Capstone Growth Fund, Inc..
on behalf of its series, the Capstone Growth Fund
Investment Company Services Agreement
This AGREEMENT, dated as of the ___ of ________2000, made by and
between Capstone Growth Fund, Inc., ("Company", on behalf of the Capstone Growth
Fund ("Fund") and Declaration Service Company ("Declaration"). The Company is a
Maryland corporation organized under Articles of Incorporation dated
(___________), (the "Articles") and authorized to divide and classify its shares
of beneficial interest into separate series of shares and is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end,
diversified management investment company. Declaration is a corporation duly
organized under the laws of the Commonwealth of Pennsylvania (Company and
Declaration are, collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Company is authorized by its Articles to issue separate
series of shares representing interests in separate investment portfolios,
including the Fund which are identified on Schedule "C" attached hereto and
which Schedule "C" may be amended from time to time by mutual agreement of the
Company and Declaration; and
WHEREAS, the Parties desire to enter into an agreement whereby
Declaration will provide the services to the Fund as specified herein and set
forth in particular in Schedule "A" which is attached hereto and made a part
hereof.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange of good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
GENERAL PROVISIONS
Section 1. Appointment. The Company hereby appoints Declaration as
servicing agent for the Fund and Declaration hereby accepts such appointment. In
order that Declaration may perform its duties under the terms of this Agreement,
the Board of Directors of the Company shall direct the officers, investment
adviser(s), legal counsel, independent accountants and custodian of the Fund to
cooperate fully with Declaration and, upon request of Declaration, to provide
such information, documents and advice relating to the Fund which Declaration
requires to execute its responsibilities hereunder. In connection with its
duties, Declaration shall be entitled to rely, and will be held harmless by the
Fund when acting in reasonable reliance, upon any instruction, advice or
document relating to the Fund as provided to Declaration by any of the
aforementioned persons on behalf of the Fund. All fees charged by any such
persons acting on behalf of the Fund will be deemed an expense of the Fund.
Any services performed by Declaration under this Agreement will conform
to the requirements of:
(a) the provisions of the 1940 Act and the Securities Act of 1933, as
amended, and any rules or regulations in force thereunder;
(b) any other applicable provision of state and federal law;
(c) the provisions of the Articles and the by-laws as amended from time to
time and delivered to Declaration;
(d) any policies and determinations of the Board of Directors of the Fund
which are communicated to Declaration; and
(e) the policies of the Fund as reflected in the Fund registration
statement as filed with the U.S. Securities and Exchange Commission.
Nothing in this Agreement will prevent Declaration or any officer
thereof from providing the same or comparable services for or with any other
person, firm or corporation. While the services supplied to the Fund may be
different than those supplied to other persons, firms or corporations,
Declaration will provide the Fund equitable treatment in supplying services. The
Fund recognize that they will not receive preferential treatment from
Declaration as compared with the treatment provided to other Declaration
clients.
Section 2. Duties and Obligations of Declaration.
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Subject to the provisions of this Agreement, Declaration will provide
to the Fund the specific services as set forth in Schedule "A" attached hereto.
Section 3. Definitions. For purposes of this Agreement:
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"Certificate" will mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement. To be effective, such
Certificate shall be given to and received by the custodian and shall be signed
on behalf of the Fund by any two of the Company's designated officers, and the
term Certificate shall also include instructions communicated to the custodian
by Declaration.
"Custodian" will refer to that agent which provides safekeeping of the
assets of the Fund.
"Instructions" will mean communications containing instructions
transmitted by electronic or telecommunications media including, but not limited
to, Industry Standardization for Institutional Trade Communications,
computer-to-computer interface, dedicated transmission line, facsimile
transmission (which may be signed by an officer or unsigned) and tested telex.
"Oral Instruction" will mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to Declaration in
person or by telephone, telegram, telecopy or other mechanical or documentary
means lacking original signature, by a person or persons reasonably identified
to Declaration to be a person or persons so authorized by a resolution of the
Board of Directors of the Company to give Oral Instructions to Declaration on
behalf of the Fund.
"Shareholders" will mean the registered owners of the shares of the
Fund in accordance with the share registry records maintained by Declaration for
the Fund.
"Shares" will mean the issued and outstanding shares of the Fund.
"Signature Guarantee" will mean the guarantee of signatures by an
"eligible guarantor institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Eligible guarantor
institutions include banks, brokers, dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations. Broker-dealers guaranteeing signatures must be members of a
clearing corporation or maintain net capital of at least $100,000. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program.
"Written Instruction" will mean an authorization, instruction,
approval, item or set of data or information of any kind transmitted to
Declaration in an original writing containing an original signature or a copy of
such document transmitted by telecopy including transmission of such signature
reasonably identified to Declaration to be the signature of a person or persons
so authorized by a resolution of the Board of Directors of the Company, or so
identified by the Company to give Written Instructions to Declaration on behalf
of the Fund.
Concerning Oral and Written Instructions For all purposes under this
Agreement, Declaration is authorized to act upon receipt of the first
of any Written or Oral Instruction it receives from the Company or its
agents, on behalf of the Fund. In cases where the first instruction is
an Oral Instruction that is not in the form of a document or written
record, a confirmatory Written Instruction or Oral Instruction in the
form of a document or written record shall be delivered. In cases where
Declaration receives an Instruction, whether Written or Oral, to enter
a portfolio transaction onto a Fund's records, the Fund shall cause the
broker/dealer executing such transaction to send a written confirmation
to the Custodian.
Declaration shall be entitled to rely on the first Instruction
received. For any act or omission undertaken by Declaration in
compliance therewith, it shall be free of liability and fully
indemnified and held harmless by the Fund, provided however, that in
the event a Written or Oral Instruction received by Declaration is
countermanded by a subsequent Written or Oral Instruction received
prior to acting upon such countermanded Instruction, Declaration shall
act upon such subsequent Written or Oral Instruction. The sole
obligation of Declaration with respect to any follow-up or confirmatory
Written Instruction or Oral Instruction in documentary or written form
shall be to make reasonable efforts to detect any such discrepancy
between the original Instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible for and
bear the expense of any action, including any reprocessing, necessary
to correct any discrepancy or error. To the extent such action requires
Declaration to act, the Fund shall give Declaration specific Written
Instruction as to the action required.
The Fund will file with Declaration a certified copy of each resolution
of the Company's Board of Directors authorizing execution of Written
Instructions or the transmittal of Oral Instructions as provided above.
Section 4. Indemnification.
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(a) Declaration, its directors, officers, employees, shareholders, and
agents will be liable for any loss suffered by the Fund resulting from the
willful misfeasance, bad faith, negligence or disregard on the part of
Declaration in the performance of its obligations and duties under this
Agreement.
(b) Any director, officer, employee, shareholder or agent of Declaration,
who may be or become an officer, director, employee or agent of the Company or
the Fund, will be deemed, when rendering services to the Fund, or acting on any
business of Company or the Fund (other than services or business in connection
with Declaration' duties hereunder), to be rendering such services to or acting
solely for the Company or the Fund, as applicable, and not as a director,
officer, employee, shareholder or agent of, or under the control or direction of
Declaration even though such person may be receiving compensation from
Declaration.
(c) The Company agrees that the Fund shall indemnify and hold Declaration
harmless, together with its directors, officers, employees, shareholders and
agents from and against any and all claims, demands, expenses and liabilities
(whether with or without basis in fact or law) of any and every nature which
Declaration may sustain or incur or which may be asserted against Declaration by
any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by Declaration except claims,
demands, expenses and liabilities arising from willful misfeasance, bad faith,
negligence or disregard on the part of Declaration in the performance of its
obligations and duties under this Agreement; or
(ii) any action taken or omitted to be taken by Declaration in reliance
upon any Certificate, instrument, order or stock certificate or other document
reasonably believed by Declaration to be genuine and signed, countersigned or
executed by any duly authorized person, upon the Oral Instructions or Written
Instructions of an authorized person of the Fund, or upon the written opinion of
legal counsel for the Fund or Declaration; or
(iii) the offer or sale of shares of the Fund to any person, natural or
otherwise, which is in violation of any state or federal law.
If a claim is made against Declaration as to which Declaration may seek
indemnity under this Section, Declaration will notify the Fund promptly after
receipt of any written assertion of such claim threatening to institute an
action or proceeding with respect thereto and will notify the Fund promptly of
any action commenced against Declaration within ten (10) days after Declaration
has been served with a summons or other legal process. Failure to notify the
Fund will not, however, relieve the Fund from any liability which they may have
on account of the indemnity under this Section so long as the Fund have not been
prejudiced in any material respect by such failure.
The Company and the Fund and Declaration will cooperate in the control of
the defense of any action, suit or proceeding in which Declaration is involved
and for which indemnity is being provided by the Fund to Declaration. The
Company, on behalf of the Fund, may negotiate the settlement of any action, suit
or proceeding subject to Declaration's approval, which will not be unreasonably
withheld. Declaration reserves the right, but not the obligation, to participate
in the defense or settlement of a claim, action or proceeding with its own
counsel. Costs or expenses incurred by Declaration in connection with, or as a
result of such participation, will be borne solely by the Fund if:
(i) Declaration has received an opinion of counsel from counsel to the Fund
stating that the use of counsel to the Fund by Declaration would present an
impermissible conflict of interest;
(ii) the defendants in, or targets of, any such action or proceeding
include both Declaration and the Fund, and legal counsel to Declaration has
reasonably concluded that there are legal defenses available to it which are
different from or additional to those available to the Fund or which may be
adverse to or inconsistent with defenses available to the Fund (in which case
the Fund will not have the right to direct the defense of such action on behalf
of Declaration); or
(iii) the Company authorizes Declaration to employ separate counsel at the
expense of the Fund.
(d) The terms of this Section will survive the termination of this
Agreement.
Section 5. Representations and Warranties.
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(a) Declaration represents and warrants that:
(i) it is a corporation duly organized and existing and in good standing
under the laws of the Commonwealth of Pennsylvania;
(ii) it is empowered under applicable laws and by its Certificate of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize
Declaration to enter into and perform this Agreement;
(iv) it has and will continue to have access to the facilities, personnel
and equipment required to fully perform its duties and obligations hereunder;
(v) no legal or administrative proceedings have been instituted or
threatened which would impair Declaration's ability to perform its duties and
obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of Declaration or
any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act; (viii) this Agreement has been duly authorized by Declaration and,
when executed and delivered, will constitute valid, legal and binding obligation
of Declaration, enforceable in accordance with its terms.
(b) The Company represents and warrants that:
(i) it is a Maryland corporation duly organized and existing and in good
standing under the laws of the State of Maryland;
(ii) it is empowered under applicable laws and by its Articles and by-laws
to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize the Company to
enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair the ability of the Company or the Fund to perform
their duties and obligations under this Agreement;
(v) the Company's entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or obligations of the
Company, or any law or regulation applicable to either;
(vi) the Shares are properly registered or otherwise authorized for
issuance and sale;
(vii) this Agreement has been duly authorized by the Company and, when
executed and delivered, will constitute valid, legal and binding obligation of
the Company, enforceable in accordance with its terms.
(c) Delivery of Documents
The Company will furnish or cause to be furnished to Declaration the
following documents relating to the Fund;
(i) current Prospectus and Statement of Additional Information;
(ii) most recent Annual Report;
(iii) most recent Semi-Annual Report for registered investment companies on
Form N-SAR;
(iv) certified copies of resolutions of the Company's Board of Directors
authorizing the execution of Written Instructions or the transmittal of Oral
Instructions and those persons authorized to give those Instructions.
(d) Record Keeping and Other Information
Declaration will create and maintain all records required of it pursuant to
its duties hereunder and as set forth in Schedule "A" in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the Act. All such records will be the property of the Fund and will be
available during regular business hours for inspection, copying and use by the
Fund. Where applicable, such records will be maintained by Declaration for the
periods and in the places required by Rule 31a-2 under the Act. Upon termination
of this Agreement, Declaration will deliver all such records to the Fund or such
person as the Fund may designate.
Section 6. Compensation. The Company agrees, on behalf of the Fund, to pay
Declaration compensation for its services, and to reimburse it for expenses at
the rates, times, manner and amounts as set forth in Schedule "B" attached
hereto and incorporated herein by reference and as will be set forth in any
amendments to such Schedule "B" agreed upon in writing by the Parties. Upon
receipt of an invoice therefor, Declaration is authorized to collect such fees
by debiting the Fund custody account following review and approval of such fees
by an authorized representative of the Fund, which will not be unreasonably
withheld. In addition, the Company agrees, on behalf of the Fund, to reimburse
Declaration for any out-of-pocket expenses paid by Declaration on behalf of the
Fund within five (5) calendar days of the Fund receipt and approval of an
invoice therefor, such approval will not be unreasonably withheld.
For the purpose of determining fees payable to Declaration, the value of
each Fund's net assets will be computed at the times and in the manner specified
in the Fund Prospectus and Statement of Additional Information then in effect,
and the fees due Declaration will be calculated daily and paid monthly on the
value of each Fund's assets thus determined.
During the term of this Agreement, should the Fund seek services or
functions in addition to those outlined below or in Schedule "A" attached
hereto, a written amendment to this Agreement specifying the additional services
and corresponding compensation will be executed by the Parties.
In the event that the Fund are more than sixty (60) days delinquent in
payments of monthly xxxxxxxx in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty (30) days' written notice to the
Fund by Declaration. The Fund must notify Declaration in writing of any
contested amounts within five (5) days of receipt of a billing for such amounts.
Disputed amounts are not due and payable while they are being disputed
Section 7. Days of Operation. Nothing contained in this Agreement is
intended to or will require Declaration, in any capacity hereunder, to perform
any functions or duties on any holiday, day of special observance or any other
day on which the New York Stock Exchange ("NYSE") is closed. Functions or duties
normally scheduled to be performed on such days will be performed on and as of
the next succeeding business day on which the NYSE is open. Notwithstanding the
foregoing, Declaration will compute the net asset value of each Fund on each day
required pursuant to Rule 22c-1 promulgated under the Act.
Section 8. Acts of God, etc. Declaration will not be liable or responsible
for delays or errors caused by acts of God or by reason of circumstances beyond
its control including, acts of civil or military authority, national
emergencies, insurrection, war, riots, or failure or unavailability of
transportation, communication or power supply, fire, flood or other catastrophe.
In the event of equipment failures beyond Declaration's control,
Declaration will, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but will have no liability with respect thereto.
The foregoing obligation will not extend to computer terminals located outside
of premises maintained by Declaration. Declaration has entered into and
maintains in effect agreements making reasonable provision for emergency use of
electronic data processing equipment.
Section 9. Inspection and Ownership of Records. In the event of a request
or demand for the inspection of the records of the Fund, Declaration will use
its best efforts to notify the Fund and to secure instructions as to permitting
or refusing such inspection. Declaration may, however, make such records
available for inspection to any person in any case where it is advised in
writing by its counsel that it may be held liable for failure to do so after
notice to the Fund.
Declaration recognizes that the records it maintains for the Fund are the
property of the Fund and will be surrendered to the Fund upon written notice to
Declaration as outlined under Section 10(c) below. The Fund are responsible for
the payment in advance of any fees owed to Declaration. Declaration agrees to
maintain the records and all other information of the Fund in a confidential
manner and will not use such information for any purpose other than the
performance of Declaration' duties under this Agreement. Declaration will
maintain off site secured storage of all electronic records of the Fund. The
Fund understand that Declaration maintains storage for physical records at
Declaration's location.
Section 10. Duration and Termination.
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(a) The initial term of this Agreement will be for the period of twenty
four (24) months, commencing on the date hereinabove first written (the
"Effective Date") and will continue thereafter subject to termination by either
Party as set forth in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached hereto will be
fixed for the initial term commencing on the Effective Date of this Agreement
and will continue thereafter subject to review and any adjustment.
(c) After the initial term of this Agreement, a Party may give written
notice to the other (the day on which the notice is received by the Party
against which the notice is made shall be the "Notice Date") of a date on which
this Agreement shall be terminated ("Termination Date"). The Termination Date
shall be set on a day not less than sixty (60) days after the Notice Date. The
period of time between the Notice Date and the Termination Date is hereby
identified as the "Notice Period". Any time up to, but not later than fifteen
(15) days prior to the Termination Date, the Fund will pay to Declaration such
compensation as may be due as of the Termination Date and will likewise
reimburse Declaration for any out-of-pocket expenses and disbursements
reasonably incurred or expected to by incurred by Declaration up to and
including the Termination Date.
(d) In connection with the termination of this Agreement, if a successor to
any of Declaration' duties or responsibilities under this Agreement is
designated by the Fund by written notice to Declaration, Declaration will
promptly, on the Termination Date and upon receipt by Declaration of any
payments owed to it as set forth in Section 10(c) above, transfer to the
successor, at the Fund expense, all records which belong to the Fund and will
provide appropriate, reasonable and professional cooperation in transferring
such records to the named successor.
(e) Should the Fund desire to move any of the services outlined in this
Agreement to a successor service provider prior to the Termination Date,
Declaration shall make a good faith effort to facilitate the conversion on such
prior date, however, there can be no guarantee that Declaration will be able to
facilitate a conversion of services prior to the end of the Notice Period.
Should services be converted to a successor service provider prior to the end of
the Notice Period, or if a Fund is liquidated or its assets merged or purchased
or the like with another entity, payment of fees to Declaration shall be
accelerated to a date prior to the conversion or termination of services and
calculated as if the services had remained at Declaration until the expiration
of the Notice Period and shall be calculated through the Notice Date.
(f) Notwithstanding the foregoing, this Agreement may be terminated at any
time by either Party in the event of a material breach by the other Party
involving negligence, willful misfeasance, bad faith or a disregard of its
obligations and duties under this Agreement provided that such breach shall have
remained unremedied for sixty (60) days or more after receipt of written
specification thereof.
Section 11. Rights of Ownership. All computer programs and procedures
developed to perform services required to be provided by Declaration under this
Agreement are the property of Declaration. All records and other data, except
such computer programs and procedures are the exclusive property of the Fund and
all such other records and data will be furnished to the Fund in appropriate
form as soon as practicable after termination of this Agreement for any reason.
Ownership and control of toll free telephone lines 000-000-0000 and 000-000-0000
will be retained by the Fund, even though these lines may be connected from time
to time to the telephone system of Declaration.
Section 12. Amendments to Documents. The Company will furnish Declaration
written copies of any amendments to, or changes in, the Articles, by-laws,
Prospectus or Statement of Additional Information in a reasonable time prior to
such amendments or changes becoming effective. In addition, the Company agrees
that no amendments will be made to the Prospectus or Statement of Additional
Information of the Fund which might have the effect of changing the procedures
employed by Declaration in providing the services agreed to hereunder or which
amendment might affect the duties of Declaration hereunder unless the Company
first obtains Declaration' approval of such amendments or changes.
Section 13. Confidentiality. Both Parties hereto agree that any non-public
information obtained hereunder concerning the other Party is confidential and
may not be disclosed to any other person without the consent of the other Party,
except as may be required by applicable law or at the request of the U.S.
Securities and Exchange Commission or other governmental agency. Declaration
agrees that it will not use any non-public information for any purpose other
than performance of its duties or obligations hereunder. The obligations of the
Parties under this Section will survive the termination of this Agreement. The
Parties further agree that a breach of this Section would irreparably damage the
other Party and accordingly agree that each of them is entitled, without bond or
other security, to an injunction or injunctions to prevent breaches of this
provision.
Section 14. Notices. Except as otherwise provided in this Agreement, any
notice or other communication required by or permitted to be given in connection
with this Agreement will be in writing and will be delivered in person or sent
by first class mail, postage prepaid or by prepaid overnight delivery service to
the respective parties as follows:
If to the Fund: If to Declaration:
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Capstone Growth Fund, Inc. Declaration Service Company.
0000 Xxx Xxxxxx, Xxxxx 0000 000 Xxxxx Xxxx, Xxxxx 0000
Xxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx Attention: Xxxxxxx X. Xxxxx
President Chief Executive Officer
Section 15. Amendment. No provision of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by the Parties. This Agreement may be amended from time to time by
supplemental agreement executed by the Parties and the compensation stated in
Schedule "B" attached hereto may be adjusted accordingly as mutually agreed
upon.
Section 16. Authorization. The Parties represent and warrant to each other
that the execution and delivery of this Agreement by the undersigned officer of
each Party has been duly and validly authorized; and when duly executed, this
Agreement will constitute a valid and legally binding enforceable obligation of
each Party.
Section 17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed will be deemed to be an original,
but such counterparts will together constitute but one and the same instrument.
Section 18. Assignment. This Agreement will extend to and be binding upon
the Parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Company without the
written consent of Declaration or by Declaration without the written consent of
the Company which consent shall be authorized or approved by a resolution by its
respective Boards of Directors.
Section 19. Governing Law. This Agreement will be governed by the laws of
the Commonwealth of Pennsylvania and the exclusive venue of any action arising
under this Agreement will be Xxxxxxxxxx County, Commonwealth of Pennsylvania.
Section 20. Severability. If any part, term or provision of this Agreement
is held by any court to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions will be considered severable and not
be affected and the rights and obligations of the parties will be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid, provided that the basic agreement is
not thereby materially impaired.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
consisting of seventeen (17) typewritten pages, together with Schedules "A," "B"
and "C" (pages 18- 25, attached), to be signed by their duly authorized officers
as of the day and year first above written.
Capstone Growth Fund, Inc.,
on behalf of Capstone Growth Fund Declaration Service Company
_________________________ _________________________
By: Xxxxxx X. Xxxxxxx By: Xxxxxxx X. Xxxxx
President Chief Executive Officer
SCHEDULE A
Accounting Services Provided by Declaration Service Company
o Journalize each Fund's investment, capital share and income and expense
activities.
o Verify investment buy/sell trade tickets when received from the advisor and
transmit trades to the Fund custodian for proper settlement.
o Maintain individual ledgers for investment securities.
o Maintain historical tax lots for each security.
o Reconcile cash and investment balances of each Fund with the custodian, and
provide the advisor with the beginning cash balance available for
investment purposes.
o Update the cash availability throughout the day as required by the advisor.
o Post to and prepare each Fund's Statement of Assets and Liabilities and
Statement of Operations.
o Calculate expenses payable pursuant to the Fund various contractual
obligations.
o Control all disbursements from the Fund and authorize such disbursements
upon instructions of the Fund.
o Calculate capital gains and losses.
o Determine each Fund's net income.
o Obtain security market prices or if such market prices are not readily
available, then obtain such prices from services approved by the advisor,
and in either case calculate the market or fair value of each Fund's
investments.
o Where applicable, calculate the amortized cost value of debt instruments.
o Transmit or mail a copy of the portfolio valuations to the advisor.
o Compute the net asset value of each Fund.
o Report applicable net asset value and performance data to performance
tracking organizations.
o Compute each Fund's yields, total returns, expense ratios and portfolio
turnover rate.
o Prepare and monitor the expense accruals and notify Fund management of any
proposed adjustments.
o Prepare monthly financial statements, which will include, without
limitation, the Schedule of Investments, the Statement of Assets and
Liabilities, the Statement of Operations, the Statement of Changes in Net
Assets, the Cash Statement, and the Schedule of Capital Gains and Losses.
o Prepare monthly security transactions listings.
o Prepare monthly broker security transactions summaries.
o Supply various Fund statistical data as requested on an ongoing basis.
o Assist in the preparation of support schedules necessary for completion of
Federal and state tax returns.
o Assist in the preparation and filing of the Fund annual and semiannual
reports with the SEC on Form N-SAR.
o Assist in the preparation and filing of the Fund annual and semiannual
reports to shareholders and proxy statements.
o Assist with the preparation of amendments to the Fund Registration
Statements on From N-1A and other filings relating to the registration of
shares.
o Monitor each Fund's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended from time to
time ("Code").
o Determine the amount of dividends and other distributions payable to
shareholders as necessary to, among other things, maintain the
qualification as a regulated investment company of each Fund under the
Code.
o Provide other accounting services as may be agreed upon from time to time
in writing by the Company and Declaration.
Transfer Agent, Shareholder Servicing Agent and Dividend Disbursing Agent
Services provided by Declaration Service Company
o Examine and process new accounts, subsequent payments, liquidations,
exchanges, transfers, telephone transactions, check redemptions, automatic
withdrawals, and wire order trades.
o Reinvest or pay dividends and make other distributions.
o Answer investor and dealer telephone and/or written inquiries, except as
otherwise agreed by the Transfer Agent and the Company.
o Process and confirm address changes.
o Process standard account record changes as required, i.e. Dividend Codes,
etc.
o Microfilm and/or store source documents for transactions, such as account
applications and correspondence.
o Perform backup withholding for those accounts in accordance with Federal
regulations.
o Solicit missing taxpayer identification numbers.
o Provide remote access inquiry to Fund records via Fund supplied hardware
(Fund also responsible for connection line and monthly fee).
o Maintain the following shareholder information in such a manner as the
Transfer Agent shall determine:
o Name and address, including zip code.
o Balance of Shares.
o Number of Shares, issuance date of each share outstanding and cancellation
date of each share no longer outstanding, if issued.
o Balance of dollars available for redemption.
o Dividend code (daily accrual, monthly reinvest, monthly cash or quarterly
cash).
o Type of account code.
o Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available.
o Original establishment date for accounts opened by exchange.
o W-9 withholding status and periodic reporting.
o State of residence code.
o Social security or taxpayer identification number, and indication of
certification.
o Historical transactions on the account for the most recent 18 months, or
other period as mutually agreed to from time to time.
o Indication as to whether phone transaction can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
o Provide the following reports and statements:
o Prepare daily journals for Fund reflecting all shares and dollar activity
for the previous day.
o Supply information monthly for Fund preparation of Blue Sky reporting. o
Supply monthly purchase, redemption and liquidation information for use in
Fund N-SAR report.
o Provide monthly average daily balance reports for the Fund.
o Prepare and mail copies of summary statements to dealers and investment
advisors.
o Mail transaction confirmation statements daily to investors.
o Mail periodic statement to investors.
o Compute, prepare and furnish all necessary reports to governmental
authorities: Forms 1099R, 1099DIV, 1099B, 1042 and 1042S.
o Enclose various marketing material as designated by the Fund in statement
mailings, i.e. monthly and quarterly statements (material must be adaptable
to mechanical equipment as reasonably specified by the Transfer Agent).
o Prepare and mail confirmation statements to dealers daily.
o Prepare certified list of stockholders for proxy mailing.
Administrative Services Provided by Declaration Service Company
o Provide overall day-to-day Fund administrative management, including
coordination of investment advisor, custodian, transfer agency,
distribution and pricing and accounting services.
o Preparation of filing of all Federal and State reports including:
o Fund's post-effective amendments under the Securities Act of 1933 and the
Investment Company Act of 1940.
o Form N-SAR - Semi-Annual report for Registered Investment Companies.
o The Fund's Annual and Semi-Annual Report.
o Rule 24f-2 Notice - filing regarding sale(s) of securities.
o Rule 17g-1 filing with the SEC regarding Fidelity Bond coverage.
o Ongoing monitoring and filing of State Blue Sky registrations.
o Prepare and file such reports, applications and documents as may be
necessary or desirable to register the Fund's shares with the Federal and
state securities authorities, and monitor the sale of Fund shares for
compliance with Federal and state securities laws.
o Prepare and file reports to shareholders, including the annual report to
shareholders, and coordinate mailing Prospectuses, notices, proxy
statements, proxies and other reports to shareholders.
o Assist with layout and printing of shareholder communications, including
Prospectuses and reports to shareholders.
o Administer contracts on behalf of the Fund with, among others, the Fund's
investment advisor, custodian, transfer agent/shareholder servicing agent,
distributor, and accounting services agent.
o Assist in preparation of and maintain materials for directors/management
meetings including, agendas, minutes, attendance records and minute books.
o Coordinate shareholder meetings, including assisting Fund counsel in
preparation of proxy materials, preparation of minutes and tabulation of
results. o
o Monitor and pay Fund bills, maintain Fund budget and report budget expenses
and variances to Fund management.
o Monitor the Fund's compliance with the investment restrictions and
limitations imposed by the 1940 Act and state Blue Sky laws and applicable
regulations thereunder, the fundamental and non-fundamental investment
policies and limitations set forth in the Fund's Prospectuses and Statement
of Additional Information, and the investment restrictions and limitations
necessary for each Portfolio of the Fund to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended, or any successor statute.
o Prepare and distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to shareholders.
o Provide other administrative services as may be agreed from time to time in
writing by the Fund or Administrator.
SCHEDULE B
Compensation Schedule for Services Provided by Declaration Service Company
Asset Charge on Combined Assets of all Portfolios
0.03% on first $50 million of average annual assets
0.02% on next $50 million of average annual assets
0.01% in excess of $100 million of average annual assets
Transfer Agent/ Shareholder Services:
$7,500 Annual Fee, per portfolio
$12.00 per shareholder account
Second Class of Shares per portfolio:
50% of base annual fee
Third Class of Shares per portfolio:
25% of base annual fee
Fund Accounting/ Portfolio Valuation Fee per portfolio:
Domestic: $17,000 per portfolio
International: $22,000 per portfolio
Second and Third Class of Shares per portfolio:
Domestic: $8,500 per portfolio
International: $11,000 per portfolio
Plus out-of-pocket expenses to include, but not limited to: wire fees, bank
service charges, printing, copying, postage, courier, account
statement/confirmation (including programming costs for specialized
statements/confirmations), Fund/SERV and Networking Costs, portfolio price
quotation service, corporate action remote feeds, asset allocation charges,
travel, telephone, registration fees, and other standard miscellaneous items.
SCHEDULE C
Capstone Growth Fund, Inc.
Series and Portfolios covered by this Agreement:
Capstone Growth Fund
