EXHIBIT (h)(2)
ADMINISTRATION AGREEMENT
AGREEMENT made as of __________________, by and between The Valiant Fund
for each portfolio listed on Exhibit A hereto and The Bank of New York, a New
York banking organization (the "Administrator").
W I T N E S S E T H :
WHEREAS, the Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Administrator to provide
administration services for the portfolios identified on Exhibit A hereto (each,
a "Series") and the Administrator is willing to provide such services, all as
more fully set forth below;
NOW THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereby agree as follows:
1. Appointment.
The Fund hereby appoints the Administrator as its agent for the term of
this Agreement to perform the services described herein. The Administrator
hereby accepts such appointment and agrees to perform the duties hereinafter set
forth.
2. Representations and Warranties.
The Fund hereby represents and warrants to the Administrator, which
representations and warranties shall be deemed to be continuing, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its business as
now conducted, to enter into this Agreement and to perform its obligations
hereunder;
(b) This Agreement has been duly authorized, executed and
delivered by the Fund in accordance with all requisite action and constitutes a
valid and legally binding obligation of the Fund, enforceable in accordance with
its terms; and
(c) It is conducting its business in compliance with all
applicable laws and regulations, both state and federal, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as now conducted; there is no statute, regulation, rule, order or judgment
binding on it and no provision of its charter or by-laws, nor of any mortgage,
indenture, credit agreement or other contract binding on it or affecting its
property which would prohibit its execution or performance of this Agreement.
3. Delivery of Documents.
(a) The Fund will promptly deliver to the Administrator true and
correct copies of each of the following documents as currently in effect and
will promptly deliver to it all future amendments and supplements thereto, if
any:
(i) The Fund's articles of incorporation or other
organizational document and all amendments thereto (the "Charter");
(ii) The Fund's bylaws (the "Bylaws");
(iii) Resolutions of the Fund's board of directors or other
governing body (the "Board") authorizing the execution, delivery and
performance of this Agreement by the Fund;
(iv) The Fund's registration statement most recently filed
with the Securities and Exchange Commission (the "SEC") relating to the
shares of the Fund (the "Registration Statement");
(v) The Fund's Notification of Registration under the 1940
Act on Form N-8A filed with the SEC; and
(vi) The Fund's Prospectus and Statement of Additional
Information pertaining to the Series (collectively, the "Prospectus").
(b) Each copy of the Charter shall be certified by the Secretary
of State (or other appropriate official) of the state of organization, and if
the Charter is required by law also to be filed with a county or other officer
or official body, a certificate of such filing shall be filed with a certified
copy submitted to the Administrator. Each copy of the Bylaws, Registration
Statement and Prospectus, and all amendments thereto, and copies of Board
resolutions, shall be certified by the Secretary or an Assistant Secretary of
the appropriate Fund.
(c) It shall be the sole responsibility of the Fund to deliver to
the Administrator its currently effective Prospectus and the Administrator shall
not be deemed to have notice of any information contained in such Prospectus
until it is actually received by the Administrator.
4. Duties and Obligations of the Administrator.
(a) Subject to the direction and control of the Fund's Board and
the provisions of this Agreement, the Administrator shall provide to each Fund
the administrative services set forth on Schedule I attached hereto.
-2-
(b) In performing hereunder, the Administrator shall provide, at
its expense, office space, facilities, equipment and personnel.
(c) The Administrator shall not provide any services relating to
the management, investment advisory or sub-advisory functions of any Fund,
distribution of shares of the Fund, maintenance of the Fund's financial records
or other services normally performed by the Funds' respective counsel or
independent auditors.
(d) Upon receipt of the Fund's prior written consent (which shall
not be unreasonably withheld), the Administrator may delegate any of its duties
and obligations hereunder to any delegee or agent whenever and on such terms and
conditions as it deems necessary or appropriate. Notwithstanding the foregoing,
the Fund's consent shall not be required for any such delegation to any other
subsidiary of The Bank of New York Company, Inc. The Administrator shall not be
liable to the Fund for any loss or damage arising out of, or in connection with,
the actions or omissions to act of any delegee or agent utilized hereunder so
long as the Administrator acts in good faith and without negligence or willful
misconduct in the selection of such delegee or agent.
(e) The Fund shall cause its officers, advisors, sponsor,
distributor, legal counsel, independent accountants, current administrator (if
any) and transfer agent to cooperate with the Administrator and to provide the
Administrator, upon request, with such information, documents and advice
relating to such Fund as is within the possession or knowledge of such persons,
in order to enable the Administrator to perform its duties hereunder. In
connection with its duties hereunder, the Administrator shall be entitled to
rely, and shall be held harmless by each Fund when acting in reliance, upon the
instructions, advice or any documents relating to the Fund provided to the
Administrator by any of the aforementioned persons. The Administrator shall not
be liable for any loss, damage or expense resulting from or arising out of the
failure of the Fund to cause any information, documents or advice to be provided
to the Administrator as provided herein. All fees or costs charged by such
persons shall be borne by the Fund.
(f) Nothing in this Agreement shall limit or restrict the
Administrator, any affiliate of the Administrator or any officer or employee
thereof from acting as administrator for or with any third parties.
(g) The Administrator may apply to an officer of the Fund for
written instructions with respect to any matter arising in connection with the
Administrator's performance hereunder for the Fund, and the Administrator shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with such instructions. Such application for instructions may, at the
option of the Administrator, set forth in writing any action proposed to be
taken or omitted to be taken by the Administrator with respect to its duties or
obligations under this Agreement and the date on and/or after which such action
shall be taken, and the Administrator shall not be liable for any action taken
or omitted to be taken in accordance with a proposal included in any such
application on or after the date specified therein unless, prior to taking or
omitting to
-3-
take any such action, the Administrator has received written instructions in
response to such application specifying the action to be taken or omitted. The
Administrator may consult with counsel to the Fund or its own counsel, at the
Fund's expense, and shall be fully protected with respect to anything done or
omitted by it in good faith in accordance with the advice or opinion of such
counsel.
(h) Notwithstanding any other provision contained in this
Agreement or any Schedule hereto, the Administrator shall have no duty or
obligation to with respect to, including, without limitation, any duty or
obligation to determine, or advise or notify any Fund of: (i) the taxable nature
of any distribution or amount received or deemed received by, or payable to, the
Fund, (ii) the taxable nature or effect on the Fund or its shareholders of any
corporate actions, class actions, tax reclaims, tax refunds or similar events,
(iii) the taxable nature or taxable amount of any distribution or dividend paid,
payable or deemed paid, by the Fund to it shareholders; or (iv) the effect under
any federal, state, or foreign income tax laws of the Fund making or not making
any distribution or dividend payment, or any election with respect thereto.
(i) The Administrator shall have no duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement and Schedule I hereto, and no covenant or obligation shall be
implied against the Administrator in connection with this Agreement.
5. Allocation of Expenses.
Except as otherwise provided herein, all costs and expenses arising or
incurred in connection with the performance of this Agreement shall be paid by
the appropriate Fund, including but not limited to, organizational costs and
costs of maintaining corporate existence, taxes, interest, brokerage fees and
commissions, insurance premiums, compensation and expenses of the Fund's
trustees, directors, officers or employees, legal, accounting and audit
expenses, management, advisory, sub-advisory, administration and shareholder
servicing fees, charges of custodians, transfer and dividend disbursing agents,
expenses (including clerical expenses) incident to the issuance, redemption or
repurchase of Fund shares, fees and expenses incident to the registration or
qualification under federal or state securities laws of the Fund or its shares,
costs (including printing and mailing costs) of preparing and distributing
Prospectuses, reports, notices and proxy material to the Fund's shareholders,
all expenses incidental to holding meetings of the Fund's trustees, directors
and shareholders, and extraordinary expenses as may arise, including litigation
affecting the Fund and legal obligations relating thereto for which the Fund may
have to indemnify its trustees, directors and officers.
6. Standard of Care; Indemnification.
(a) Except as otherwise provided herein, the Administrator shall
not be liable for any costs, expenses, damages, liabilities or claims (including
attorneys' and
-4-
accountants' fees) incurred by the Fund, except those costs, expenses, damages,
liabilities or claims arising out of the Administrator's own bad faith, gross
negligence or willful misconduct. In no event shall the Administrator be liable
to the Fund or any third party for special, indirect or consequential damages,
or lost profits or loss of business, arising under or in connection with this
Agreement, even if previously informed of the possibility of such damages and
regardless of the form of action.
(b) Each Fund shall indemnify and hold harmless the Administrator
from and against any and all costs, expenses, damages, liabilities and claims
(including claims asserted by a Fund), and reasonable attorneys' and
accountants' fees relating thereto, which are sustained or incurred or which may
be asserted against the Administrator, by reason of or as a result of any action
taken or omitted to be taken by the Administrator in good faith hereunder or in
reliance upon (i) any law, act, regulation or interpretation of the same even
though the same may thereafter have been altered, changed, amended or repealed,
(ii) the Fund's Registration Statement or Prospectus, (iii) any instructions of
an officer of the Fund, or (iv) any opinion of legal counsel for the Fund or the
Administrator, or arising out of transactions or other activities of such Fund
which occurred prior to the commencement of this Agreement; provided, that the
Fund shall not indemnify the Administrator for costs, expenses, damages,
liabilities or claims arising out of the Administrator's own gross negligence,
bad faith or willful misconduct. This indemnity shall be a continuing obligation
of the Fund, its successors and assigns, notwithstanding the termination of this
Agreement.
(c) Actions taken or omitted in reliance on oral or written
instructions, or upon any information, order, indenture, stock certificate,
power of attorney, assignment, affidavit or other instrument believed by the
Administrator to be genuine or bearing the signature of a person or persons
believed to be authorized to sign, countersign or execute the same, or upon the
opinion of legal counsel for the Fund or its own counsel, shall be conclusively
presumed to have been taken or omitted in good faith.
7. Compensation.
For the services provided hereunder, the Fund agrees to pay the
Administrator such compensation as is mutually agreed from time to time and such
out-of-pocket expenses (e.g., telecommunication charges, postage and delivery
charges, record retention costs, reproduction charges and transportation and
lodging costs) as are incurred by the Administrator in performing its duties
hereunder. Except as hereinafter set forth, compensation shall be calculated and
accrued daily and paid monthly. The Fund authorizes the Administrator to debit
the Fund's custody account for all amounts due and payable hereunder. The
Administrator shall deliver to the Fund invoices for services rendered after
debiting the Fund's custody account with an indication that payment has been
made. Upon termination of this Agreement before the end of any month, the
compensation for such part of a month shall be prorated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the
-5-
effective date of termination of this Agreement. For the purpose of determining
compensation payable to the Administrator, the Fund's net asset value shall be
computed at the times and in the manner specified in the Fund's Prospectus.
8. Term of Agreement.
(a) This Agreement shall continue until terminated by either the
Administrator giving to the Fund, or the Fund giving to the Administrator, a
notice in writing specifying the date of such termination, which date shall be
not less than 90 days after the date of the giving of such notice. Upon
termination hereof, the Fund shall pay to the Administrator such compensation as
may be due as of the date of such termination, and shall reimburse the
Administrator for any disbursements and expenses made or incurred by the
Administrator and payable or reimbursable hereunder.
(b) Notwithstanding the foregoing, the Administrator may terminate
this Agreement upon 30 days prior written notice to the Fund if the Fund shall
terminate either its custody agreement or fund accounting agreement with The
Bank of New York, or fail to perform its obligations hereunder in a material
respect.
9. Force Majeure.
The Administrator shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities, computer (hardware or software) or
communications service; accidents; labor disputes; acts of civil or military
authority or governmental actions; it being understood that the Administrator
shall use its best efforts to resume performance as soon as practicable under
the circumstances.
10. Amendment.
This Agreement may not be amended or modified in any manner except by a
written agreement executed by the Administrator and the Fund, and authorized or
approved by such Fund's Board.
11. Assignment.
This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by any Fund without the written consent
of the Administrator, or by the Administrator without the written consent of the
Fund accompanied by the authorization or approval of the Fund's Board.
-6-
12. Governing Law; Consent to Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of New York, without regard to conflict of laws principles thereof. The Fund
hereby consents to the jurisdiction of a state or federal court situated in New
York City, New York in connection with any dispute arising hereunder. Customer
and Custodian each hereby irrevocably waives any and all rights to trial by jury
in any legal proceeding arising out of or relating to this Agreement. To the
extent that in any jurisdiction the Fund may now or hereafter be entitled to
claim, for itself or its assets, immunity from suit, execution, attachment
(before or after judgment) or other legal process, the Fund irrevocably agrees
not to claim, and it hereby waives, such immunity.
13. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby, and if any provision is inapplicable to any
person or circumstances, it shall nevertheless remain applicable to all other
persons and circumstances.
14. No Waiver.
Each and every right granted to the Administrator hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of the Administrator to exercise, and no delay in
exercising, any right will operate as a waiver thereof, nor will any single or
partial exercise by the Administrator of any right preclude any other or future
exercise thereof or the exercise of any other right.
15. Notices.
All notices, requests, consents and other communications pursuant to this
Agreement in writing shall be sent as follows:
if to the Fund, at
The Valiant Fund
000 Xxxxxxx Xxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxx 00000
-7-
if to the Administrator, at
The Bank of New York
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Vice President
or at such other place as may from time to time be designated in writing.
Notices hereunder shall be effective upon receipt.
16. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts together shall
constitute only one instrument.
17. Several Obligations.
The parties acknowledge that the obligations of the Funds hereunder are
several and not joint, that no Fund shall be liable for any amount owing by
another Fund and that the Funds have executed one instrument for convenience
only.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereunto affixed, all as of the day and year first above written.
THE VALIANT FUND
By: _____________________________
Title:
THE BANK OF NEW YORK
By: ____________________________
Title:
-8-
EXHIBIT A
Series
SCHEDULE I
ADMINISTRATIVE SERVICES
1. Maintain the Fund's minute book and its general corporate records (other
than accounting books and records).
2. Monitor and document compliance by the Fund with its policies and
restrictions as delineated in its Prospectus.
3. Participate in the periodic updating of the Fund's Registration Statement
and Prospectus and, subject to approval by the Fund's Treasurer and legal
counsel, coordinate the preparation, filing, printing and dissemination of
periodic reports and other information to the SEC and the Fund's
shareholders, including annual and semi-annual reports to shareholders,
annual and semi-annual Form N-SAR, notices pursuant to Rule 24(f)-2 and
proxy materials.
4. Prepare federal, state and local income tax returns for the Fund and each
Series and file such returns upon the approval of the Funds' respective
independent accountants; monitor and report on Sub-Chapter M
qualifications; prepare and file all Form 1099s with respect to each
Fund's directors or trustees; monitor compliance with Section 4982 of the
Internal Revenue Code; calculate and maintain records pertaining to
Original Issue Discount and premium amortization as required; perform
ongoing wash sales review (i.e., purchases and sales of Fund investments
within 30 days of each other).
5. Prepare and, subject to approval of the Fund's Treasurer, disseminate to
the Fund's Board quarterly unaudited financial statements and schedules of
the Fund's investments and make presentations to the Board, as
appropriate.
6. Subject to approval of the Fund's Board, assist the Fund in obtaining
fidelity bond and E&O/D&O insurance coverage.
7. Prepare statistical reports for outside information services (e.g.,
IBC/Xxxxxxxx, ICI, Lipper Analytical and Morningstar).
8. Attend shareholder and Board meetings as requested from time to time.
9. Establish appropriate expense accruals, maintain expense files and
coordinate the payment of invoices.
SCHEDULE I (CONTINUED)
ADMINISTRATIVE SERVICES
10. Blue Sky Services
- Subject to approval of the Fund's Board and its legal counsel,
perform initial registration for Funds or Series in such states as
each Fund shall identify to the Administrator.
- Subject to approval of the Fund's Board and its legal counsel,
perform renewal registration for Funds or Series in such states as
each Fund shall identify to the Administrator.
- Receive nightly downloads of sales data from transfer agents.
- Update state/territory sales information for the Fund or Series.
- Create and maintain state/territory sales information worksheets for
each Fund or Series.
- Monitor changes in Blue Sky laws and procedures for all registered
states/territories.
- Subject to approval of the Fund's legal counsel, update filing
requirements for all law and procedural changes.
- Communicate directly with regulatory authorities in
states/territories as needed.
- Periodically attend Investment Company Institute (ICI) State Liaison
Committee meetings.
-2-
