EXHIBIT (k)(2)
ADMINISTRATION AGREEMENT
AGREEMENT made this 20/th/ day of February 1992 by and between The First
Commonwealth Fund, Inc., a Maryland corporation (hereinafter called the "Fund"),
and Princeton Administrators, Inc., a Delaware corporation (hereinafter called
the "Administrator");
W I T N E S S E T H
WHEREAS, the Fund intends to engage in business as a closed-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund and the EquitiLink International Management Limited
(the "Investment Manager") entered into a Management Agreement (the "Management
Agreement") pursuant to which the Investment Manager agreed to act as investment
manager for, and to manage the affairs, business and investment of the assets
of, the Fund; and
WHEREAS, the Investment Manager and EquitiLink Australia Limited (the
"Investment Adviser") entered into an Investment Adviser Agreement (the
"Investment Adviser Agreement") pursuant to which the Investment Adviser will
make recommendations to the Investment Manager as to the structure and
composition of the Fund's portfolio; and
WHEREAS, the Fund desires to retain the Administrator to render certain
administrative services in the manner and on the terms and conditions hereafter
set forth; and
WHEREAS, the Administrator desires to be retained to perform such
services on said terms and conditions.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and the Administrator agree as follows:
1. Duties of the Administrator. The Fund hereby retains the
Administrator to act as administrator of the Fund, subject to the supervision
and direction of the Board of Directors of the Fund, as hereinafter set forth.
The Administrator shall perform or arrange for the performance of the following
administrative and clerical services: (i) maintain and keep separate books and
records for investment activities conducted in (a) United Kingdom pounds, (b)
Canadian dollars, and (c) Australian dollars (including investment activities
conducted in New Zealand dollars); (ii) prepare and, subject to approval by the
Fund, file reports and other documents required by U.S. Federal, state and other
applicable U.S. laws and regulations and by U.S. stock exchanges on which Fund
shares are listed, including proxy materials and periodic reports to Fund
stockholders, and prepare or arrange for preparation of the initial draft of
Federal, state and local tax returns; (iii) coordinate tax related matters; (iv)
respond to or refer to the Fund's officers or its transfer agent inquiries from
Fund shareholders; (v) calculate in accordance with the Fund's policy as adopted
from time to time by the Board of Directors and publish, or arrange for the
publication of, the net asset value of the Fund's shares; (vi) oversee,
and, as the Board may reasonably request or deem appropriate, make reports and
recommendations to the Board on, the performance of administrative and
professional services rendered to the Fund by others, including its custodian
and any subcustodian, registrar, transfer agent, dividend disbursing agent and
dividend reinvestment plan agent, as well as accounting, auditing and other
services; (vii) provide the Fund with the services of persons competent to
perform the foregoing administrative and clerical functions; (viii) provide the
Fund with administrative offices and data processing facilities; (ix) arrange
for payment of the Fund's expenses; (x) consult with the Fund's officers,
independent accountants, legal counsel, custodian and any sub-custodian,
registrar, transfer agent and dividend disbursing agent and dividend
reinvestment plan agent in establishing the accounting policies of the Fund;
(xi) prepare such financial information and reports as may be required by any
banks from which the Fund borrows funds; (xii) provide such assistance to the
Investment Manager, the Investment Adviser, the custodian and any sub-custodian,
and the Fund's counsel and auditors as generally may be required to carry on
properly the business and operations of the Fund; and (xiii) prepare reports
related to the Fund's Preferred Stock as required by rating agencies. The Fund
agrees to cause the custodian and the Investment Manager to deliver, on a timely
basis, such information to the Administrator as may be necessary or appropriate
for the Administrator's performance of its duties and responsibilities
hereunder, including but not limited to, daily records of transactions, daily
valuation of investments in local currency (which may be based on information
provided by a pricing service) as well as the daily conversion factor in order
for the Administrator to price the Fund in United States dollars, reports of
expenses borne by the Fund, the Fund management letter to stockholders and such
other information necessary for the Administrator to prepare the above
referenced reports and filings, and the Administrator shall be entitled to rely
on the accuracy and completeness of such information in performing its duties
hereunder.
2. Expenses of the Administrator. The Administrator 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 office space,
facilities, equipment and necessary personnel which it is obligated to provide
under paragraph 1 hereof. The Fund and the Investment Manager assume and shall
pay or cause to be paid all other expenses of the Fund as set forth in the
Management Agreement. The expenses of legal counsel and accounting experts
retained by the Administrator, after consulting with the Fund counsel and
independent auditors, as may be necessary or appropriate for the Administrator's
performance of its duties and responsibilities under this Agreement are deemed
expenses of, and shall be paid by, the Fund to the extent set forth in Section
4(b) of this Agreement.
3. Compensation of the Administrator. For the services rendered to
the Fund by the Administrator pursuant to this Agreement, the Fund shall pay to
the Administrator on the first business day of each calendar month a fee for the
previous month equal to the greater of (i) $150,000 per annum ($12,500 per
month), or (ii) at an annual rate equal to 0.20% of the Fund's average weekly
net assets computed based upon the net asset values applicable to shares of
common stock and shares of preferred stock at the end of each week. The value of
the Fund's net assets shall be computed at the times and in the manner specified
in the Fund's registration statement on Form N-2, as amended from time to time
(the "Registration Statement").
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Compensation by the Fund of the Administrator shall commence on the date of the
first receipt by the Fund of the proceeds of the sale of its shares to the
Underwriters as described in the Registration Statement, and the fee for the
period from the date the Fund shall first receive the proceeds of the sale of
its shares to the Underwriters as aforesaid to the end of the month during which
such proceeds are so received, shall be pro-rated according to the proportion
that such period bears to the full monthly period. Upon termination of this
Agreement before the end of a month, the fee for such part of that month shall
be pro-rated according to the proportion that such period bears to the full
monthly period and shall be payable within seven (7) days after the date of
termination of this Agreement.
4. Limitation of Liability of the Administrator; Indemnification.
(a) The Administrator shall not be liable to any person for any
error of judgment or mistake of law or for any loss arising out of any
act or omission by the Administrator in the performance of its duties
hereunder; provided, however, that nothing herein contained shall be
construed to protect the Administrator against any liability to the Fund
to which the Administrator shall otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of
its duties, or by reckless disregard of its obligations and duties
hereunder.
(b) The Administrator may, with respect to questions of law,
apply for and obtain the advice and opinion of legal counsel to the Fund,
or of counsel of the Administrator's choosing upon approval of an officer
of the Fund, which approval shall not be unreasonably withheld, at the
expense of the Fund, and with respect to the application of generally
accepted accounting principles or Federal tax accounting principles,
apply for and obtain the advice and opinion of the Fund's accounting
experts, or of accounting experts of the Administrator's choosing upon
approval of an officer of the Fund, which approval shall not be
unreasonably withheld, at the expense of the Fund. The Administrator
shall be fully protected with respect to any action taken or omitted by
it in good faith in conformity with such advice or opinion.
(c) The Fund agrees to indemnify and hold harmless the
Administrator from and against all charges, claims, expenses (including
legal fees) and liabilities reasonably incurred by the Administrator in
connection with the performance of its duties hereunder, except such as
may arise from the Administrator's willful misfeasance, bad faith, gross
negligence in the performance of its duties or by reckless disregard of
its obligations and duties hereunder. The Fund shall make advance
payments in connection with the expenses of defending any action with
respect to which indemnification might be sought hereunder if the Fund
receives a written affirmation of the Administrator's good faith belief
that the standard of conduct necessary for indemnification has been met
and a written undertaking to reimburse the Fund unless it is subsequently
determined that the Administrator is entitled to such indemnification and
if the Directors of the Fund determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the
following conditions must be met: (A) the Administrator shall
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provide security for this undertaking; (B) the Fund shall be insured
against losses arising by reason of any lawful advances; or (C) a
majority of a quorum consisting of Directors of the Fund who are neither
"interested persons" of the Fund (as defined in Section 2(a)(19) of the
0000 Xxx) nor parties to the proceeding ("Disinterested Non-Party
Directors") or an independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the
Administrator ultimately will be found entitled to indemnification.
(d) As used in this Paragraph 4, the term "Administrator" shall
include any affiliates of the Administrator performing services for the
Fund contemplated hereby and directors, officers, agents and employees of
the Administrator and such affiliates.
5. Activities of the Administrator. The services of the Administrator
under this Agreement are not to be deemed exclusive, and the Administrator and
any person controlled by or under common control with the Administrator shall be
free to render similar services to others.
6. Duration and Termination of this Agreement. This Agreement shall
become effective as of the date first above written and shall remain in force
until terminated as provided herein. This Agreement may be terminated at any
time, without the payment of any penalty, by the Fund on sixty days' written
notice to the Administrator and by the Administrator on ninety days' written
notice to the Fund. This Agreement shall automatically terminate in the event of
its assignment.
7. Amendments of this Agreement. This Agreement may be amended by the
parties hereto only if such amendment is specifically approved by the Board of
Directors of the Fund and such amendment is set forth in a written instrument
executed by each of the parties hereto.
8. Governing Law. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of New York as at the
time in effect and the applicable provisions of the 1940 Act. To the extent that
the applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
9. Counterparts. This Agreement may be executed by the parties hereto
in counterparts and if executed in more than one counterpart the separate
instruments shall constitute one agreement.
10. Notices. Any notice under this Agreement, shall be in writing and
shall be deemed to be received on the earlier of the date actually received or
on the tenth day after the postmark if such notice is mailed first class with
postage prepaid. Notice shall be addressed: (a) if to the Administrator, to:
President, Princeton Administrators, Inc., X.X. Xxx 0000, Xxxxxxxxx, Xxx Xxxxxx
00000-0000; or (b) if to the Fund, to: President, The First Commonwealth Fund,
Inc., c/o EquitiLink International Management Limited, Xxxxx Xxxxx, Xxxxx
Xxxxxx, Xx. Xxxxxx, Xxxxxx, Xxxxxxx Xxxxxxx.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
THE FIRST COMMONWEALTH FUND, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
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Title: President
PRINCETON ADMINISTRATORS, INC.
By: /s/ Xxxxxxx Xxxxxx
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Title: Executive Vice President
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