Exhibit (h)(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of ______,
2004, by and between The Vantage Funds, Inc., a Massachusetts business Trust
(the "Trust"), and Stellar Financial, Inc., a Delaware corporation ("Stellar
Financial").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company, and
is authorized to issue shares of common stock in separate series, with each such
series representing interests in a separate portfolio of securities and other
assets;
WHEREAS, Stellar Financial is, among other things, in the business of
providing fund administration services for the benefit of its customers; and
WHEREAS, the Trust desires to retain Stellar Financial to provide fund
administration services for each series of the Trust listed on Exhibit A hereto
(as amended from time to time) (each, a "Fund" and collectively, the "Funds").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Appointment of Stellar Financial as Administrator
The Trust hereby appoints Stellar Financial as administrator of the Trust
on the terms and conditions set forth in this Agreement, and Stellar
Financial hereby accepts such appointment and agrees to perform the
services and duties set forth in this Agreement.
2. Services and Duties of Stellar Financial
Stellar Financial shall provide the following fund administration services
for the Funds, including but not limited to:
A. General Fund Management:
(1) Act as liaison among all service providers to the Funds.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in Stellar Financial's
or its affiliate's own offices).
c. Non-investment-related statistical and research data as
needed.
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(3) Coordinate the Trust's Trustees' communications, such as:
a. Establish meeting agendas
b. Prepare reports for the Board of Trustee based on
financial and administrative data.
c. Evaluate the independent auditor of the Trust.
d. Secure and monitor fidelity bond and Trustee and officer
liability coverage, and make the necessary Securities
and Exchange Commission (the "SEC") filings relating
thereto.
e. Prepare minutes of meetings of the Trustees and
shareholders of each Fund.
f. Recommend dividend declarations to the Trustees, prepare
and distribute to appropriate parties notices announcing
declarations of dividends and other distributions to
shareholders.
g. Provide personnel to serve as officers of the Trust if
so elected by the Trustees, attend Trustees' meetings
and present materials for Trustees review at such
meetings.
(4) Audits:
a. Prepare appropriate schedules and assist independent
auditors.
b. Provide information to the SEC and facilitate the audit
process.
c. Provide office facilities.
(5) Assist in overall operations of the Funds.
(6) Pay each Fund's expenses upon written authorization from the
Trust.
(7) Monitor arrangements under shareholder services or similar
plans.
B. Compliance:
(1) Regulatory Compliance:
a. Monitor compliance with the 1940 Act requirements, including:
(i) Asset diversification tests
(ii) Total return and SEC yield calculations.
(iii) Maintenance of books and records under Rule 31a-3.
(iv) Code of Ethics requirements for the disinterested
Trustees of the Fund.
b. Monitor each Fund's compliance with the policies and
investment limitations of the Trust as set forth in its
current prospectus (the "Prospectus") and statement of
additional information (the "SAI").
c. Maintain awareness of applicable regulatory and operational
service issues and recommend dispositions.
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(2) Blue Sky Compliance:
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings relating
to the qualification of the securities of the Trust, each
Fund, or class of shares of a Fund, as applicable, so as to
enable the Trust to make a continuous offering of its shares
in all states.
b. Monitor status and maintain registrations in each state.
c. Provide information regarding material developments in state
securities regulation.
(3) SEC Registration and Reporting:
a. Assist Fund counsel to the Trust or individual Funds in
updating the Prospectus and SAI and in preparing proxy
statements and Rule 24f-2 notices.
b. Prepare and file annual and semiannual reports, Form N-SAR
filings and Rule 24f-2 notices.
c. Coordinate the printing, filing and mailing of publicly
disseminated Prospectuses and reports, and amendments and
supplements thereto.
d. File fidelity bonds under Rule 17g-1.
e. File shareholder reports under Rule 30b2-1.
f. Monitor sales of each Fund's shares and ensure that such
shares are properly registered or qualified, as applicable,
with the SEC and the appropriate state authorities.
(4) IRS Compliance:
a. Monitor the Trust's status as a regulated investment company
under Subchapter M, including without limitation, review of
the following:
(i) Asset diversification requirements.
(ii) Qualifying income requirements.
(iii) Distribution requirements.
b. Calculate required distributions (including excise tax
distributions).
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C. Financial Reporting:
(1) Provide financial data required by each Fund's Prospectus and SAI.
(2) Prepare financial reports for officers, shareholders, tax
authorities, performance reporting companies, the Board of Trustees,
the SEC, and independent auditors.
(3) Supervise the Trust's custodian and accountants for each Fund in the
maintenance of the Trust's general ledger and in the preparation of
each Fund's financial statements, including oversight of expense
accruals and payments, of the determination of net asset value of
the Trust's net assets and of the Trust's shares, and of the
declaration and payment of dividends and other distributions to
shareholders.
(4) Compute the yield, total return and expense ratio of each class of
each Fund, and each Fund's portfolio turnover rate.
(5) Monitor the expense accruals and notify the Trust's management of
any proposed adjustments.
(6) Prepare monthly financial statements, which include, without
limitation, the following items:
a. Schedule of Investments.
b. Statement of Assets and Liabilities.
c. Statement of Operations.
d. Statement of Changes in Net Assets.
e. Cash Statement.
f. Schedule of Capital Gains and Losses.
g. Prepare quarterly broker security transaction summaries.
D. Tax Reporting:
(1) Prepare and file on a timely basis appropriate federal and state tax
returns including, without limitation, Forms 1120/8610 with any
necessary schedules.
(2) Prepare state income breakdowns where relevant.
(3) File Form 1099 Miscellaneous for payments to Trustees and service
providers.
(4) Monitor wash sale losses.
(5) Calculate eligible dividend income for corporate shareholders.
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3. Compensation
Stellar Financial shall be compensated for providing the services set
forth in this Agreement in accordance with the fee schedule set forth on
Exhibit B hereto (as amended from time to time). The Trust shall pay all
fees and reimbursable expenses within thirty (30) calendar days following
receipt of the billing notice, except for any fee or expense subject to a
good faith dispute. The Trust shall notify Stellar Financial in writing
within thirty (30) calendar days following receipt of each invoice if the
Trust is disputing any amounts in good faith. The Trust shall settle such
disputed amounts within ten (10) calendar days of the day on which the
parties agree to the amount to be paid. With the exception of any fee or
expense the Trust is disputing in good faith as set forth above, unpaid
invoices shall accrue a finance charge of one and one-half percent (1
1/2%) per month, after the due date. Notwithstanding anything to the
contrary, amounts owed by the Trust to Stellar Financial shall only be
paid out of the assets and property of the particular Fund involved.
4. Indemnification; Limitation of Liability
A. Stellar Financial shall exercise reasonable care in the performance
of its duties under this Agreement. Stellar Financial shall not be
liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with matters to which this
Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond
Stellar Financial's control, except a loss arising out of or
relating to Stellar Financial's refusal or failure to comply with
the terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this
Agreement, if Stellar Financial has exercised reasonable care in the
performance of its duties under this Agreement, the Trust shall
indemnify and hold harmless Stellar Financial from and against any
and all claims, demands, losses, expenses, and liabilities of any
and every nature (including reasonable attorneys' fees) which
Stellar Financial may sustain or incur or which may be asserted
against Stellar Financial by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder, except for any and all claims, demands, losses, expenses,
and liabilities arising out of or relating to Stellar Financial's
refusal or failure to comply with the terms of this Agreement or
from bad faith, negligence or from willful misconduct on its part in
performance of its duties under this Agreement, (i) in accordance
with the foregoing standards, or (ii) in reliance upon any written
or oral instruction provided to Stellar Financial by any duly
authorized officer of the Trust, such duly authorized officer to be
included in a list of authorized officers furnished to Stellar
Financial and as amended from time to time in writing by resolution
of the Trustees.
B. Stellar Financial shall indemnify and hold the Trust harmless from
and against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable attorneys'
fees) that the Trust may sustain or incur or that may be asserted
against the Trust by any person arising out of any action taken or
omitted to be taken by Stellar Financial as a result of Stellar
Financial's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
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C. In the event of a mechanical breakdown or failure of communication
or power supplies beyond its control, Stellar Financial shall take
all reasonable steps to minimize service interruptions for any
period that such interruption continues beyond Stellar Financial's
control. Stellar Financial will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting
from such a breakdown at the expense of Stellar Financial. Stellar
Financial agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of
the Trust shall be entitled to inspect Stellar Financial's premises
and operating capabilities at any time during regular business hours
of Stellar Financial, upon reasonable notice to Stellar Financial.
Notwithstanding the above, Stellar Financial reserves the right to
reprocess and correct administrative errors at its own expense.
D. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is
further understood that the indemnitee will use all reasonable care
to notify the indemnitor promptly concerning any situation that
presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim that may be the subject of this
indemnification. In the event that the indemnitor so elects, it will
so notify the indemnitee and thereupon the indemnitor shall take
over complete defense of the claim, and the indemnitee shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall
in no case confess any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify the indemnitee,
except with the indemnitor's prior written consent.
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5. Proprietary and Confidential Information
Stellar Financial agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust and
prior, present, or potential shareholders of the Trust (and clients of
said shareholders), and not to use such records and information for any
purpose other than the performance of its responsibilities and duties
hereunder, 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 Stellar Financial 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.
Further, Stellar Financial will adhere to the privacy policies adopted by
the Trust pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be
modified from time to time (the "Act"). Notwithstanding the foregoing,
Stellar Financial will not share any nonpublic personal information
concerning any of the Trust's shareholders to any third party unless
specifically directed by the Trust or allowed under one of the exceptions
noted under the Act.
6. Term of Agreement; Amendment
This Agreement shall become effective as of the date first written above
and will continue in effect for a period of one year. Subsequent to the
initial one-year term, unless sooner terminated as provided herein, this
Agreement shall continue automatically in effect for successive annual
periods. This Agreement may be terminated by either party upon giving
ninety (90) days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. However, this Agreement
may be amended by mutual written consent of the parties.
7. Records
Stellar Financial shall keep records relating to the services to be
performed hereunder in the form and manner, and for such period, as it may
deem advisable and is agreeable to the Trust, but not inconsistent with
the rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. Stellar
Financial agrees that all such records prepared or maintained by Stellar
Financial relating to the services to be performed by Stellar Financial
hereunder are the property of the Trust and will be preserved, maintained,
and made available in accordance with such applicable sections and rules
of the 1940 Act and will be promptly surrendered to the Trust in
accordance with its request.
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8. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York, without regard to conflicts of law principles. To the extent
that the applicable laws 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, and nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or order of the SEC
thereunder.
9. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
Stellar Financial's duties or responsibilities hereunder is designated by
the Trust by written notice to Stellar Financial, Stellar Financial will
promptly, upon such termination and at the expense of the Trust, transfer
to such successor all relevant books, records, correspondence, and other
data established or maintained by Stellar Financial under this Agreement
in a form reasonably acceptable to the Trust (if such form differs from
the form in which Stellar Financial has maintained, the Trust shall pay
any expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Stellar Financial's personnel in the
establishment of books, records, and other data by such successor.
10. No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower Stellar
Financial to act as agent for the other party to this Agreement, or to
conduct business in the name, or for the account, of the other party to
this Agreement.
11. Data Necessary to Perform Services
The Trust or its agent shall furnish to Stellar Financial the data
necessary to perform the services described herein at such times and in
such form as mutually agreed upon. If Stellar Financial is also acting in
another capacity for the Trust, nothing herein shall be deemed to relieve
Stellar Financial of any of its obligations in such capacity.
12. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other party.
13. Notices
Any notice required or permitted to be given by either party to the other
shall be in writing and shall be deemed to have been given on the date
delivered personally or by courier service, or three (3) days after sent
by registered or certified mail, postage prepaid, return receipt
requested, or on the date sent and confirmed received by facsimile
transmission to the other party's address set forth below:
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Notice to Stellar Financial shall be sent to:
Stellar Financial, Inc.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
and notice to the Trust shall be sent to:
The Vantage Funds
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
14. Acknowledgment of Disclaimer of Liability.
Stellar Financial acknowledges that the Declaration of Trust of the Trust
states that all persons extending credit to, contracting with or having any
claim against the Trust or a particular series of sharesof the Trust shall look
only to the assets of the Trust or the assets of that particular series of
shares for payment under such credit, contract or claim; and neither the
shareholders nor the trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally liable therefor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.
THE VANTAGE FUNDS STELLAR FINANCIAL, INC.
By: _______________ By: ___________________________
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Exhibit A
to the
Administration Agreement
Separate Series of Vantage Funds
Name of Series Date Added
--------------------------------------------------------------------------------
Vantage Money Market Fund __________, 2004
Vantage Balance Fund __________, 2004
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Exhibit B
to the
Administration Agreement
Annual fee based upon average assets:
10 basis points on first $200 million
5 basis points on next $500 million
3 basis points on the balance
Minimum monthly fee: $2,000
Plus out-of pocket expense reimbursements, including, but not limited to:
Proxies
Special reports
Printing of Annual Prospectus, SAI, Annual and Semi-Annual Reports
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of trustees meetings
Auditing expenses
Legal expenses
Fees and out-of-pocket expense reimbursements are billed monthly
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