EX-99.B(h)(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of March, 2003, by and between
Xxxxx Fargo Variable Trust, a Delaware statutory trust (the "Trust") and Xxxxx
Fargo Funds Management, LLC, a limited liability company organized under the
laws of the State of Delaware ("Funds Management").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain Funds Management to render certain
administrative services to the Trust's investment portfolios listed on Appendix
A (individually, a "Fund" and collectively, the "Funds"), and Funds Management
is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Trust hereby appoints Funds Management to act as
Administrator of the Funds, and Funds Management hereby accepts such appointment
and agrees to render such services and duties set forth in Paragraph 3, for the
compensation and on the terms herein provided. Each new investment portfolio
established in the future by the Trust shall automatically become a "Fund" for
all purposes hereunder as if it were listed on Appendix A, absent written
notification to the contrary by either the Trust or Funds Management.
2. Delivery of Documents. The Trust shall furnish to, or cause to be
furnished to, Funds Management originals of, or copies of, all books, records,
and other documents and papers related in any way to the administration of the
Trust.
3. Duties as Administrator. Funds Management shall, at its expense, provide
the following administrative services in connection with the operations of the
Trust and the Funds:
(a) coordinate, supervise and make all payments to the Funds'
transfer agent and various sub-transfer agents and omnibus
account servicers and record-keepers, including certain of the
service providers to the separate accounts that invest in the
Funds;
(b) receive and tabulate shareholder votes;
(c) furnish statistical and research data;
(d) coordinate (or assist in) the preparation and filing with the
U.S. Securities and Exchange Commission ("SEC") of registration
statements, notices, shareholder reports, and other material
required to be filed under applicable laws;
(e) prepare and file with the states registration statements,
notices, reports, and other material required to be filed under
applicable laws;
(f) prepare and file Form 24F-2s and N-SARs;
(g) review bills submitted to the Funds and, upon determining that a
xxxx is appropriate, allocating amounts to the appropriate Funds
and Classes thereof and instructing the Funds' custodian to pay
such bills;
(h) coordinate (or assist in) the preparation of reports and other
information materials regarding the Funds including prospectuses,
proxies and other shareholder communications;
(i) prepare expense table and performance information for annual
updates;
(j) provide legal and regulatory advice to the Funds in connection
with its other administrative functions, including assignment of
matters to outside legal counsel on behalf of the Trust and
supervising the work of such counsel;
(k) provide office facilities and clerical support for the Funds;
(l) develop and implement procedures for monitoring compliance with
regulatory requirements and compliance with the Funds' investment
objectives, policies and restrictions;
(m) serve as liaison between the Funds and their independent
auditors;
(n) prepare and file tax returns;
(o) review payments of Fund expenses;
(p) prepare expense budgeting and accruals;
(q) provide communication, coordination, and supervision services
with regard to the Funds' transfer agent, custodian, fund
accountant, any co-administrators, and other service
organizations that render recordkeeping or shareholder
communication services;
(r) provide information to the Funds' distributor concerning fund
performance and administration;
(s) assist the Trust in the development of additional investment
portfolios;
2
(t) provide reports to the Funds' board of directors regarding its
activities;
(u) assist in the preparation and assembly of meeting materials,
including comparable fee information, as required, for the Funds'
board of directors; and
(v) provide any other administrative services reasonably necessary
for the operation of the Funds other than those services that are
to be provided by the Trust's transfer and dividend disbursing
agent, custodian, and fund accountant, provided that nothing in
this Agreement shall be deemed to require Funds Management to
provide any services that may not be provided by it under
applicable banking laws and regulations.
In performing all services under this Agreement, Funds Management shall:
(a) act in conformity with the Trust's Declaration of Trust (and By-Laws, if
any), the 1940 Act, and any other applicable laws as may be amended from time to
time, and all relevant rules thereunder, and with the Trust's registration
statement under the Securities Act of 1933 and the 1940 Act, as may be amended
from time to time; (b) consult and coordinate with legal counsel to the Trust as
necessary and appropriate; and (c) advise and report to the Trust and its legal
counsel, as necessary and appropriate, with respect to any compliance or other
matters that come to its attention.
In connection with its duties under this Paragraph, Funds Management may,
at its own expense, enter into sub-administration agreements with other service
providers, provided that each such service provider agrees with Funds Management
to comply with this Agreement and all relevant provisions of the 1940 Act, any
other applicable laws as may be amended from time to time, and all relevant
rules thereunder. Funds Management will provide the Trust with a copy of each
sub-administration agreement it executes relating to the Trust. Funds Management
will be liable for acts or omissions of any such sub-administrators under the
standards of care described herein under Paragraph 5.
4. Compensation. In consideration of the administration services to be
rendered by Funds Management under this Agreement, the Trust shall pay Funds
Management a monthly fee, as shown on Appendix A, of the average daily value (as
determined on each business day at the time set forth in the Prospectus for
determining net asset value per share) of the Funds' net assets during the
preceding month. If the fee payable to Funds Management pursuant to this
Paragraph begins to accrue before the end of any month or if this Agreement
terminates before the end of any month, the fee for the period from the
effective date to the end of that month or from the beginning of that month to
the termination date, respectively, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating each such monthly fee, the value
of each Fund's net assets shall be computed in the manner specified in that
Fund's registration statement as then on file with the SEC for the computation
of the value of the Fund's net assets in connection with the determination of
the net asset value of Fund shares. For purposes of this Agreement, a "business
day" is any day that the Trust is open for trading.
3
5. Limitation of Liability; Indemnification.
(a) Funds Management shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
performance of its obligations and duties under this Agreement, except a loss
resulting from Funds Management's willful misfeasance, bad faith, or negligence
in the performance of its obligations and duties or that of its agents or
sub-administrators, or by reason of its or their reckless disregard thereof. Any
person, even though also an officer, director, employee or agent of Funds
Management, shall be deemed, when rendering services to the Trust or acting on
any business of the Trust (other than services or business in connection with
Funds Management's duties as Administrator hereunder), to be acting solely for
the Trust and not as an officer, director, employee, or agent or one under the
control or discretion of Funds Management even though paid by it.
(b) The Trust, on behalf of each Fund, will indemnify Funds Management
against and hold it harmless from any and all losses, claims, damages,
liabilities, or expenses (including reasonable counsel fees and expenses)
resulting from any claim, demand, action, or suit relating to the particular
Fund and not resulting from willful misfeasance, bad faith, or negligence of
Funds Management or its agents or sub-administrators in the performance of their
obligations and duties, or by reason of its or their reckless disregard thereof.
Funds Management will not confess any claim or settle or make any compromise in
any instance in which the Trust will be asked to provide indemnification, except
with the Trust's prior written consent. Any amounts payable by the Trust under
this Subparagraph shall be satisfied only against the assets of the Fund
involved in the claim, demand, action, or suit and not against the assets of any
other Fund.
(c) Funds Management will indemnify the Trust against and hold it
harmless from any and all losses, claims, damages, liabilities, or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action, or suit against the Trust or any Fund that resulted from a
failure of Funds Management or its agents to act in accordance with the standard
of care set forth in Subparagraph (a) above; provided that such loss, claim,
damage, liability or expense did not result primarily from willful misfeasance,
bad faith, or negligence of the Trust or its agents (other than Funds Management
or agents of Funds Management) in the performance of their obligations and
duties, or by reason of its or their reckless disregard thereof. The Trust will
not confess any claim or settle or make any compromise in any instance in which
Funds Management will be asked to provide indemnification, except with Funds
Management's prior written consent.
6. Allocation of Expenses. Funds Management assumes and shall pay for
maintaining the staff and personnel necessary to perform its obligations under
this Agreement and shall, at its own expense, provide its own office space,
facilities and equipment. In addition to the fees described in Section 4 of this
Agreement, the Trust (or its other service providers, as may be provided
pursuant to their respective agreements and contracts with the Trust) shall pay
all of its expenses which are not expressly assumed by Funds Management
hereunder. The expenses of legal counsel and accounting experts retained by
Funds Management, after consulting with the Trust's legal counsel and
independent auditors, as may be reasonably
4
necessary or appropriate for the performance by Funds Management of its duties
under this Agreement shall be deemed to be expenses of, and shall be paid for
by, the Trust.
7. Amendments. This Agreement supersedes the administration agreement
between Xxxxx Fargo Variable Trust and Funds Management dated March 1, 2001 and
the administration agreement between Xxxxx Fargo Variable Trust and Xxxxx Fargo
Bank, N.A. dated September 20, 1999. This Agreement may be amended at any time
by mutual agreement in writing of the Trust and Funds Management, provided that
the Board of Trustees of the Trust, including a majority of the trustees who are
not interested persons of the Trust or any party to this Agreement, as defined
by the 1940 Act, approves any such amendment in advance.
8. Administrator's Other Businesses. Except to the extent necessary to
perform Funds Management's obligations under this Agreement, nothing herein
shall be deemed to limit or restrict the right of Funds Management, or any
affiliate or employee of Funds Management, 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, firm, individual or association.
9. Duration. This Agreement shall become effective on its execution date
and shall remain in full force and effect for one year or until terminated
pursuant to the provisions in Paragraph 10, and it may be reapproved at least
annually by the Board of Trustees, including a majority of the directors who are
not interested persons of the Trust or any party to this Agreement, as defined
by the 1940 Act.
10. Termination of Agreement. This Agreement may be terminated at any time,
without the payment of any penalty, by a vote of a majority of the members of
the Trust's Board of Trustees, on 60 days' written notice to Funds Management;
or by Funds Management on 60 days' written notice to the Trust.
11. Expense Waivers. If in any fiscal year the total expenses of a Fund
incurred by, or allocated to, the Fund, excluding taxes, interest, brokerage
commissions and other portfolio transaction expenses, other expenditures that
are capitalized in accordance with generally accepted accounting principles,
extraordinary expenses and amounts accrued or paid under a Rule 12b-1 Plan of
the Fund and including only the fees provided for in Paragraph 4 and those
provided for pursuant to the Fund's advisory agreement ("includible expenses"),
exceed the applicable voluntary expense waivers, if any, set forth in the
Prospectus, Funds Management shall waive or reimburse that portion of the excess
derived by multiplying the excess by a fraction, the numerator of which shall be
the percentage at which the fee payable pursuant to this Agreement is calculated
under Paragraph 4, and the denominator of which shall be the sum of such
percentage plus the percentage at which the fee payable pursuant to the Fund's
advisory agreement is calculated (the "Applicable Ratio"), but only to the
extent of the fee hereunder for the fiscal year. If the fees payable under this
Agreement and/or the Fund's advisory agreement contributing to such excess
portion are calculated at more than one percentage rate, the Applicable Ratio
shall be calculated separately for and applied separately to the portions of
excess attributable to, the period to which a particular percentage rate
applied. At the end of each month of the Trust's fiscal year, the Trust shall
review the includible expenses accrued during
5
that fiscal year to the end of that period and shall estimate the includible
expenses for the balance of that fiscal year. If as a result of that review and
estimation it appears likely that the includible expenses will exceed the
limitations referred to in this Paragraph for a fiscal year with respect to the
Fund, the monthly fee set forth in Paragraph 4 payable to Funds Management for
such month shall be reduced, subject to a later adjustment, by an amount equal
to the Applicable Ratio times the estimated excess pro rated over the remaining
months of the fiscal year (including the month just ended). For purposes of
computing the excess, if any, the value of the Fund's net assets shall be
computed in the manner specified in Paragraph 4, and any reimbursements required
to be made by Funds Management shall be made once a year promptly after the end
of the affected Fund's fiscal year.
12. Trust not bound to violate its Articles. Nothing in this Agreement
shall require the Trust to take any action contrary to any provision of its
Declaration of Trust or to any applicable statute or regulation.
13. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Trust or Funds Management shall be
sufficiently given if addressed to that party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Trust:
Xxxxx Fargo Variable Trust
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: C. Xxxxx Xxxxxxx
To Funds Management:
Xxxxx Fargo Funds Management, LLC
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
(b) This Agreement shall extend to and be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be subject to assignment (as that term is defined under the
0000 Xxx) without the written consent of the other party.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(d) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, and which collectively shall be
deemed to constitute only one agreement.
6
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(f) If any provision of this Agreement is declared to be prohibited or
unenforceable, the remaining provisions of this Agreement shall continue to be
valid and fully enforceable.
In witness whereof, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
XXXXX FARGO VARIABLE TRUST
By: /s/ C. Xxxxx Xxxxxxx
---------------------------------------------------
C. Xxxxx Xxxxxxx
Secretary
XXXXX FARGO FUNDS MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President, Chief Administrative Officer
and Chief Financial Officer
7
Appendix A
Funds of Xxxxx Fargo Variable Trust Covered by This Agreement
Fee of 0.16% of average daily net assets:
1. Asset Allocation Fund
2. Corporate Bond Fund
3. Equity Income Fund
4. Equity Value Fund
5. Growth Fund
6. International Equity Fund
7. Large Company Growth Fund
8. Money Market Fund
9. Small Cap Growth Fund
Approved by Board of Trustees: February 4, 2003.
The foregoing fee schedule is agreed to as of March 1, 2003 and shall
remain in effect until changed in writing by the parties.
XXXXX FARGO VARIABLE TRUST
By: /s/ C. Xxxxx Xxxxxxx
---------------------------------------------------
C. Xxxxx Xxxxxxx
Secretary
XXXXX FARGO FUNDS MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President, Chief Administrative
Officer and Chief Financial Officer
A-1
