Exhibit 2(g)(3)
ADMINISTRATIVE SERVICE AGREEMENT
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AGREEMENT dated as of September 1, 1999, by and amongst BLUE CHIP VALUE
FUND, INC., a Maryland corporation (the "Fund"), Denver Investment Advisors LLC
(DIA), a Colorado Limited Liability Company and ALPS Mutual Funds Services, Inc.
(ALPS), a Colorado corporation (DIA and ALPS are referred to herein collectively
as "Administrators").
Background
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Whereas the Fund is a diversified closed-end management investment company
registered with the United States Securities and Exchange Commission; and
Whereas, the Fund wishes to retain the Administrators to provide, as co-
administrators, certain administration services with respect to the Fund and the
Administrators are willing to furnish such services;
Terms
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NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained and intending to be legally bound hereby, the Fund and the
Administrators hereby agree as follows:
1. Duties of the Administrators. ALPS as co-administrator will perform the
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following services for the Fund:
(a) journalize the Fund's investment, capital share and income and
expense activities;
(b) maintain individual ledgers for each investment security;
(c) maintain historical tax lots for each security;
(d) calculate the Fund's net asset value and communicate such value
to the Fund, NASDAQ quotation service, and to such publications as the Fund
shall designate from time to time;
(e) prepare quarterly broker security transaction summaries and
monthly security transaction listings with respect to the Fund;
(f) supply various Fund data as reasonably requested;
(g) maintain such books and records of the Fund as may be required
under the Investment Company Act of 1940 to fulfill its duties hereunder;
(h) prepare the Fund's federal, state and local income tax returns;
(i) prepare the financial information for the Fund's proxy
statements, semi-annual and annual reports to shareholders and quarterly board
meetings;
(j) prepare the Fund's Form N-SAR reports in conjunction with the
Fund's appointed legal counsel;
(k) refer to the Fund's officers or transfer agent, shareholder
inquiries relating to the Fund;
(l) calculate various contractual expenses (e.g. advisory and custody
fees);
(m) monitor the Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended;
(n) monitor compliance with the Fund's policies and limitations as
set forth in the Registration Statement on Form N-2, Articles of Incorporation
and Bylaws of the Fund; and
(o) provide office space to the Fund, including facilities for an
independent or Securities and Exchange Commission audit as may be required.
DIA as co-administrator will perform the following services for the
Fund:
(a) determine the Fund's net investment income and amount of
quarterly dividends, to be reviewed by the Fund's independent public
accountants;
(b) calculate capital gains and losses and the amount per share
available for distribution on an annualized basis, to be reviewed by the Fund's
independent public accountants;
(c) compute the Fund's yield and total return;
(d) monitor expense accruals and notify Fund management of any
proposed adjustments;
(e) monitor all invoices for the Fund's account and submit to a Fund
officer for authorization of payment;
(f) prepare quarterly Board materials;
(g) maintain the Fund's insurance; and
(h) respond to shareholder inquiries relating to the Fund.
ALPS and DIA as co-administrators will share responsibility for
performing the following services for the Fund:
(a) the Administrators shall provide to the Board of Directors of the
Fund on a quarterly basis a report, in such form as the Administrators and the
Fund shall from time to time agree, representing that, to its knowledge, the
Fund was in compliance with all requirements of applicable federal and state
law, including without limitation, the rules and regulations of the Securities
and Exchange Commission and the Internal Revenue Service, or specifying any
instances in which the Fund was not so in compliance. Whenever, in the course of
performing its duties under this Agreement, the Administrators determine, on the
basis of information supplied to the Administrators by the Fund, that a
violation of applicable law has occurred or that, to its knowledge, a possible
violation of applicable law may have occurred or, with the passage of time,
would occur, the Administrators shall promptly notify the Fund and its counsel
of such violation; and
(b) Generally assist in the Fund's operations.
The Administrators shall, for all purpose herein, be deemed to be
independent contractors and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way or
otherwise be deemed agents of the Fund.
2. Compensation of the Administrators.
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(a) Administrative Fee. For the services rendered and expenses
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assumed by the Administrators, the Fund shall pay to the Administrators, within
ten days after receipt of an invoice from the Administrators at the beginning of
each month, a monthly fee allocated as follows:
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ALPS DIA
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First $75 million in average daily net
assets of the Fund 8.0 basis points 1.0 basis point
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Next $50 million in average daily net
assets of the Fund 4.0 basis points 0.5 basis point
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Net Assets greater than $125 million in
average daily net assets of the Fund 2.0 basis points 0.5 basis point
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(b) Expenses. The Fund shall reimburse the Administrators for any
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out-of-pocket expenses advanced by the Administrators in connection with, but
not limited to, the printing or filing of documents for the Fund, travel at the
request of the Fund, office supplies and postage and courier charges, incurred
in connection with the performance of their duties hereunder. The Administrators
shall make available to the Fund reports of and receipts for such expenses and
the Fund shall reimburse the Administrators therefor within thirty days after
receipt thereof.
3. Responsibility and Indemnification.
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(a) The Administrators shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement, but shall be without
liability to the Fund for any action taken or omitted by it in good faith
without negligence, bad faith, willful misconduct or reckless disregard of their
duties hereunder. They shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Fund) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice
provided that such action is not in violation of applicable federal or state
laws or regulations, and provided further that such action is taken without
negligence, bad faith, willful misconduct or reckless disregard of its duties.
(b) The Fund shall indemnify and hold harmless the Administrators
from all loss, cost, damage and expense, including reasonable expenses for
counsel, incurred by the Administrators as a result of any claim, demand, action
or suit arising out of the inaccuracy of information furnished in writing to the
Administrators by the Fund, provided that this indemnification shall not apply
to actions or omissions of the Administrators in case of its own negligence, bad
faith or willful misconduct or that of its employees or agents. In order that
indemnification under this Section 3(b) shall be available in any case in which
the Fund may be asked to indemnify or hold harmless the Administrators, the Fund
shall be fully and promptly advised of all pertinent facts concerning the
situation presenting or appearing likely to present the probability of such a
claim for indemnification. The Fund shall have the option to defend the
Administrators against any claim that may be the subject of this
indemnification, and if the Fund so elects, it will so notify the
Administrators, and thereupon the Fund shall take over complete defense of the
claim, and the Administrators shall incur no further legal or other expenses for
which it shall seek indemnification. The Administrators shall in no case confess
any claim or make any compromise in which the Fund will be asked to indemnify
the Administrators except with the Fund's prior written consent.
(c) The Administrators shall indemnify and hold harmless the Fund
from all loss, cost, damage and expense, including reasonable expenses for
counsel, incurred by the Fund as a result of any claim, demand, action or suit
arising out of the Administrators' failure to comply with the terms of this
Agreement or applicable federal or state laws or regulations, or which arise out
of the Administrators' negligence, bad faith or willful misconduct, or reckless
disregard of its duties, provided that this
indemnification shall not apply to actions or omissions of the Fund in case of
its own negligence, bad faith or willful misconduct or that of its employees or
agents. In order that indemnification under this Section 3(c) shall be available
in any case in which the Administrators may be asked to indemnify or hold
harmless the Fund, the Fund shall fully and promptly advise the Administrators
of all pertinent facts concerning the situation presenting or appearing likely
to present the probability of such a claim for indemnification against the
Administrators. The Administrators shall have the option to defend the Fund
against any claim that may be the subject of this indemnification, and if the
Administrators so elect they will so notify the Fund, and thereupon the
Administrators shall take over complete defense of the claim, and the Fund shall
incur no further legal or other expenses for which it shall seek
indemnification. The Fund shall, in no case, confess any claim or make any
compromise in any case in which the Administrators will be asked to indemnify
the Fund except with the Administrators' prior written consent.
4. Activities of the Administrators. The Administrators shall be free to
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render similar services to others so long as its services hereunder are
not impaired thereby.
5. Duration and Termination of this Agreement. This Agreement shall
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become effective as of the date hereof and shall remain in force until
terminated as provided herein. This Agreement may be terminated at any time,
without the payment of any penalty, by the Fund on not less than 60 days prior
written notice to the Administrators, or by the Administrators on not less than
60 days prior written notice to the Fund. This Agreement shall automatically
terminate in the event of its assignment.
6. Amendments of this Agreement. This Agreement may be amended by the
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parties hereto only if such amendment is in writing.
7. Governing Law. The provisions of this Agreement shall be construed and
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interpreted in accordance with the laws of the State of Colorado as at the time
in effect and the applicable provisions of the Investment Company Act of 1940.
To the extent that the applicable law of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act of 1940, the latter shall control.
8. Notices. All notices and other communications hereunder shall be in
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writing, shall be deemed to have been given when sent by registered or certified
mail, postage prepaid, and shall be given to the following addresses (or such
other addresses as to which notice is given):
To the Fund:
Xxxxxx X. Xxxxxx, Treasurer
Blue Chip Value Fund, Inc.
1225 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to:
W. Xxxxx XxXxxxxx, III
Drinker, Xxxxxx & Xxxxx LLP
One Xxxxx Square
00/xx/ xxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
To the Administrators:
Xxxxxx X. Xxxxxx, Chief Financial Officer
ALPS Mutual Funds Services, Inc.
000 00/xx/ Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxx
Denver Investment Advisors LLC
1225 00/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxxxxx, Xxxxxxxx 00000
9. Miscellaneous. This Agreement embodies the entire agreement and
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understanding between the Fund and the Administrators, and supersedes all prior
agreements and understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Blue Chip Value Fund, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Chairman
ALPS Mutual Funds Services, Inc.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chief Financial Officer
Denver Investment Advisors LLC
By: /s/ Todger Xxxxxxxx
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Todger Xxxxxxxx, President
