Exhibit (h)(3)
ADMINISTRATION AGREEMENT
AGREEMENT made this 11th day of May, 2001 between LMCG Funds (the "Trust"), a
Massachusetts business trust, on behalf of its series, and Funds Distributor,
Inc. ("FDI"), a Massachusetts corporation.
WHEREAS, the Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), comprised of
the series as listed on Schedule A, as such Schedule may be amended from time to
time (each a "Fund," collectively, the "Funds");
WHEREAS, the Trust has entered into a distribution agreement with FDI (the
"Distribution Agreement") for the distribution by FDI of certain classes of
shares of beneficial interest (the "Shares") in the Trust;
WHEREAS, the Trust desires to retain FDI to assist it in performing certain
services with respect to the Shares of the Trust and FDI is willing to perform
such services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
herein contained, the parties agree as follows:
1. Services provided by FDI. FDI will assist the Trust in providing services to
each Fund as may be reasonably requested by the Trust from time to time. At the
direction of the Trust, specific assignments may include any of the services
listed in Exhibit A.
2. Services Provided by the Trust. In furtherance of the responsibilities under
this Agreement, the Trust will provide or cause the provision of certain
services, as listed in Exhibit B.
3. Compensation; Reimbursement of Expenses. The Trust, on behalf of each Fund,
hereby agrees to pay to FDI the compensation set forth on Exhibit C attached
hereto for the services described in this Agreement.
4. Effective Date. This Agreement shall become effective on the date first above
written; and with respect to a Fund, also as of the date first written above or,
if a particular Fund is not in existence on that date, on the date FDI becomes
the distributor of the shares of such Fund; Schedule A to this Agreement shall
be deemed amended to include such Fund and any classes of Shares of such Fund
from and after such date.
5. Term.
(a) This Agreement shall continue for an initial one-year period
and shall continue thereafter for successive one-year terms,
unless terminated pursuant to the
provision of sub-section (c) of this Section 5, so long as
such continuance is specifically approved at least annually by
the Trust's Board of Trustees and by a majority of the
Trustees who are not "interested persons" (as defined in the
0000 Xxx) of the Trust.
(b) The provisions of Section 6 and 7 shall survive termination of
this Agreement and continue in full force and effect.
Compensation due FDI and unpaid by the Trust upon such
termination shall be immediately due and payable upon and
notwithstanding such termination.
(c) Either the Trust or FDI shall have the right to immediately
terminate this Agreement, if (i) a material breach of any provision of
this Agreement has been committed by the other party; (ii) the
non-breaching party delivers notice that the other party is in breach
of any of its obligations under this Agreement; and (iii) either (a)
the action or inaction of the breaching party giving rise to the cause
for termination is not capable of being remedied or (b) if such action
or inaction is capable of being remedied, the breaching party shall not
have remedied such action or inaction within thirty (30) days after
such notice.
6. Standard of Care and Indemnification.
(a) The Trust shall indemnify and hold FDI, its officers, directors,
employees, shareholders, affiliated persons (as such term is defined in
the 0000 Xxx) and agents (collectively the "FDI Indemnified Parties"
and each individually an "FDI Indemnified Party") harmless from and
against any and all losses, claims, damages, expenses and liabilities,
joint or several (including, but not limited to, any reasonable
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit, proceeding or
claim), which such FDI Indemnified Party or FDI Indemnified Parties may
be or become subject to or liable for by reason of or in connection
with this Agreement, FDI's provision of services pursuant to this
Agreement, or any other matter, event or transaction in any way
relating to or connected with this Agreement or the subject matter
hereof; provided, however, that an FDI Indemnified Party shall not be
entitled to indemnification hereunder to the extent, but only to the
extent, that it shall have been finally determined by a court of
competent jurisdiction that such loss, claim, damage, expense or
liability was caused directly (or indirectly contributed to) and
proximately by action or omission of FDI and that such action or
omission involved bad faith, negligence or intentional misconduct by
FDI.
(b) FDI shall indemnify and hold the Trust, its officers, directors,
employees, shareholders, affiliated persons (as such term is defined in
0000 Xxx) and agents (collectively the "Trust Indemnified Parties" and
each individually an "Trust Indemnified Party") harmless from and
against any and all losses, claims, damages, expenses and liabilities,
joint or several (including, but not limited to, any reasonable
investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit, proceeding or
claim), which such Trust Indemnified Party or Trust
Indemnified Parties may be or become subject to or incur by reason of
this Agreement or under the 1933 Act, the 1934 Act, common law or
otherwise, but only to the extent that such loss, claim, damage,
expense or liability incurred by a Trust Indemnified Party shall arise
out of or be based on (i) any breach of any covenant or obligation of
FDI contained in this Agreement, (ii) any failure by FDI to comply with
any laws applicable with its performance of services under this
Agreement or (iii) a final determination by a court of competent
jurisdiction that such loss, claim, damage, expense or liability was
caused directly or proximately by an action or omission of FDI
involving bad faith, gross negligence or intentional misconduct by FDI;
provided that a Trust Indemnified Party shall not be entitled to
indemnification hereunder to the extent, but only to the extent, that
it shall have been finally determined by a court of competent
jurisdiction that such loss, claim, damage, expense or liability was
caused directly and proximately by action or omission of the Trust and
that such action or omission involved bad faith, negligence or
intentional misconduct by the Trust.
(c) In order to provide for just and equitable contribution in
circumstances in which the terms of Section 6(a) or 6(b) are
applicable, but for any reason the indemnification provided for therein
is held to be unavailable, the Trust and FDI shall contribute to the
aggregate losses, claims, damages, expenses and liabilities (including,
but not limited to, any reasonable investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement
of, any action, suit, proceeding or claim) which any of the FDI
Indemnified Parties or Trust Indemnified Parties (as defined above),
respectively, may be subject to or liable for in proportion to the
relative fault of the Trust, on the one hand, and FDI, on the other
hand; provided, however, that in determining relative fault, there
shall be considered the relative benefits received by each party from
the transactions giving rise to the loss, claim, damage, expense or
liability, the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission, and any
other equitable considerations appropriate under the circumstances;
provided, further, that in no event shall FDI be required to contribute
in the aggregate hereunder any amount in excess of the aggregate
compensation received by it for its services during the immediately
preceding 12 month period. Neither the Trust nor FDI shall have any
other right of contribution in connection herewith.
(d) The applicable indemnified party, promptly and in any event within
ten (10) days after receipt of notice of commencement of any action,
suit, proceeding or claim in respect of which a claim for
indemnification may be made by it, shall notify the applicable
indemnifying party in writing of the commencement of such action, suit,
proceeding or claim, enclosing a copy of all papers served. However,
the omission to so notify the applicable indemnifying party of any such
action, suit, proceeding or claim shall not relieve such indemnifying
party from any liability that it may have under Section 6(a) or (b), as
applicable, of this Agreement except to the extent that the ability of
such indemnifying party to defend such action, suit, proceeding or
claim is materially adversely affected.
(e) In case any such action, suit, proceeding or claim for which
indemnity may be
payable hereunder shall be brought against an FDI Indemnified Party or
Trust Indemnified Party, as applicable (an "Indemnified Party"), and
such Indemnified Party shall notify the applicable indemnifying party
of the commencement thereof, such indemnifying party shall be entitled
to participate in, and to the extent that such indemnifying party shall
wish to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party, subject to the further
provisions of this paragraph. After written notice from such
indemnifying party to such Indemnified Party of its election to so
assume the defense thereof, such indemnifying party shall not be liable
to the applicable Indemnified Parties for any additional attorneys'
fees or other expenses of litigation, other than reasonable costs of
investigation subsequently incurred by such Indemnified Parties in
connection with the defense thereof, unless (i) the employment of
counsel by such Indemnified Parties has been authorized in writing by
such indemnifying party, such authorization not to be unreasonably
withheld or delayed; (ii) such Indemnified Parties shall have obtained
a written opinion of counsel reasonably acceptable to such indemnifying
party that there exists a conflict of interest between such Indemnified
Parties and the relevant party in the conduct of the defense of such
action or that there are one or more defenses available to such
Indemnified Parties that are unavailable to such indemnifying party (in
which case such indemnifying party shall not have the right to direct
the defense of such action on behalf of such Indemnified Parties); or
(iii) such indemnifying party shall not in fact have employed counsel
reasonably satisfactory to such Indemnified Parties to assume the
defense of such action, in each of which cases the reasonable fees and
expenses of counsel utilized by such Indemnified Parties shall be at
the expense of such indemnifying party, it being understood, however,
that such indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys for an Indemnified Party, which
firm shall be designated in writing by the Indemnified Party.
Notwithstanding the foregoing, under the circumstances described in
clause (ii) above, the applicable Indemnified Parties shall be entitled
to retain an additional law firm, in any one such action or separate
but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, provided
such Indemnified Parties have obtained a written opinion of counsel
reasonably acceptable to the indemnifying party that a conflict of
interest exists that would preclude the use of a single law firm, in
which case the indemnifying party shall be liable for the reasonable
fees and expenses of counsel designated by the Indemnified Parties in
writing. All such fees and expenses which are at the expense of an
indemnifying party hereunder shall be promptly paid by such
indemnifying party.
(f) Nothing in this Agreement shall be construed as limiting an
Indemnified Party's rights to employ counsel at its own expense or to
obtain indemnification for amounts reasonably paid to adverse claimants
in satisfaction of any judgments or in settlement of any actions, suit,
proceeding or claims, except that no party hereto shall be liable for
any
settlement of any action, suit, proceeding or claim effected without
its written consent. None of the parties hereto shall settle or
compromise any action, suit, proceeding or claim if such settlement or
compromise provides for an admission of liability on the part of an
Indemnified Party without such Indemnified Party's written consent.
7. Confidentiality. During the term of this Agreement, FDI and the Trust may
have access to confidential information relating to such matters as either
party's business, trade secrets, systems, procedures, manuals, products,
contracts, personnel, and clients. As used in this Agreement, "Confidential
Information" means information belonging to FDI or the Trust which is of value
to FDI or the Trust and the disclosure of which could result in a competitive or
other disadvantage to either party. Confidential Information includes, without
limitation, financial information, proposal and presentations, reports,
forecasts; inventions, improvements and other intellectual property; trade
secrets; know-how; designs, processes or formulae; software; market or sales
information or plans; customer lists; and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses or
facilities). Confidential Information includes information developed by either
party in the course of engaging in the activities provided for in this
Agreement, unless: (i) the information is or becomes publicly known through
lawful means; (ii) at the time of receipt the information was already actually
known to the other party; or (iii) the information is disclosed to the other
party without a confidential restriction by a third party who rightfully
possesses the information and did not obtain it, either directly or indirectly,
from FDI or the Trust, as the case may be, or any of their respective
principals, employees, affiliated persons, or affiliated entities. The parties
understand and agree that all Confidential Information shall be kept
confidential by the other both during and after the term of this Agreement. The
parties further agree that they will not, without the prior written approval by
the other party, disclose such Confidential Information, or use such
Confidential Information in any way, either during the term of this Agreement or
at any time thereafter, except as required in the course of this Agreement and
as approved by the other party or as required by law.
8. Record Retention and Confidentiality. FDI shall keep and maintain on behalf
of the Funds all books and records which the Funds and FDI are, or may be,
required to keep and maintain in connection with the services to be provided
hereunder pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the 1940 Act. FDI further agrees
that all such books and records shall be the property of the Funds and to make
such books and records available for inspection by or upon the request of the
Funds, by the Trust, or by the SEC at reasonable times and otherwise to keep
confidential all books and records and other information relative to the Funds
and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
9. Rights of Ownership. All computer programs and procedures developed to
perform the services to be provided by FDI under this Agreement are the property
of FDI. All records and other data except such computer programs and procedures
are the exclusive property of the Funds and all such other records and data will
be furnished to the Trust and/or the Funds in appropriate form as soon as
practicable after termination of this Agreement for any reason.
10. Return of Records. FDI may at its option at any time, and shall promptly
upon the demand of the Trust and/or the Funds, turn over to the Trust and/or the
Funds and cease to retain FDI's files, records and documents created and
maintained by FDI pursuant to this Agreement which are no longer needed by FDI
in the performance of its services or for its legal protection. If not so turned
over to the Trust and/or the Funds, such documents and records will be retained
by FDI for six years from the year of creation. At the end of such six-year
period, such records and documents will be turned over to the Trust and/or the
applicable Fund unless the applicable Fund authorizes in writing the destruction
of such records and documents.
11. Representations of the Trust. The Trust represents and warrants that this
Agreement has been duly authorized by the Trust and, when executed and delivered
by the Trust, will constitute a legal, valid and binding obligation of the
Trust, enforceable against the Trust in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
12. Representations of FDI.
(a) FDI represents and warrants that this Agreement has been duly
authorized by FDI and, when executed and delivered by FDI, will
constitute a legal, valid and binding obligation of FDI, enforceable
against FDI in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
(b) FDI further represents and warrants that it is a member of the NASD
and agrees to abide by all of the rules and regulations of the NASD,
including, without limitation, its Conduct Rules. FDI agrees to comply
with all applicable federal and state laws, rules and regulations. FDI
agrees to notify the Trust immediately in the event of its expulsion or
suspension by the NASD. Expulsion of FDI by the NASD will automatically
terminate this Agreement immediately without notice. Suspension of FDI
by the NASD will terminate this Agreement effective immediately upon
written notice of termination to FDI from the Trust.
13. Notices. Any notice provided hereunder shall be sufficiently given when sent
by registered or certified mail to the Trust at the following address: LMCG
Funds, 000 Xxxxx Xxxx Xxx, Xxxx Xxxxx, XX 00000, Attention: President; and to
FDI at the following address: 00 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000,
Attention: President with a copy to General Counsel, or at such other address as
either party may from time to time specify in writing to the other party
pursuant to this Section.
14. Headings. Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
15. Assignment. This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party.
16. Governing Law. This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of The Commonwealth of Massachusetts.
17. Use of the Trust Name. The Trust consents to FDI's non-exclusive use of the
"LMCG Funds" name solely in connection with FDI's website, trade advertisements,
client lists and mutual fund industry conferences and displays. FDI agrees and
acknowledges that LMCG Funds and/or affiliates own all right, title, and
interest in the name "LMCG Funds" and will only use the name as stated herein.
18. Services Not Exclusive. The Fund and the Trust hereby acknowledge that the
services provided hereunder by FDI are not exclusive. Nothing herein shall be
deemed to limit or restrict FDI's right, or the right of any of FDI's officers,
directors or employees to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, fund, firm, individual or association, as well as provide
distribution services to any other mutual fund, including any fund which may
directly compete with or be similar to the Trust.
19. Severability. If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if this Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
20. Counterparts. This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
21. Massachusetts Business Trust. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trusts as Trustees and not individually and that
the obligations under this instrument are not binding upon any of the Trustees
or holders of shares of beneficial interest of any such Fund individually but
are binding only upon the respective assets and property of each Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
LMCG FUNDS, on behalf of each Fund
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Vice President
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FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
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Name: /s/ Xxxxxxxx X. Xxxxxxxx
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Title: Executive Vice President
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Dated: May 11, 2001
SCHEDULE A
TO THE SERVICES AGREEMENT
BETWEEN
LMCG FUNDS AND FUNDS DISTRIBUTOR, INC.
1. Funds 2. Classes
LMCG Small Cap Growth Fund A Shares
LMCG Mid Cap Growth Fund A Shares
LMCG Small Cap Tax-Sensitive Fund A Shares
LMCG Technology Fund A Shares
LMCG Internet Fund A Shares
LMCG FUNDS, on behalf of each Fund
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: Vice President
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FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
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Name: /s/ Xxxxxxxx X. Xxxxxxxx
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Title: Executive Vice President
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EXHIBIT A
SERVICES PROVIDED BY FUNDS DISTRIBUTOR, INC.
Legal Management Services
Subject to the oversight of Trust counsel, FDI will provide the
following routine legal management services ("Routine Legal Management
Services"):
1. Corporate and Secretarial Services
(a) Provide Secretary and the necessary complement of Assistant
Secretaries for the Funds.
(b) Maintain general corporate calendar and track all legal and
compliance requirements through annual cycles.
(c) Prepare board meeting materials (four (4) quarterly board meetings
per year), including but not limited to:
- Prepare agenda and background materials for legal approval,
including explanatory memorandums and resolutions
- Make presentations
- Monitor annual approval requirements (e.g., contracts,
procedures and plans)
- Prepare extensive background material for annual review of
advisory fees, major corporate structural changes, etc.
- Prepare minutes
- Follow-up on matters raised at meetings
- Keep board of directors apprised of important and relevant
industry developments
(d) Maintain Agreement and Declaration of Trust and By-Laws of the
Funds.
(e) Draft contracts, assist in negotiation and planning, as
appropriate. For example negotiate, draft and keep current the
following contracts: (i) investment advisory and sub-advisory
contracts; (ii) distribution agreement; (iii) broker-dealer and other
intermediary agreements; (iv) transfer agency agreement; (v) custody
agreement; (vi) administration agreement and sub-administration
agreement; (vii) Rule 12b-1 plans and related agreements; (viii)
shareholder servicing plans and related agreements; (ix) XXX custodian
agreements; (x) repurchase agreements; (xi) futures account agreement
and procedural safekeeping agreement; (xii) loan agreements; and (xiii)
various other routine agreements and amendments.
(f) Draft and maintain Fund procedures and plans, as appropriate,
including (i) code of ethics, (ii) Rule 2a-7 procedures, (iii) Rule
17a-7 procedures, (iv) Rule 17e-1 procedures, (v) Rule 10f-3
procedures, (vi) Rule 144A/liquidity/valuation procedures,
(vii) repurchase agreement standards and guidelines, (viii) securities
lending arrangements and (ix) dividend procedures.
(g) Prepare organizational board meeting materials for new funds and/or
registrants.
2. SEC and Public Disclosure Assistance
(a) Prepare and file one annual amendment (which may be comprised of a
filing made pursuant to Rule 485(a) under the 1933 Act followed by a
related Rule 485(b) filing) to the Funds' registration statement each
year, including updating prospectuses and statement of additional
information (not including any amendment requiring major prospectus
revisions or the addition of new portfolios or classes).
(b) Coordinate/monitor XXXXX (Electronic Data Gathering Analysis and
Retrieval System) on-line filings related to post-effective amendments,
Form N-SAR, Form 24F-2, annual and semiannual shareholder reports.
(c) Review Form N-SAR, Form 24F-2, annual and semi-annual shareholder
reports for legal disclosure requirements and file with the SEC.
(d) Monitor fidelity bond and directors' and officers' errors and
omissions policies and file such fidelity bond with the SEC.
(e) Provide legal assistance for shareholder communications.
(f) Provide advice regarding long-term planning, including the creation
of new portfolios, corporate or trust structural changes, mergers,
acquisitions, and other asset gathering plans including new
distribution methods.
(g) Maintain effective communications with Fund counsel; counsel to the
"non-interested" directors and to the Funds' local counsel.
(h) Create and implement timing and responsibility system for outside
legal counsel when necessary to implement major projects and the legal
management of such projects.
(i) Monitor activities and billing practices of outside counsel
performing services for the fund or in connection with related fund
activities.
3. Compliance
(a) Consulting regarding all testing that is done by the fund
accountant to assist the adviser in complying with Fund prospectus
guidelines and limitations, 1940 Act requirements, and Internal Revenue
Code requirements.
(b) Consultation and advice for resolution of compliance questions
along with Fund counsel and the fund accountant.
(c) Assist in the management of SEC and other regulatory examinations.
(d) Assist in developing guidelines and procedures to improve overall
compliance by the Fund and its various agents.
(e) Provide advice with regard to Fund litigation matters, routine Fund
examinations and investigations by regulatory agencies.
(f) Maintain legal liaison with and provide legal advice and counsel to
the Fund regarding its relationships, contractual or otherwise, with
the various Fund agents, such as the investment adviser, custodian,
transfer agent, and auditors with respect to their activities on behalf
of the Funds.
(g) Provide advice regarding all portfolio distribution arrangements
for compliance with applicable banking and broker/dealer regulations.
* * *
FDI is also willing to provide certain extraordinary legal management
services ("Extraordinary Legal Management Services") to the Funds. All of the
extraordinary legal functions set forth below may be accomplished wholly or
partially by FDI depending upon the circumstances (e.g., work flow and timing
demands) surrounding each request.
Additional compensation payable by the Trust to FDI for the provision
of extraordinary services is either (i) a flat fee to be negotiated after the
scope of the project has been accurately and completely defined; or (ii) a fee
for a particular project based on an hourly rate, as mutually determined by the
parties, depending upon the complexity of the project. Only personnel with an
Assistant Vice President title or higher with FDI would xxxx on an hourly basis.
Extraordinary Legal Management Services may, depending upon the
circumstances, include the following:
(a) Shareholder Meetings
- Draft Proxies
- Organize, attend and keep minutes
- Work with the transfer agent on solicitations and vote
tabulation
- Provide legal presence at meetings
(b) Draft Proxy/Solicitation Documents on Form N-14 (Fund
Mergers).
(c) A post-effective amendment that involves major prospectus
revisions or the addition of new investment portfolios or
classes.
(d) Board meeting materials for significant corporate
restructuring or other major changes as well as more than four
board meetings during a twelve month period.
(e) More than one post-effective amendment in any twelve month
period.
(f) Monitor and participate in the preparation of no-action
requests and application documents for exemptive orders.
