions For all purposes under this
Agreement, Declaration is authorized to act upon receipt of the first of any
Written or Oral Instruction it receives from Trust, Portfolio or its agents. In
cases where the first instruction is an Oral Instruction that is not in the form
of a document or written record, a confirmatory Written Instruction or Oral
Instruction in the form of a document or written record shall be delivered. In
cases where Declaration receives an Instruction, whether Written or Oral, to
enter a portfolio transaction onto the Portfolio's records, Trust shall cause
the broker/dealer executing such transaction to send a written confirmation to
the Custodian.
Declaration shall be entitled to rely on the first Instruction received.
For any act or omission undertaken by Declaration in compliance therewith,
Declaration shall be free of liability and fully indemnified and held harmless
by Trust, provided however, that in the event a Written or Oral Instruction
received by Declaration is countermanded by a subsequent Written or Oral
Instruction received prior to acting upon such countermanded Instruction,
Declaration shall act upon such subsequent Written or Oral Instruction. The sole
obligation of Declaration with respect to any follow-up or confirmatory Written
Instruction or Oral Instruction in documentary or written form shall be to make
reasonable efforts to detect any such discrepancy between the original
Instruction and such confirmation and to report such discrepancy to Trust. Trust
shall be responsible and bear the expense of its taking any action, including
any reprocessing, necessary to correct any discrepancy or error. To the extent
such action requires Declaration to act, Trust shall give Declaration specific
Written Instruction as to the action required. Trust will file with Declaration
a certified copy of each resolution of the Trust's Board of Trustees authorizing
execution of Written Instructions or the transmittal of Oral Instructions as
provided above.
Section 4. Indemnification.
(a) Declaration, its directors, officers, employees, shareholders, and
agents will be liable for any loss suffered by the Portfolio resulting from the
willful misfeasance, bad faith, negligence or reckless disregard on the part of
Declaration in the performance of its obligations and duties under this
Agreement.
(b) Any director, officer, employee, shareholder or agent of Declaration,
who may be or become an officer, director, employee or agent of Trust, will be
deemed, when rendering services to the Portfolio, or acting on any business of
the Portfolio (other than services or business in connection with Declaration'
duties hereunder), to be rendering such services to or acting solely for Trust
and not as a director, officer, employee, shareholder or agent of, or under the
control or direction of Declaration even though such person may be receiving
compensation from Declaration.
(c) Trust agrees to indemnify and hold Declaration harmless, together with
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 Declaration may sustain or incur
or which may be asserted against Declaration by any person by reason of, or as a
result of:
(i) any action taken or omitted to be taken by Declaration on behalf of the
Portfolio except claims, demands, expenses and liabilities arising from willful
misfeasance, bad faith, negligence or reckless disregard on the part of
Declaration in the performance of its obligations and duties under this
Agreement; or
(ii) any action taken or omitted to be taken by Declaration in reliance
upon any Certificate, instrument, order or stock certificate or other document
reasonably believed by Declaration to be genuine and signed, countersigned or
executed by any duly authorized person, upon the Oral Instructions or Written
Instructions of an authorized person of the Trust, or upon the written opinion
of legal counsel for Trust or Declaration; or
(iii) the offer or sale of shares of the Portfolio to any person, natural
or otherwise, which is in violation of any state or federal law.
If a claim is made against Declaration as to which Declaration may seek
indemnity under this Section, Declaration will notify Trust promptly after
receipt of any written assertion of such claim threatening to institute an
action or proceeding with respect thereto and will notify Trust promptly of any
action commenced against Declaration within ten (10) days after Declaration has
been served with a summons or other legal process. Failure to notify Trust will
not, however, relieve Trust from any liability which it may have on account of
the indemnity under this Section so long as Trust has not been prejudiced in any
material respect by such failure.
Trust and Declaration will cooperate in the control of the defense of any
action, suit or proceeding in which Declaration is involved and for which
indemnity is being provided by Trust to Declaration. Trust may negotiate the
settlement of any action, suit or proceeding subject to Declaration's approval,
which will not be unreasonably withheld. Declaration reserves the right, but not
the obligation, to participate in the defense or settlement of a claim, action
or proceeding with its own counsel. Costs or expenses incurred by Declaration in
connection with, or as a result of such participation, will be borne solely by
the Trust if:
(i) Declaration has received an opinion of counsel from counsel to the
Trust stating that the use of counsel to Trust by Declaration would present an
impermissible conflict of interest;
(ii) the defendants in, or targets of, any such action or proceeding
include both Declaration and Trust, and legal counsel to Declaration has
reasonably concluded that there are legal defenses available to it which are
different from or additional to those available to Trust or which may be adverse
to or inconsistent with defenses available to Trust (in which case Trust will
not have the right to direct the defense of such action on behalf of
Declaration); or
(iii) Trust authorizes Declaration to employ separate counsel at the
expense of Trust.
(d) The terms of this Section will survive the termination of this
Agreement.
Section 5. Representations and Warranties.
(a) Declaration represents and warrants that:
(i) it is a corporation duly organized and existing and in good standing
under the laws of Pennsylvania;
(ii) it is empowered under applicable laws and by its Certificate of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize
Declaration to enter into and perform this Agreement;
(iv) it has and will continue to have access to the facilities, personnel
and equipment required to fully perform its duties and obligations hereunder;
(v) no legal or administrative proceedings have been instituted or
threatened which would impair Declaration's ability to perform its duties and
obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of Declaration or
any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act;
(viii) this Agreement has been duly authorized by Declaration and, when
executed and delivered, will constitute valid, legal and binding obligation of
Declaration, enforceable in accordance with its terms.
(b) Trust represents and warrants that:
(i) it is an unincorporated business trust duly organized and existing and
in good standing under the laws of the State of Pennsylvania;
(ii) it is empowered under applicable laws and by its Declaration of Trust
and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize Trust to enter
into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair Trust's ability to perform its duties and
obligations under this Agreement;
(v) Trust's entrance into this Agreement shall not cause a material breach
or be in material conflict with any other agreement or obligations of Trust, or
any law or regulation applicable to either;
(vi) the Shares are properly registered or otherwise authorized for
issuance and sale;
(vii) this Agreement has been duly authorized by Trust and, when executed
and delivered, will constitute valid, legal and binding obligation of Trust,
enforceable in accordance with its terms.
(c) Adviser represents and warrants that:
(i) it is an independent trust company duly organized and existing as a
corporation in good standing under the laws of the State of New Mexico;
(ii) it is empowered under applicable laws and by its Articles of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize Adviser to
enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair Adviser's ability to perform its duties and
obligations under this Agreement;
(v) Adviser's entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or obligations of
Adviser, or any law or regulation applicable to either;
(vi) this Agreement has been duly authorized by Adviser and, when executed
and delivered, will constitute valid, legal and binding obligation of Adviser,
enforceable in accordance with its terms.
(d) Delivery of Documents
Trust will furnish or cause to be furnished to Declaration the following
documents;
(i) current Prospectus and Statement of Additional Information for the
Portfolio;
(ii) most recent Annual Report, when applicable;
(iii) most recent Semi-Annual Report for registered investment companies on
Form N-SAR, when applicable;
(iv) certified copies of resolutions of Trust's Board of Trustees
authorizing the execution of Written Instructions or the transmittal of Oral
Instructions on behalf of the Portfolio and those persons authorized to give
those Instructions.
(e) Record Keeping and Other Information
Declaration will create and maintain on behalf of the Portfolio all records
required of it pursuant to its duties as set forth in Schedule "A" in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the Act. All such records will be the property of Trust and
will be available during regular business hours for inspection, copying and use
by Trust. Where applicable, such records will be maintained by Declaration for
the periods and in the places required by Rule 31a-2 under the Act. Upon
termination of this Agreement, Declaration will deliver all such records to
Trust or such person as Trust may designate.
In case of any request or demand for the inspection of the Share records of
the Portfolio, Declaration shall notify Trust and secure instructions as to
permitting or refusing such inspection. Declaration may, however, exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure to do so.
Section 6. Compensation.
Adviser shall pay Declaration compensation for its services, and shall
reimburse it for expenses at the rates, times, manner and amounts as set forth
in Schedule "B" attached hereto and incorporated herein by reference and as will
be set forth in any amendments to such Schedule "B" agreed upon in writing by
the Parties.
Upon receipt of an invoice therefor, Adviser agrees to pay such fees within
ten (10) calendar days. In addition, Adviser agrees to reimburse Declaration for
any out-of-pocket expenses paid by Declaration on behalf of the Portfolio within
ten (10) calendar days of Adviser's receipt of an invoice therefor. In the event
Adviser is unable to pay such invoices for services or out-of-pocket expenses,
for any reason, Trust agrees to pay Declaration the full amount(s) due within
ten (10) additional business days.
For the purpose of determining fees payable to Declaration, the value of
the Portfolio's net assets will be computed at the times and in the manner
specified in the Portfolio's Prospectus and Statement of Additional Information
then in effect.
During the term of this Agreement, should Trust seek services or functions
on behalf of the Portfolio in addition to those outlined below or in Schedule
"A" attached hereto, a written amendment to this Agreement specifying the
additional services and corresponding compensation will be executed by the
Parties.
In the event that Adviser is more than thirty (30) days delinquent in its
payments of monthly xxxxxxxx in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by Trust or
Adviser), this Agreement may be terminated upon thirty (30) days' written notice
by Declaration. Adviser or Trust must notify Declaration in writing of any
contested amounts within ten (10) calendar days of receipt of a billing for such
amounts. Disputed amounts are not due and payable while they are being disputed.
Section 7. Days of Operation.
Nothing contained in this Agreement is intended to or will require
Declaration, in any capacity hereunder, to perform any functions or duties on
any holiday, day of special observance or any other day on which the New York
Stock Exchange ("NYSE") is closed. Functions or duties normally scheduled to be
performed on such days will be performed on and as of the next succeeding
business day on which the NYSE is open. Notwithstanding the foregoing,
Declaration will compute the net asset value of the Portfolio on each day
required pursuant to Rule 22c-1 promulgated under the Act.
Section 8. Acts of God, etc.
Declaration will not be liable or responsible for delays or errors caused
by acts of God or by reason of circumstances beyond its control including, acts
of civil or military authority, national emergencies, labor difficulties,
mechanical breakdown, insurrection, war, riots, or failure or unavailability of
transportation, communication or power supply, fire, flood or other catastrophe.
In the event of equipment failures beyond Declaration's control,
Declaration will, at no additional expense to the Portfolio, take reasonable
steps to minimize service interruptions but will have no liability with respect
thereto. The foregoing obligation will not extend to computer terminals located
outside of premises maintained by Declaration. Declaration has entered into and
maintains in effect agreements making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
Section 9. Inspection and Ownership of Records.
In the event of a request or demand for the inspection of the records of
the Portfolio, Declaration will use its best efforts to notify Trust and/or
Adviser and to secure instructions as to permitting or refusing such inspection.
Declaration may, however, make such records available for inspection to any
person in any case where it is advised in writing by its counsel that it may be
held liable for failure to do so after notice to Trust.
Declaration recognizes that the records it maintains for the Portfolio are
the property of Trust and will be surrendered to Trust upon written notice to
Declaration as outlined under Section 10(c) below. Adviser is responsible for
the payment in advance of any fees owed to Declaration, subject to the
provisions of Section 6 above requiring payment of fees by Trust in the event of
non-payment by Adviser. Declaration agrees to maintain the records and all other
information of the Portfolio in a confidential manner and will not use such
information for any purpose other than the performance of Declaration' duties
under this Agreement.
Section 10. Duration and Termination.
(a) The initial term of this Agreement will be for a period of two (2)
years ("Initial Term"), commencing on the date first written above (the
"Effective Date") and will continue thereafter subject to termination by either
Party as set forth in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached hereto will be
fixed for the Initial Term commencing on the Effective Date of this Agreement
and will continue thereafter subject to their review and any adjustment.
(c) After the Initial Term of this Agreement, the Trust or Declaration, but
not Adviser, may give written notice to the other party (the day on which the
notice is received by the Party against which the notice is made shall be the
"Notice Date") of a date on which this Agreement shall be terminated
("Termination Date"). The Termination Date shall be set on a day not less than
ninety (90) days after the Notice Date. The period of time between the Notice
Date and the Termination Date is hereby identified as the "Notice Period". Any
time up to, but not later than fifteen (15) days prior to the Termination Date,
Adviser or Trust, if applicable, will pay to Declaration such compensation as
may be due as of the Termination Date and will likewise reimburse Declaration
for any out-of-pocket expenses and disbursements reasonably incurred or expected
to be incurred by Declaration up to and including the Termination Date.
(d) In connection with the termination of this Agreement, if a successor to
any of Declaration' duties or responsibilities under this Agreement is
designated by Trust or Adviser by written notice to Declaration, Declaration
will promptly, on the Termination Date and upon receipt by Declaration of any
payments owed to it as set forth in Section 10(c) above, transfer to the
successor, at Adviser's expense, all records which belong to the Portfolio and
will provide appropriate, reasonable and professional cooperation in
transferring such records to the named successor.
(e) Should Trust desire to move any of the services outlined in this
Agreement to a successor service provider prior to the Termination Date,
Declaration shall make a good faith effort to facilitate the conversion on such
prior date, however, there can be no guarantee that Declaration will be able to
facilitate a conversion of services prior to the end of the Notice Period.
Should services be converted to a successor service provider prior to the end of
the Notice Period, or if the Portfolio is liquidated or its assets merged or
purchased or the like with another entity, payment of fees to Declaration shall
be accelerated to a date prior to the conversion or termination of services and
calculated as if the services had remained at Declaration until the expiration
of the Notice Period and shall be calculated at the asset levels on the Notice
Date.
(f) Notwithstanding any other provisions of this Paragraph 10, upon the
passage of one year from the Effective Date, or at any time in the event Trust
deregisters as an Investment Company with the United States Securities and
Exchange Commission ("SEC"), this Agreement may be terminated by Trust upon
ninety (60) days written notice to Declaration. The Termination Date shall be
ninety (60) days after the receipt of such notice by Declaration. Any time up
to, but not later than fifteen (15) days prior to the Termination Date, Adviser
or Trust will pay to Declaration such compensation as may be due as of the
Termination Date and will likewise reimburse Declaration for any out-of-pocket
expenses and disbursements reasonably incurred or expected to be incurred by
Declaration up to and including the Termination Date.
(g) Notwithstanding the foregoing, this Agreement may be terminated at any
time by either Party in the event of a material breach by the other Party
involving negligence, willful misfeasance, bad faith or a reckless disregard of
its obligations and duties under this Agreement provided that such breach shall
have remained unremedied for sixty (60) days or more after receipt of written
specification thereof.
Section 11. Rights of Ownership.
All computer programs and procedures developed to perform services required
to be provided by Declaration under this Agreement are the property of
Declaration. All records and other data relating to the Portfolio except such
computer programs and procedures are the exclusive property of Trust and all
such other records and data will be furnished to Trust in appropriate form as
soon as practicable after termination of this Agreement for any reason.
Section 12. Amendments to Documents.
Trust will furnish Declaration written copies of any amendments to, or
changes in, its Declaration of Trust, by-laws, or Prospectus and Statement of
Additional Information for the Portfolio in a reasonable time prior to such
amendments or changes becoming effective. In addition, Trust agrees that no
amendments will be made to the Prospectus or Statement of Additional Information
of the Portfolio which might have the effect of changing the procedures employed
by Declaration in providing the services agreed to hereunder or which amendment
might affect the duties of Declaration hereunder unless Trust first obtains
Declaration' approval of such amendments or changes.
Section 13. Confidentiality.
The Parties hereto agree that any non-public information obtained hereunder
concerning the other Party is confidential and may not be disclosed to any other
person without the consent of the other Party, except as may be required by
applicable law or at the request of the U.S. Securities and Exchange Commission
or other governmental agency. Declaration agrees that it will not use any
non-public information for any purpose other than performance of its duties or
obligations hereunder. The obligations of the Parties under this Section will
survive the termination of this Agreement. The Parties further agree that a
breach of this Section would irreparably damage the other Party and accordingly
agree that each of them is entitled, without bond or other security, to an
injunction or injunctions to prevent breaches of this provision.
Section 14. 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 will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
If to Trust: If to Adviser: If to Declaration:
Declaration Trust Avalon Trust Company Declaration Service Company
000 Xxxxx Xxxx, Xxxxx 0000 000 Xxxxxxx Xxx., Xxxxx 000 000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000 Xxxxx XX, XX 00000-0000 Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx Attn: Xxxxx Xxxxxx Attn: Xxxxxxx X. Xxxxx
President President & CEO Chief Executive Officer
Section 15. Amendment.
No provision of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by the Parties.
This Agreement may be amended from time to time by supplemental agreement
executed by the Parties and the compensation stated in Schedule "B" attached
hereto may be adjusted accordingly as mutually agreed upon.
Section 16. Authorization.
The Parties represent and warrant to each other that the execution and
delivery of this Agreement by the undersigned officer of each Party has been
duly and validly authorized; and when duly executed, this Agreement will
constitute a valid and legally binding enforceable obligation of each Party.
Section 17. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
when so executed will be deemed to be an original, but such counterparts will
together constitute but one and the same instrument.
Section 18. Assignment.
This Agreement will extend to and be binding upon the Parties hereto and
their respective successors and assigns; provided, however, that this Agreement
will not be assignable by any of the parties without the written consent of the
other parties, which consents shall be authorized or approved by a resolution by
its respective Boards of Directors.
Section 19. Governing Law.
This Agreement will be governed by the laws of the State of Pennsylvania.
Section 20. 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 will be considered severable and not be affected and the rights and
obligations of the parties will be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid, provided that the basic agreement is not thereby materially impaired.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement, together
with Schedules "A," and "B" (attached), to be signed by their duly authorized
officers as of the day and year first above written.
Declaration Trust Declaration Service Company Avalon Trust Company
___________________ __________________ _____________________
By: Xxxxxxx X. Xxxxx By: Xxxxxxx X. Xxxxx By: Xxxxx Xxxxxx
President Chief Executive Officer President & CEO
SCHEDULE A
Accounting Services Provided on behalf of the Portfolio by Declaration
Service Company
* Journalize Portfolio's investment, capital share and income and expense
activities.
* Verify investment buy/sell trade tickets when received from Adviser and
transmit trades to Portfolio's custodian for proper settlement.
* Maintain individual ledgers for investment securities.
* Maintain historical tax lots for each security.
* Reconcile cash and investment balances of Portfolio with the custodian,
and provide Adviser with the beginning cash balance available for investment
purposes.
* Update the cash availability throughout the day as required by Adviser.
* Post to and prepare Portfolio's Statement of Assets and Liabilities and
Statement of Operations.
* Calculate expenses payable pursuant to the Portfolio's various
contractual obligations.
* Control all disbursements from Trust on behalf of Portfolio and authorize
such disbursements upon instructions of Trust.
* Calculate capital gains and losses.
* Determine Portfolio's net income.
* At the Portfolio's expense, obtain security market prices or if such
market prices are not readily available, then obtain such prices from services
approved by Adviser, and in either case calculate the market or fair value of
Portfolio's investments.
* Where applicable, calculate the amortized cost value of debt instruments.
* Transmit or mail a copy of the portfolio valuations to Adviser.
* Compute the net asset value of Portfolio.
* Report applicable net asset value and performance data to performance
tracking organizations.
* Compute Portfolio's yields, total returns, expense ratios and portfolio
turnover rate.
* Prepare and monitor the expense accruals and notify Trust management of
any proposed adjustments.
* Prepare monthly financial statements, which will include, without
limitation, the Schedule of Investments, the Statement of Assets and
Liabilities, the Statement of Operations, the Statement of Changes in Net
Assets, the Cash Statement, and the Schedule of Capital Gains and Losses.
* Prepare monthly security transactions listings.
* Prepare monthly broker security transactions summaries.
* Supply various Trust and Portfolio statistical data as requested on an
ongoing basis.
* Assist in the preparation of support schedules necessary for completion
of Federal and state tax returns.
* Assist in the preparation and filing of the Portfolio's annual and
semiannual reports with the SEC on Form N-SAR.
* Assist in the preparation and filing of the Portfolio's annual and
semiannual reports to shareholders and proxy statements.
* Assist with the preparation of amendments to the Portfolio's Registration
Statements on From N-1A and other filings relating to the registration of
shares.
* Monitor Portfolio's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended from time to time
("Code").
* Determine the amount of dividends and other distributions payable to
shareholders as necessary to, among other things, maintain the qualification as
a regulated investment company of each Portfolio of the Trust under the Code.
* Provide other accounting services as may be agreed upon from time to time
in writing by Trust, Adviser and Declaration.
Administrative Services Provided by Declaration Service Company
* Provide overall day-to-day Portfolio administrative management, including
coordination of investment adviser, custodian, transfer agency, distribution and
pricing and accounting services.
* Preparation and filing of all Federal and State reports including:
o Portfolio's post-effective amendments under the Securities Act of 1933
and Investment Company Act of 1940.
o Form N-SAR - Semi-Annual report for Registered Investment Companies.
o The Portfolio's Annual and Semi-Annual Report.
o Rule 24f-2 Notice - filing regarding sale(s) of securities.
o Rule 17g-1 filing with the SEC regarding Fidelity Bond coverage.
o Ongoing monitoring and filing of State Blue Sky registrations.
* Prepare and file such reports, applications and documents as may be
necessary or desirable to register the Portfolio's shares with the Federal and
state securities authorities, and monitor the sale of Portfolio shares for
compliance with Federal and state securities laws.
* Prepare and file reports to shareholders, including the annual report to
shareholders, and coordinate mailing Prospectuses, notices, proxy statements,
proxies and other reports to shareholders.
* Assist with layout and printing of shareholder communications, including
Prospectuses and reports to shareholders.
* Administer contracts on behalf of the Portfolio with, among others, the
Portfolio's investment adviser, custodian, transfer agent/shareholder servicing
agent, distributor, and accounting services agent.
* Prepare and maintain materials for directors/management meetings
including, agendas, minutes, attendance records and minute books.
* Coordinate shareholder meetings, including assisting Trust counsel in
preparation of proxy materials, preparation of minutes and tabulation of
results.
* Monitor and pay Portfolio bills, maintain Portfolio budget and report
budget expenses and variances to Trust management.
* Monitor the Portfolio's compliance with the investment restrictions and
limitations imposed by the 1940 Act and state Blue Sky laws and applicable
regulations thereunder, the fundamental and non-fundamental investment policies
and limitations set forth in the Portfolio's Prospectuses and Statement of
Additional Information, and the investment restrictions and limitations
necessary for the Portfolio to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended, or any successor
statute.
* Prepare and distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to shareholders.
* Provide administrative services as may be agreed from time to time in
writing by Declaration.
Blue Sky Administration
* Produce and mail the following required filings:
* Renewals - produce all renewal documents and mail to states, includes
follow-up to ensure all is in order to continue selling in states.
* Sales Reports - produce all the relevant sales reports for the states and
complete necessary documents to properly file sales reports with states.
* Annual Report Filings - file copies of all annual reports with states.
* Prospectus Filings - file all copies of Definitive SAI & Prospectuses
with the states.
* Post-Effective Amendment Filing - file all Post-Effective Amendments with
the states, as well as, any other required documents.
* On demand additional states - complete filing for any states that Adviser
desires to add.
* Amendments to current permits - file in a timely manner any amendment to
registered share amounts.
* Update and file hard copy of all data pertaining to individual permits.
Transfer Agent, Shareholder Servicing Agent and Dividend Disbursing Agent
Services provided by Declaration Service Company
* Examine and process new accounts, subsequent payments, liquidations,
exchanges, transfers, telephone transactions, check redemptions automatic
withdrawals, and wire order trades.
* Reinvest or pay dividends and make other distributions.
* Answer investor and dealer telephone and/or written inquiries, except as
otherwise agreed by Adviser and/or Trust.
* Process and confirm address changes.
* Process standard account record changes as required, i.e. Dividend Codes,
etc.
* Microfilm and/or store source documents for transactions, such as account
applications and correspondence.
* Perform backup withholding for those accounts in accordance with Federal
regulations.
* Solicit missing taxpayer identification numbers.
* Provide remote access inquiry to Portfolio records via Trust supplied
hardware (Adviser responsible for connection line and monthly fee).
* Maintain the following shareholder information in such a manner as
Declaration shall determine:
o Name and address, including zip code.
o Balance of Shares.
o Number of Shares, issuance date of each share outstanding and
cancellation date of each share no longer outstanding, if issued.
o Balance of dollars available for redemption.
o Dividend code (daily accrual, monthly reinvest, monthly cash or quarterly
cash).
o Type of account code.
o Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available.
o Original establishment date for accounts opened by exchange.
o W-9 withholding status and periodic reporting.
o State of residence code.
o Social security or taxpayer identification number, and indication of
certification.
o Historical transactions on the account for the most recent 18 months, or
other period as mutually agreed to from time to time.
o Indication as to whether phone transaction can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
* Provide the following reports and statements:
o Prepare daily journals for Portfolio reflecting all shares and dollar
activity for the previous day.
o Supply information monthly for Trust's preparation of Blue Sky reporting.
o Supply monthly purchase, redemption and liquidation information for use
in Trust's N-SAR report.
o Provide monthly average daily balance reports for the Trust.
o Prepare and mail copies of summary statements to dealers and investment
advisers.
o Mail transaction confirmation statements daily to investors.
o Address and mail four periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably specified by
the Transfer Agent).
o Mail periodic account statements to investors.
o Compute, prepare and furnish all necessary reports to governmental
authorities: Forms 1099R, 1099DIV, 1099B, 1042 and 1042S.
o Enclose various marketing material as designated by the Trust in
statement mailings, i.e. monthly and quarterly statements (material must be
adaptable to mechanical equipment as reasonably specified by the Transfer
Agent).
* Prepare and mail confirmation statements to dealers daily.
* Prepare certified list of stockholders for proxy mailing.
SCHEDULE B
Compensation Schedule for Services Provided on behalf of Portfolio by
Declaration Service Company
Per Portfolio
0.20% on first $25 million of average annual assets
0.15% on next $25 million of average annual assets
0.10% on next $50 million of average annual assets
0.075% in excess of $100 million of average annual assets
Transfer Agent/ Shareholder Services:
$ 12.00 per Shareholder Account
Minimum annual fees:
Year one (1) $ 60,000
Year two (2) $ 71,000
Year three (3) $ 82,000
Thereafter $ 93,000
Plus out-of-pocket expenses to include, but not limited to: wire fees,
Trust/SERV and Networking fees, bank service charges, printing, copying,
postage, courier, account statement/ confirmation (including programming costs
for specialized statements/ confirmations), portfolio price quotation service,
asset allocation charges, travel, telephone, registration fees, and other
standard miscellaneous items.
Additional classes of shares per portfolio
Each category of fee ( including annual minimums) increases by 50% for the
second class of shares per portfolio, and by 25% for each additional class of
shares per portfolio.
