ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made this ___ day of _______, 2001 by and
between Capstone Growth Fund, Inc. ("Company") on behalf of CAPSTONE EMPLOYEE
STOCK OWNERSHIP FUND, a Maryland Corporation (the "Fund") and CAPSTONE ASSET
MANAGEMENT COMPANY, a Delaware corporation (the "Administrator").
W I T N E S S E T H
WHEREAS, the Fund intends to engage in business as a diversified open-end
management investment company and register as such under the Investment Company
Act of 1940 (the "Act"); and
WHEREAS, the Administrator is engaged in the business of rendering
administrative and supervisory services to investment companies; and
WHEREAS, the Company desires to retain the Administrator to render
supervisory and administrative services to the Fund in the manner and on the
terms hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the terms and
provisions hereinafter set forth, the parties hereto agree as follows:
1. Employment of the Administrator. The Company hereby employs the
Administrator to perform the duties set forth in Paragraph 2 hereof on
behalf of the Fund for the period and on the terms hereinafter set
forth. The Administrator hereby accepts such employment and agrees
during such period to render the services herein set forth for the
compensation herein provided. The Administrator shall for all purposes
herein be deemed to be an independent contractor and, except as
expressly provided or authorized (whether herein or otherwise), shall
have no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
2. Duties of the Administrator. The Administrator, subject to the
direction of the Board of Directors and officers of the Company,
undertakes to provide the following services and to assume the
following obligations:
(a) Administrative Services. The Administrator shall conduct and
manage the day-to-day operations of the Fund, including (i) the
coordination of all matters relating to the functions of the
investment adviser, custodian, transfer agent, other shareholder
service agents, accountants, attorneys and other parties
performing services or operational functions for the Fund, (ii)
providing the Fund, at the Administrator's expense, with services
of persons competent to perform such administrative and clerical
functions as are necessary in order to provide effective
administration of the Fund, including duties in connection with
shareholder relations, reports, redemption requests and account
adjustments and the maintenance of certain books and records of
the Fund, (iii) the preparation of registration statements,
prospectuses, reports, proxy solicitation materials and
amendments thereto and the furnishing of legal services to the
Fund except for services provided by outside counsel to be
selected by the Board of Directors, and (iv) providing the Fund,
at the Administrator's expense, with adequate office space and
related services necessary for its operations as contemplated in
this Agreement.
(b) Other Obligations and Services. The Administrator shall make its
officers and employees available to the Board of Directors and
officers of the Company for consultation and discussions
regarding the administrative management of the Fund.
3. Expenses of the Fund.
(a) The Administrator. The Administrator assumes and shall pay for
maintaining the staff and personnel and shall at its own expense
provide the equipment (other than equipment used in connection
with the Funds' custodial system), office space and facilities
necessary to perform its obligations under this Agreement, and
except as noted below shall pay all compensation of officers of
the Company and the fees of all Directors of the Company who are
affiliated persons of the Administrator.
(b) The Fund. The Fund assumes and shall pay or shall arrange to pay
all other expenses of the Fund, including (i) interest and taxes;
(ii) brokerage commissions and other costs in connection with the
purchase and sale of portfolio investments; (iii) compensation of
its Directors other than those who are affiliated persons of the
Adviser or the Administrator; (iv) fees of outside counsel to and
of independent accountants of the Fund selected by the Board of
Directors; (v) custodian, registrar and transfer agent fees and
expenses; (vi) expenses related to the repurchase or redemption
of the Fund's shares including expenses related to a program of
periodic repurchases or redemptions; (vii) expenses related to
the issuance of the Fund's shares against payment therefor by or
on behalf of the subscribers thereto; (viii) fees and related
expenses of registering and qualifying the Fund, and its shares
for distribution under state and federal securities laws; (ix)
expenses of printing and mailing of registration statements,
prospectuses, reports, notices and proxy solicitation materials
of the Fund; (x) all other expenses incidental to holding
meetings of the shareholders of the Fund including proxy
solicitations therefor; (xi) expenses for servicing shareholder
accounts; (xii) insurance premiums for fidelity coverage and
errors and omissions insurance; (xiii) dues for membership of the
Fund in trade associations approved by the Board of Directors;
(xiv)expenses of the Administrator's directors, officers and
employees to attend meetings of the Company's Board of Directors
or committees of or advisers to the Board; and (xv) such
non-recurring expenses as may arise, including those associated
with actions, suits or proceedings arising out of the activities
of the Fund to which the Fund is a party and the legal obligation
which the Fund may have to indemnify the officers and Directors
with respect thereto. To the extent that any of the foregoing
expenses are allocated, such allocations shall be made pursuant
to methods approved by the Board of Directors.
4. Compensation. As compensation for the services rendered, the
facilities furnished and the expenses assumed by the Administrator,
the Fund shall pay to the Administrator at the end of each month a fee
at the annual rate of 0.075% of the average daily net assets of the
Fund as determined and computed in accordance with the description of
the method of determination of net asset value contained in the
prospectus and statement of additional information of the Fund as in
effect from time to time under the Securities Act of 1933. If the
Administrator shall serve for less than any whole month, the
compensation described in the preceding sentence shall be prorated.
5. Activities of the Administrator. The services of the Administrator to
the Fund hereunder are not to be deemed exclusive and the
Administrator shall be free to render similar services to others.
6. Liabilities of the Administrator. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Administrator, the
Administrator shall not be liable to the Company or the Fund, or to
any shareholder of the Fund for any act or omission in the course of,
or in connection with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any
security.
7. Renewal. The term of this Agreement shall commence on the date hereof
and shall continue in effect until ________, 2002 or until terminated
in accordance with Paragraph 8 hereof.
8. Termination.
(a) Prior to________, 2002, this Agreement may be terminated by
either party only for cause and upon 60 days' written notice to
the other party. Such termination shall be without penalty to the
terminating party. For purposes of this Paragraph 9(a), "cause"
is defined as a finding made in good faith by the Directors of
the Company or the directors of the Administrator, as applicable,
that (i) the other party has failed on a continuing basis to
perform its duties pursuant to this Agreement in a satisfactory
manner consistent with then current industry standards and
practices or (ii) the terms and provisions of this Agreement are
no longer reasonable in light of then current industry standards
and practices and the parties hereto cannot agree on a mutually
satisfactory amendment.
(b) After________, 2002, this Agreement may be terminated without the
payment of any penalty (i) by the Fund on 60 days' notice to the
Administrator and (ii) by the Administrator on 90 days' written
notice to the Fund.
9. Amendments. This Agreement may be amended by written agreement between
the parties at any time provided such amendment is authorized or
approved by the Board of Directors of the Company, and in accordance
with any applicable regulatory requirements.
10. Notices. Any and all notices or other communications required or
permitted under this Agreement shall be in writing and shall be deemed
sufficient when mailed by United States certified mail, return receipt
requested, or delivered in person against receipt to the party to whom
it is to be given, at the address of such party set forth below:
If to the Administrator:
Capstone Asset Management Company
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
If to the Fund:
Capstone Employee Stock Ownership Fund
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
or to such other address as the party shall have furnished in writing
in accordance with the provisions of this Section 10.
11. Severability. If any provision of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in full
force and effect and this Agreement shall be construed in all respects
as if such invalid, illegal or unenforceable provision were omitted.
12. Headings. Any paragraph headings in this Agreement are for convenience
of reference only, and shall be given no effect in the construction or
interpretation of this Agreement or any provisions thereof.
13. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and
which together shall constitute but one and the same instrument.
14. Governing Law. This Agreement shall be subject to the laws of the
State of Texas, and shall be interpreted and construed to further and
promote the operation of the Fund, including the Funds, as a
diversified open-end management company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date first written above.
CAPSTONE GROWTH FUND, INC. on behalf of
CAPSTONE EMPLOYEE STOCK OWNERSHIP FUND
By ________________________________
Name:
Title:
CAPSTONE ASSET MANAGEMENT COMPANY
By ________________________________
Name:
Title:
