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EXHIBIT (h)(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of ________, 2001, by and between XXXXXXX
INVESTMENTS, a Massachusetts business trust (the "Trust"), and XXXXXXX ASSET
MANAGEMENT, INC. ("Xxxxxxx Management"), a Michigan corporation.
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), currently has six separate investment portfolios (the "Funds")
which offer and sell shares beneficial interest; and
WHEREAS, the Trust desires Xxxxxxx Management to provide, and Xxxxxxx
Management is willing to provide, management and administrative services to the
Fund;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and Xxxxxxx Management hereby agree as follows:
1. Retention of Xxxxxxx Management. Effective __________________, 2001,
the Trust hereby retains Xxxxxxx Management to act as the administrator of the
Funds and to furnish the Funds with the management and administrative services
described in Section 2 below. Xxxxxxx Management hereby accepts such employment
to perform the duties set forth below. Xxxxxxx Management 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 Trust in any way and shall not be deemed an agent of the Trust.
2. Administrative and Accounting Services. Xxxxxxx Management shall
perform or supervise the performance by others of other administrative services
in connection with the operations of the Fund, and, on behalf of the Trust, will
investigate, assist in the selection of and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other capacity deemed
to be necessary or desirable for the Fund's operations. Xxxxxxx Management shall
provide the Trustees of the Trust with such reports regarding investment
performance and compliance with investment policies and applicable laws, rules
and regulations as they may reasonably request but shall have no responsibility
for supervising the performance by any investment adviser or subadviser of its
responsibilities.
Xxxxxxx Management shall provide the Trust with administrative
services, regulatory reporting, fund accounting and related portfolio accounting
services, all necessary office space, equipment, personnel, compensation and
facilities (including facilities for shareholders' meetings but not Trustees'
meetings that are not held at offices of Xxxxxxx Management) for handling the
affairs of the Funds and such other services as the Trustees may, from time to
time, reasonably request and Xxxxxxx Management shall, from time to time,
reasonably determine to be necessary to perform its obligations under this
Agreement. In addition, at the request of the Trust's Board of
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Trustees, Xxxxxxx Management shall make reports to the Trustees concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, Xxxxxxx Management
shall:
(a) calculate contractual expenses and control all
disbursements for the Fund, and as appropriate compute the yields,
total return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighed maturity for each Fund;
(b) assist counsel with the preparation of prospectuses,
statements of additional information, registration statements, and
proxy materials for the Trust;
(c) prepare such reports, applications and documents
(including reports regarding the sale and redemption of shares as may
be required in order to comply with Federal and state securities law)
as may be necessary or desirable to register the Trust's shares with
state securities authorities, monitor sale of the Trust's shares for
compliance with state securities laws, and file with the appropriate
state securities authorities the registration statements and reports
for the Trust and the Trust's shares and all amendments thereto, as may
be necessary or convenient to register and keep effective the Trust's
shares with state securities authorities to enable the Trust to make a
continuous offering of its shares;
(d) develop and prepare communications to shareholders,
including the annual report to shareholders, coordinate mailing
prospectuses, notices, proxy statements, proxies and other reports to
shareholders of the Trust, and supervise and facilitate the
solicitation of proxies for all shareholder meetings of the Funds,
including tabulation process for such shareholder meetings;
(e) coordinate with counsel the preparation and negotiation
of, and administer, contracts on behalf of the Trust with, among
others, the Fund's investment adviser, distributor, custodian, and
transfer agent;
(f) maintain the Trust's general ledger and prepare the
Trust's financial statements, including expense accruals and payments,
determine the net asset value of each Fund's assets and of the Trust's
shares, and supervise the Trust's transfer agent with respect to the
payment of dividends and other distributions to shareholders;
(g) calculate performance data of the Funds for dissemination
to information services covering the investment company industry;
(h) coordinate and supervise the preparation and filing of the
Trust's tax returns;
(i) examine and review the operations and performance of the
various organizations providing services to the Fund, including,
without limitation, the Trust's
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investment adviser, distributor, custodian, transfer agent, counsel and
independent public accountants;
(j) assist with the layout and printing of publicly
disseminated prospectuses and assist with and coordinate layout and
printing of the Trust's semi-annual and annual reports to shareholders;
(k) assist with the design, development, and operation of the
Trust, including new portfolio and class investment objectives,
policies and structure;
(l) provide individuals acceptable to the Trustees for
nomination, appointment, or election as officers of the Trust, who will
be responsible for the management of certain of the Trust's affairs as
determined by the Trustees;
(m) 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 Trust's Board
of Trustees;
(n) monitor and advise the Trust and the Funds on their
registered investment company status under the Internal Revenue Code of
1986, as amended;
(o) perform all administrative services and functions of the
Trust and the Funds to the extent administrative services and functions
are not provided to the Trust or the Funds pursuant to the Trust's
investment advisory agreement, distribution agreement, custodian
agreement and transfer agent agreement;
(p) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Trust and Xxxxxxx Management
shall determine desirable;
(q) prepare and file with the SEC the semi-annual report for
the Trust on Form N-SAR and all required notices pursuant to Rule
24f-2;
(r) review, and file with the National Association of
Securities Dealers where necessary, marketing materials relating to the
Funds; and
(s) assist in the training and oversight of third parties used
to perform any of the services described herein.
Xxxxxxx Management shall also be available, at its expense, to perform
internal audit examinations no more frequently than once annually at the request
of the Trust. In addition, Xxxxxxx Management will perform or oversee other
services for the Trust as agreed from time to time,
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including, but not limited to mailing the annual and semi-annual reports to
shareholders of the Fund; preparing an annual list of shareholders; and mailing
notices of shareholders' meetings, proxies and proxy statements, for all of
which the Trust will pay Xxxxxxx Management's out-of-pocket expenses.
In the performance of its duties hereunder, Xxxxxxx Management will
comply with the provisions of the Declaration of Trust and the Bylaws of the
Trust, will safeguard and promote the welfare of the Trust, and will comply with
the policies that the Trustees may from time to time reasonably determine;
provided that such policies are not in conflict with this Agreement, the Trust's
governing documents, or any applicable statutes or regulations.
3. Allocation of Charges and Expenses.
(A) Xxxxxxx Management. Xxxxxxx Management shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. Xxxxxxx Management 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 Trust as well as all Trustees of the
Trust who are affiliated persons of Xxxxxxx Management or any affiliated
corporation of Xxxxxxx Management; provided, however, that unless otherwise
specifically provided, Xxxxxxx Management shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing shareholders of the Fund, all
expenses incurred in connection with issuing and redeeming shares of the Fund,
the costs of custodial services, the cost of initial and ongoing registration of
the shares of the Fund under federal and state securities laws, fees and
out-of-pocket expenses of Trustees who are not affiliated persons of Xxxxxxx
Management or the investment adviser to the Trust or any affiliated corporation
of Xxxxxxx Management or the Investment Adviser, the costs of Trustees'
meetings, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Trust.
4. Compensation of Xxxxxxx Management.
(a) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by Xxxxxxx Management pursuant to this
Agreement, the Trust shall pay to Xxxxxxx Management compensation at an annual
rate calculated daily and paid monthly equal to 0.10% of the Fund's average
daily net assets. If this Agreement becomes effective subsequent to the first
day of a month or terminates before the last day of a month, Xxxxxxx
Management's compensation for that part of the month in which this Agreement is
in effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Payment of Xxxxxxx Management's compensation for the
preceding month shall be made promptly.
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(b) Compensation from Transactions. The Trust hereby authorizes any
entity or person associated with Xxxxxxx Management which is a member of a
national securities exchange to effect any transaction on the exchange for the
account of the Trust which is permitted by Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust hereby
consents to the retention of compensation for such transactions in accordance
with Rule 11a2-2(T) (a) (2) (iv).
(c) Survival of Compensation Rates. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
5. Activities of Xxxxxxx Management. The services of Xxxxxxx Management
rendered to the Trust are not to be deemed to be exclusive. Xxxxxxx Management
is free to render such services to others and to have other businesses and
interests. It is understood that Trustees, officers, employees and Shareholders
of the Trust are or may be or become interested in Xxxxxxx Management, as
directors, officers, employees and shareholders or otherwise and that directors,
officers, employees and shareholders of Xxxxxxx Management and its counsel are
or may be or become similarly interested in the Trust, and that Xxxxxxx
Management may be or become interested in the Trust as a Shareholder or
otherwise.
6. Confidentiality. Xxxxxxx Management agrees on behalf of itself and
its employees to treat confidentially all records and other information relative
to the Trust and its prior, present or potential Shareholders and relative to
Xxxxxxx Management and its prior, present or potential customers, except, after
prior notification to and approval in writing by the Trust, which approval shall
not be unreasonably withheld and may not be withheld where Xxxxxxx Management
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
7. Representations, Warranties and Covenants.
(a) In the event of equipment failures beyond Xxxxxxx Management's
control, Xxxxxxx Management shall, at no additional expense to the Trust, take
reasonable steps to minimize service interruptions but shall have no liability
with respect to such service interruptions if such reasonable steps are taken.
Xxxxxxx Management shall develop and maintain a plan for recovery from equipment
failures which may include contractual arrangements with appropriate parties
making reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
(b) Xxxxxxx Management undertakes to comply with all applicable
requirements of the 1933 Act, the 1934 Act, the 1940 Act and any laws, rules and
regulations of governmental authorities having jurisdiction with respect to the
duties to be performed by Xxxxxxx Management hereunder.
(c) Xxxxxxx Management warrants that all software code owned by or
under its control, used in the performance of its obligations under this
contract, will be Year 2000 compliant. For
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purposes of this paragraph, "Year 2000 Compliant" means that the software will
continue to operate beyond December 31, 1999, without creating any logical or
mathematical inconsistencies concerning any date after December 31, 1999, and
without decreasing the functionality of the system applicable to dates prior to
January 1, 2000, including, but not limited to, making changes to (a) date and
data century recognition; (b) calculations which accommodate same-century and
multi-century formulas and date values; and (c) input/output of date values
which reflect century dates. All changes described in this paragraph will be
made at no additional cost to the Fund.
8. Term; Termination. This Agreement shall become effective with
respect to the Fund on the date hereof and shall remain in full force until the
second anniversary of the effective date set forth in Section 1, unless sooner
terminated as hereinafter provided. This Agreement shall continue in force from
year to year thereafter with respect to the Fund, but only as long as such
continuance is specifically approved for the Fund at least annually in the
manner required by the 1940 Act and the rules and regulations thereunder;
provided, however, that if the continuation of this Agreement is not approved
for the Fund, Xxxxxxx Management may continue to serve in such capacity for the
Fund in the manner and to the extent permitted by the 1940 Act and the rules and
regulations thereunder.
This Agreement shall automatically terminate in the event of its
assignment by the Xxxxxxx Management, and may be terminated by the Board of
Trustees of the Trust, by vote of a majority of the outstanding voting
securities of the Trust, or by Xxxxxxx Management, at any time without cause and
without the payment of any penalty on sixty (60) days' written notice by one
party to the other party. This Agreement may also be terminated immediately,
upon delivery of notice of termination and without the payment of any penalty,
by the Trust in the event that the Board of Trustees determines that Cause for
termination exists. The term "Cause" shall include, without limitation, (i) a
material breach of this Agreement or other action or omission by Xxxxxxx
Management which has or is likely to have a material and imminent adverse effect
on the Fund or its shareholders, (ii) any other breach of this Agreement by
Xxxxxxx Management which is not cured within twenty (20) business days after
written notice of such breach from the Board, (iii) the insolvency or the filing
of bankruptcy or reorganization proceedings by or against Xxxxxxx Management, or
(iv) the conviction of Xxxxxxx Management or any director or executive officer
of Xxxxxxx Management of a felony. The terms "assignment" and "majority of the
outstanding voting securities" have the meanings set forth in the 1940 Act and
the rules and regulations thereunder. Termination of this Agreement shall not
affect the right of Xxxxxxx Management to receive payments on any unpaid balance
of the compensation described in Section 4 earned prior to the effective date of
such termination.
9. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
10. Certain Records. Xxxxxxx Management 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 maintained
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by Xxxxxxx Management on behalf of the Trust shall be prepared and maintained at
the expense of Xxxxxxx Management, but shall be the property of the Trust and
will be made available to or surrendered promptly to the Trust on request. In
case of any request or demand for the inspection of such records by another
party, Xxxxxxx Management shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection.
11. 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 Securities and Exchange
Commission.
12. Notices. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Trust, at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxx, Xxxxxxxx 00000;
and if to Xxxxxxx Management at 000 Xxxx Xxxx Xxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000.
13. Governing Law. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the Commonwealth of
Massachusetts, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same instrument.
15. Limitation of Trust Liability. The Declaration of Trust
establishing Xxxxxxx Investments, dated July 19, 1993, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name "Xxxxxxx
Investments" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of Xxxxxxx Investments, shall be held to any personal
liability, nor shall result be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Xxxxxxx Investments, but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
XXXXXXX INVESTMENTS XXXXXXX ASSET MANAGEMENT, INC.
By: ___________________________ By: ________________________________
Xxxx X. Xxxxxxxx, Chairman Xxxxxx X. Xxxxxx, Vice President
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