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