Exhibit (h)(7)
FORM OF
ADMINISTRATION AGREEMENT
THIS AGREEMENT dated as of , 2004 by and between Security Capital
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Real Estate Mutual Funds Incorporated ("Company"), a Maryland corporation,
having its principal place of business at 00 Xxxxx Xx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, on behalf of its single current series, Security Capital U.S.
Real Estate Shares ("Fund"), and One Group Administrative Services, Inc.
("Administrator"), a Delaware corporation having its principal place of business
at 0000 Xxxxxxx Xxxxxxx, Xxxxxxxx, Xxxx 00000 ("Agreement"). THIS AGREEMENT
SHALL BE EFFECTIVE FEBRUARY 19, 2005.
WHEREAS, the Company is an open-end, management investment company
registered with the Securities and Exchange Commission ("Commission") under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Company desires to retain the Administrator to furnish
management and administrative services to the Company on behalf of the Fund; and
WHEREAS, on September 8, 2004, the Board of Directors of the Company
approved the reorganization and redomiciliation of the Fund into a series of the
One Group Real Estate Fund, a series of One Group Mutual Funds, subject to the
approval of the Fund's shareholders at a meeting to be held January 20, 2005
("Reorganization"); and
WHEREAS, the Reorganization, if approved by shareholders, is expected to be
completed on or about February 18, 2005, or such later date as the parties to
the reorganization may agree ("Closing Date");
WHEREAS, the parties agree that this Agreement shall not become effective
or shall cease to be effective with respect to the Fund, effective as of the
close of business on the Closing Date, if shareholders of the Fund approve the
Reorganization; and
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth, the parties agree as follows:
ARTICLE 1. Retention of the Administrator. The Company hereby retains the
Administrator to act as the administrator of the Fund and to furnish the Fund
with the administrative services as set forth in Article 2 below. The
Administrator hereby accepts such employment to perform the duties set forth
below. The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company.
ARTICLE 2. Administrative Services. Subject to the direction and control of
the Board of Directors of the Company ("Board"), the Administrator shall perform
or supervise the performance by others of administrative services in connection
with the operations of the Fund.
Without limiting the generality of the foregoing, the Administrator shall:
a. Provide all necessary office facilities (which may be in the offices
of the Administrator or an affiliate), equipment, and personnel for
handling the affairs of the Fund;
b. Subject to supervision by counsel to the Company, prepare amendments
to, file, and maintain the Company's governing documents, including
the Articles of Incorporation, the Bylaws, and minutes of meetings of
shareholders;
c. Provide individuals reasonably acceptable to the Company's Board to
serve as officers of the Company, who will be responsible for the
management of certain of the Company's affairs as determined by the
Company's Board;
d. Prepare agenda and compile board materials for all Board meetings and
review, file, and maintain minutes of meetings of Board;
e. Provide appropriate personnel and prepare appropriate materials for
Board meetings;
f. Subject to supervision by counsel to the Company, prepare, review and
file the Company's Registration Statement (on Form N-1A, Form N-14 or
any replacements therefor), periodic supplements to the Registration
Statement, proxy materials and other filings with the Commission;
g. Subject to supervision by counsel to the Company, prepare and file, or
supervise the preparation and filing of, Form N-CSR and Form N-Q and
provide any sub-certifications which may reasonably be requested by
the Company's Principal Executive Officer or Principal Financial
Officer in connection with the required certification of those filings
and coordinate receipt of similar sub-certifications from other
service providers that provide information to be included in such
filings;
h. Prepare and file, or supervise the preparation and filing of, all
necessary Blue Sky filings;
i. Prepare and file, or supervise the preparation and filing of, annual
Form N-PX;
j. Arrange for and coordinate the layout and printing of prospectuses,
statements of additional information, semi-annual and annual reports
to shareholders, and proxy materials;
k. Prepare, with the assistance of the Fund's investment adviser, and
sub-adviser, as applicable, communications to shareholders;
l. Coordinate the mailing of prospectuses, notices, proxy statements,
proxies, semi-annual and annual reports to shareholders, and other
reports to shareholders of the Fund, and supervise and facilitate the
proxy solicitation process for all shareholder meetings, including the
tabulation of shareholder votes;
m. Prepare for and conduct shareholder meetings, if necessary;
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n. Assist with the design, development, and operation of Fund, including
new classes, investment objectives, policies and structure;
o. Prepare semi-annual and annual financial statements;
p. Prepare and file periodic reports to shareholders and the Commission
on Form N-SAR or any replacement forms therefor;
q. Prepare and file Notices to the Commission required pursuant to Rule
24f-2 of the 1940 Act;
r. Compile data for, assist the Company or its designee in the
preparation of, and file, all of the Fund's federal and state tax
returns and required tax filings other than those required to be made
by the Company's custodian and transfer agent;
s. Prepare and distribute year-end shareholder tax information letters
and Forms 1099-MISC for fees for the Board members and vendor
payments;
t. Identify and track book-tax differences;
u. Prepare quarterly tax compliance checklist for use by the Fund's
investment adviser;
v. Calculate declaration of income/capital gain distributions in
compliance with income/excise tax distribution requirements and ensure
that such distributions are not "preferential" under the Internal
Revenue Code;
w. Review reports produced by, and the operations and performance of, the
various organizations providing services to the Company or the Fund,
including, without limitation, the Fund's investment adviser,
custodian, sub-adviser, fund accountant, shareholder servicing agent,
transfer agent, outside legal counsel, independent public accountants,
and other entities providing services to the Company, and at the
request of the Board, report to the Board on the performance of such
organizations;
x. Prepare, negotiate, and administer contracts on behalf of the Company
with, among others, the Fund's investment adviser, custodian, fund
accountant, shareholder servicing agent, and transfer agent and
oversee expense disbursement and any service provider conversions;
y. Calculate contractual Company and Fund expenses and control all
disbursements for the Fund, and as appropriate compute the Fund's
yields, total return, expense. ratios, portfolio turnover rate and, if
required, portfolio average dollar weighted maturity;
z. Prepare annual Company expense budget and monthly accrual analyses,
perform various expense savings analysis and expense benchmarking
analysis;
aa. Prepare expense authorizations and review or prepare for management
review all invoices for Company and Fund expenses;
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bb. Calculate performance data of the Fund for dissemination to
information service providers covering the investment company
industry;
cc. Review marketing material to verify that Fund information is accurate;
dd. Prepare and file proofs of claims in connection with Class Action
notices;
ee. Monitor compliance of the Fund with the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder, so as to
enable the Fund to maintain its status as a "regulated investment
company;"
ff. Monitor compliance by the Company and the Fund with all applicable
federal securities and other regulatory requirements (other than state
securities registration and filing requirements);
gg. Monitor the Fund's compliance with its registration statement;
hh. Obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Fund in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Company's
Board;
ii. Provide information and assistance with inspections by the Commission;
jj. Coordinate annual audit activities, including providing information
and assistance with respect to audits conducted by the Company's
independent auditors;
kk. Assist management with the administration of any deferred compensation
plan for the Board;
ll. Design, implement and maintain a disaster recovery program for the
Company's records;
mm. Assist the Company's Chief Compliance Officer with issues regarding
the Company's compliance program (as approved by the Board in
accordance with Rule 38a-1 under the 0000 Xxx) as reasonably
requested;
nn. Administer the implementation and required distribution of the Privacy
Policy of the Company as required under Regulation S-P; and
oo. Perform all administrative services and functions of the Company and
the Fund to the extent administrative services and functions are not
provided to the Company or the Fund pursuant to the Company's or the
Fund's investment advisory agreement, custodian agreement, fund
accounting agreement, shareholder servicing agreement, and transfer
agent agreement.
The Administrator shall perform such other administrative services for the
Company that are mutually agreed upon by the parties from time to time.
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ARTICLE 3. Additional Services; Delegation. The Administrator may provide
additional reports and services upon the request of the Fund's investment
adviser, which may result in an additional charge, the amount of which shall be
agreed upon between the parties. The Administrator may delegate some or all of
its responsibilities under this Agreement, as provided in Article 9.
ARTICLE 4. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all the Board of the
Company who are officers or employees of the Administrator or any affiliated
company of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Board of the Company
to perform services on behalf of the Company.
(B) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, fees and expenses for legal and auditing
services, fees and expenses of pricing services, transfer agency fees and
expenses, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing shareholders, all expenses
incurred in connection with issuing and redeeming shares, the cost of custodial
services, the cost of initial and ongoing registration of the shares under
Federal and state securities laws, fees and out-of-pocket expenses of Board
members who are not officers or employees of the Administrator, the Distributor,
or the Investment Adviser to the Company or any affiliated company of the
Administrator, the Distributor, or the Investment Adviser, insurance, interest,
brokerage costs, litigation and other extraordinary or nonrecurring expenses,
and all fees and charges of investment advisers to the Company.
ARTICLE 5. Compensation of the Administrator.
(A) Administration Fee. In consideration of the services rendered, the
facilities furnished and the expenses assumed by the Administrator pursuant to
this Agreement, the Company shall pay the Administrator compensation at an
annual rate specified in Schedule A attached hereto. Such compensation shall be
calculated and accrued daily, and paid to the Administrator on the first
business day of each month, or at such time(s) as the Administrator shall
request and the parties hereto shall agree. The Company shall also reimburse the
Administrator for its reasonable out-of-pocket expenses, including the travel
and lodging expenses incurred by officers and employees of the Administrator in
connection with attendance at Board meetings. If this Agreement terminates
before the last day of a month, the Administrator's compensation for that part
of the month in which this Agreement is in effect shall be prorated according to
the proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to the Administrator, the value
of net assets of the Fund shall be computed in the manner described in the
Company's Articles of Incorporation or in the prospectus or statement of
additional information for the computation of the Company's net assets in
connection with the determination of the net asset value of the Company's
shares.
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(B) Survival of Compensation Rights. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 6. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. Any person, even though also an employee, or agent of the Administrator,
who may be or become an officer, Board member, employee or agent of the Company
or the Fund shall be deemed, when rendering services to the Company or the Fund,
or acting on any business of that party, to be rendering such services to or
acting solely for that party and not as a partner, employee, or agent or one
under the control or direction of the Administrator even though paid by it.
So long as the Administrator acts in good faith and with due diligence and
without negligence, the Company assumes full responsibility and shall indemnify
the Administrator, its employees, agents, directors, officers and nominees and
hold them harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all losses,
damages, costs, charges, reasonable counsel fees and disbursements, payments,
expenses and liabilities (including reasonable investigation expenses) arising
directly or indirectly out of the Administrator's actions taken or non-actions
with respect to the performance of services hereunder. The indemnity and defense
provisions set forth herein shall indefinitely survive the termination of this
Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Company, but failure to do so in good faith shall not affect the rights
hereunder.
The Company shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to the Administrator, whose approval shall not be
unreasonably withheld. In the event that the Company elects to assume the
defense of any suit and retain counsel, the Administrator shall bear the fees
and expenses of any additional counsel retained by it. If the Company does not
elect to assume the defense of a suit, it will reimburse the Administrator for
the reasonable fees and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Company at any time for instructions and
may consult counsel for the Company or its own counsel and with accountants and
other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be
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liable or accountable for any action taken or omitted by it in good faith in
accordance with such instruction or with the opinion of such counsel,
accountants or other experts.
The Administrator shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. The Administrator will not be held to have notice of
any change of authority of any officers, employees or agents of the Company
until receipt of written notice thereof from the Company.
ARTICLE 7. Activities of the Administrator. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and shareholders of the Company are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of the Administrator and its counsel are or may be or become
similarly interested in the Company, and that the Administrator may be or become
interested in the Company as an owner of Company shares or otherwise.
ARTICLE 8. Term. This Agreement shall become effective February 19, 2005
and, unless sooner terminated as provided herein, shall continue until October
31, 2006. Thereafter, if not terminated, this Agreement shall continue
automatically for successive one year terms, provided that such continuance is
specifically approved at least annually by the vote of a majority of those
members of the Company's Board of Directors who are not parties to this
Agreement or interested persons of any such party. This Agreement may be
terminated without penalty, on not less than 60 days prior written notice, by
the Company's Board of Directors or by the Administrator.
ARTICLE 9. Assignment. This Agreement shall not be assigned by either party
without the written consent of the other party; provided, however, that the
Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 6
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 10. Amendments. This Agreement may be amended by the parties hereto
only if such amendment is specifically approved (i) by the vote of a majority of
the Board members and (ii) by the vote of a majority of the Board members who
are not parties to this Agreement or interested persons of any such party.
For special cases, the parties hereto may amend such procedures set forth
herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Company does not conflict with or violate any requirements of
its Articles of Incorporation or then-current prospectuses, or any rule,
regulation or requirement of any regulatory body.
ARTICLE 11. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or
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maintained by the Administrator on behalf of the Company shall be prepared and
maintained at the expense of the Administrator, but shall be the property of the
Company and will be made available to or surrendered promptly to the Company on
request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may 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.
ARTICLE 12. Definitions of Certain Terms. The terms "interested person" and
"affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Commission.
ARTICLE 13. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if delivered to the other party at
the following address: 0000 Xxxxxxx Xxxxxxx, Xxxxxxxx, Xxxx 00000, or at such
other address as a party may from time to time specify in writing to the other
party pursuant to this Section.
ARTICLE 14. Governing Law. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the State
of Delaware.
ARTICLE 15. Use of Confidential Information. Notwithstanding anything in
this Agreement to the contrary:
The Administrator will keep confidential and will not use or disclose to
any other party (including, but not limited to, affiliates of the Administrator)
any Customer Information (as defined below), except as authorized in writing by
the Company or as appropriate in connection with performing this Agreement and
subject to any conditions set forth elsewhere in the Agreement.
The Administrator will maintain appropriate physical, electronic and
procedural safeguards to store, dispose of (if applicable) and secure Customer
Information to protect it from unauthorized access, use, disclosure, alteration,
loss and destruction. The safeguards used by the Administrator to protect
Customer Information will be no less than those used by the Administrator to
protect its own confidential information. In addition, the Administrator will
comply with any other security safeguards required by this Agreement.
The Administrator will control access to Customer Information and, except
as required by law or as otherwise may be specifically permitted by this
Agreement, permit access only to individuals who need access in connection with
performing this Agreement and will cause such individuals to maintain the
confidentiality of Customer Information.
Except as necessary to conform to any record retention requirements imposed
by this Agreement, the Company will, upon termination of this Agreement or the
Company's earlier request, return to the Company all Customer Information or
destroy it, as specified by the Company. The Administrator will provide to the
Company a destruction certificate if so required.
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As between the Company and the Administrator, Customer Information and all
applicable intellectual property rights embodied in the Customer Information
shall remain the property of the Company.
The Administrator acknowledges that it has received and reviewed a copy of
the Company's privacy policy applicable to Customer Information and it agrees
that it will not act in a manner that is inconsistent with such policy.
Without limiting the foregoing, the Administrator shall not directly or
through an affiliate, disclose any Customer Information, including account
numbers, access numbers, or access codes for an account for use in
telemarketing, direct mail marketing, or marketing through electronic mail,
except as permitted by this Agreement, the Privacy Policy of the Company's, and
as permitted in Section 248.12 of Regulation S-P.
The term "Customer Information" as used in this Article means information,
in any form, provided to the Administrator by on or behalf of the Company that
uniquely identifies in any way a current, former or prospective Company
customer. Customer Information includes, but is not limited to, copies of such
information or materials derived from such information.
ARTICLE 16. Counterparts. This Agreement may be executed by the parties on
any number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
SECURITY CAPITAL REAL ESTATE MUTUAL
FUNDS INCORPORATED
By:
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Title:
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ONE GROUP ADMINISTRATIVE SERVICES, INC.
By:
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Title:
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
BETWEEN
SECURITY CAPITAL REAL ESTATE MUTAL FUNDS INCORPORATED
AND
ONE GROUP ADMINISTRATIVE SERVICES, INC.
(Effective as of February 19, 2005)
Category 1
The Administrator receives a pro-rata portion of the following annual fee on
behalf of each Fund in Category 1 for administrative services: 0.15% of the
first $25 billion of average daily net assets of all Category 1 and Category 4
funds in the JPMorgan Funds Complex/1/ plus 0.075% of average daily net assets
of all Category 1 and Category 4 funds over $25 billion.
Security Capital U.S. Real Estate Shares/2/
Category 2
The Administrator receives a pro-rata portion of the following annual fee on
behalf of each Fund in Category 2 for administrative services: 0.10% of the
Fund's average daily net assets on the first $500,000,000 in Fund assets; 0.075%
of the Fund's average daily net assets between $500,000,000 and $1,000,000,000
and 0.05% of the Fund's average daily net assets in excess of $1,000,000,000.
None
Category 3
The Administrator receives a pro-rata portion of the following annual fee on
behalf of each Fund in Category 3 for administrative services: 0.10% of the
first $100 billion of average daily net assets of all Category 3 funds in the
JPMorgan Funds Complex plus 0.05% of average daily net assets over $100 billion.
None
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/1/ For purposes of this Agreement, the "JPMorgan Funds Complex" includes all
of the Funds subject to this Agreement and all of the series of each of the
entities that have entered into a separate Administration Agreement with
One Group Administrative Services, Inc., dated August 12, 2004 or August
19, 2004.
/2/ Shareholders of Security Capital U.S. Real Estate Shares will be asked to
approve the reorganization of that Fund with and into the One Group Real
Estate Fund at a shareholder meeting to be held January 20, 2005. If
shareholders approve the reorganization, the Security Capital U.S. Real
Estate Shares will no longer be part of this Agreement effective upon the
closing of the reorganization, which is expected to occur on or about
February 18, 2005 or on such later date as the parties to the
reorganization transaction shall agree.
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Category 4
The Administrator receives a pro-rata portion of the following annual fee on
behalf of each Fund for administrative services: 0.10% of the first $25 billion
of average daily net assets of all Category 1 and Category 4 funds in the
JPMorgan Funds Complex plus 0.025% of average daily net assets of all Category 1
and Category 4 funds over $25 billion. These Funds are feeders into the Growth
and Income Portfolio that has an additional 0.05% administration fee.
None
Category 5
The Administrator receives a fee of 0.05% of the average daily net assets of all
Category 5 Funds.
None
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