FUND ACCOUNTING
AND COMPLIANCE ADMINISTRATION
AGREEMENT
THIS AGREEMENT, made and entered into as of the 23rd day of SEPTEMBER, 1998, by
and between NOTTINGHAM INVESTMENT TRUST II, a Massachusetts business trust (the
"trust"), and THE NOTTINGHAM COMPANY, INC., a North Carolina corporation (the
"Administrator").
WHEREAS, the trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Administrator is in the business of providing administrative
services to investment companies.
NOW THEREFORE, the trust and the Administrator do mutually promise and agree as
follows:
1. Employment. The trust hereby employs the Administrator, The Nottingham
Company ("TNC"), to act as fund accountant and fund administrator for
each fund of the trust. Administrator, at its own expense, shall render
the services and assume the obligations herein set forth subject to
being compensated therefore as herein provided.
2. Delivery of Documents. The trust has furnished the Administrator with
copies properly certified or authenticated of each of the following:
a) The trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as
it shall from time to time be amended, is herein called the
"Declaration");
b) The trust's by-laws (such by-laws, as presently in effect and
as they shall from time to time be amended, are herein called
the "by-laws");
c) Resolutions of the trust's board of trustees authorizing the
appointment of the Administrator and approving this Agreement;
and
d) The trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the
"1933 Act"), including all exhibits, relating to shares of
beneficial interest of, and containing the Prospectus of, each
fund of the trust (herein called the "Shares") as filed with
the Securities and Exchange Commission and all amendments
thereto.
The trust will furnish the Administrator with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Administrator. Subject to the policies and direction of
the trust's board of trustees, the Administrator will provide a
continuous executive management program and day to day supervision for
each of the trust's funds. Services to be provided shall be in
accordance with the trust's organizational and registration documents
as listed in paragraph 2 hereof and with the Prospectus of each fund of
the trust. The Administrator further agrees that it:
a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will, in addition,
conduct its activities under this Agreement in accordance with
regulations of any other Federal and State agencies which may
now or in the future have jurisdiction over its activities;
b) will maintain, except as may be required to be maintained by
third parties hired by the trust under Rule 31a-3 of the 1940
Act, the account books and records of the trust and each fund
of the trust as required by Rule 31a-1 of the 1940 Act and
will preserve such records in accordance with Rule 31a-2 of
the 1940 Act;
c) will provide, at its expense, the necessary non-executive
personnel and data processing equipment and software to
perform the Portfolio Accounting Services, Expense Accrual and
Payment Services, fund Valuation and Financial Reporting
Services (with the exception of pricing data services as
specified in Exhibit B), Tax Accounting Services, Compliance
Control Services, Registration Services, SEC Filing Services,
and Proxy Material Services shown on Exhibit A hereof;
d) will provide, at its expense, certain executive personnel for
the trust as may be agreed upon from time to time with the
board of trustees; and
e) will provide all office space and general office equipment
necessary for the activities of the trust except as may be
provided by third parties pursuant to separate agreements with
the trust.
Notwithstanding anything contained in this Agreement to the contrary, the
Administrator (including its directors, officers, employees and agents) shall
not be required to perform any of the duties of, assume any of the obligations
or expenses of, or be liable for any of the acts or omissions of, any investment
advisor of a fund of the trust or other third party subject to separate
agreements with the trust. The Administrator shall not be responsible hereunder
for the administration of the Code of Ethics of the trust which shall be under
the responsibility of the investment advisors, except insofar as the Code of
Ethics applies to the personnel of the Administrator. It is the express intent
of the parties hereto that the Administrator shall not have control over or be
responsible for the placement, investment or reinvestment of the assets of any
fund of the trust. The Administrator may from time to time, subject to the
approval of the trustees (other than with respect to TNC), obtain at its own
expense the services of consultants or other third parties to perform part or
all of its duties hereunder, and such parties may be affiliates of the
Administrator.
4. Services Not Exclusive. The management and administrative services
furnished by the Administrator hereunder are not to be deemed
exclusive, and the Administrator shall be free to furnish similar
services to others so long as its services under this Agreement are not
impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Administrator hereby agrees that all records
which it maintains for the trust are the property of the trust and
further agrees to surrender promptly to the trust any of such records
upon the trust's request.
6. Expenses. During the term of this Agreement, the Administrator will pay
all expenses incurred by it in connection with the performance of its
obligations under this Agreement.
Notwithstanding the foregoing, the trust shall pay the expenses and
costs of the following:
a) Taxes
b) Brokerage fees and commissions with regard to portfolio
transaction of the funds
c) Interest charges, fees and expenses of the custodian of the
funds' portfolio securities
d) Fees and expenses of the trust's dividend disbursing and
transfer agent
e) Fees and expenses of the trust's fund accounting agent and
administrator, in accordance with paragraph 7 herein
f) Costs, as may be allocable to and agreed upon in advance by
the trustees and the Administrator, of all non-executive and
clerical personnel and all data processing equipment and
software in connection with the provision of fund accounting
and recordkeeping services functions as contemplated herein
g) Auditing and legal expenses of the trust
h) Cost of maintenance of the trust's existence as a legal entity
i) Cost of special forms, stationery and telephone services (but
not telephone equipment) for the trust;
j) Compensation of independent trustees who are not interested
persons of the trust as that term is defined by law
k) Costs of trust meetings
l) Federal and state registration fees and expenses
m) Costs of setting in type, printing and mailing prospectuses,
reports and notices to existing shareholders
n) Advisory fees payable to each funds' investment advisor
o) Direct out-of-pocket costs in connection with trust
activities, such as the costs of long distance telephone and
wire charges, postage and the printing of special forms and
stationery, copying charges, financial publications used in
connection with trust activities, etc., and
p) Other actual out-of-pocket expenses of the Administrator as
may be agreed upon in writing from time to time by the
Administrator and the trustees
7. Compensation. For the services provided and the expenses assumed by the
Administrator pursuant to this Agreement, the trust will pay the
Administrator and the Administrator will accept as full compensation
the administrative fees and expenses as set forth on Exhibit B attached
hereto. Special projects, not included herein and requested in writing
by the trustees, shall be completed by the Administrator and invoiced
to the trust as mutually agreed upon.
8.(a) Limitation of Liability. The Administrator shall not be liable for
any loss, damage or liability related to or resulting from the
placement, investment or reinvestment of assets in any fund of the
trust or the acts or omissions of any fund's investment advisor or any
other third party subject to separate agreements with the trust.
Further, the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss or damage suffered by the
trust in connection with the performance of this Agreement or any
agreement with a third party, except a loss resulting directly from (i)
a breach of fiduciary duty on the part of the Administrator with
respect to the receipt of compensation for services; or (ii) willful
misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless
disregard by it of its duties under this Agreement.
(b) Indemnification of Administrator. Subject to the limitations set forth
in this Subsection 8(b), the trust shall indemnify, defend and hold
harmless (from the assets of the fund or funds to which the conduct in
question relates) the Administrator against all loss, damage and
liability, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Administrator in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, related to or resulting
from this Agreement or the performance of services hereunder, except
with respect to any matter as to which it has been determined that the
loss, damage or liability is a direct result of (i) a breach of
fiduciary duty on the part of the Administrator with respect to the
receipt of compensation for services; or (ii) willful misfeasance, bad
faith or gross negligence on the part of the Administrator in the
performance of its duties or from reckless disregard by it of its
duties under this Agreement (either and both of the conduct described
in clauses (i) and (ii) above being referred to hereinafter as
"Disabling Conduct"). A determination that the Administrator is
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought
that the Administrator was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding
against the Administrator for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of
the facts, that the Administrator was not liable by reason of Disabling
Conduct by, (a) vote of a majority of a quorum of trustees who are
neither "interested persons" of the trust as the quoted phrase is
defined in Section 2(a)(19) of the 1940 Act nor parties to the action,
suit or other proceeding on the same or similar grounds that is then or
has been pending or threatened (such quorum of such trustees being
referred to hereinafter as the "Independent trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Administrator (but
excluding amounts paid in satisfaction of judgments, in compromise or
as fines or penalties), shall be paid from time to time by the fund or
funds to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Administrator shall have undertaken to repay the amounts so paid unless
it is ultimately determined that it is entitled to indemnification of
such expenses under this Subsection 8(b) and if (i) the Administrator
shall have provided security for such undertaking, (ii) the trust shall
be insured against losses arising by reason of any lawful advances, or
(iii) a majority of the Independent trustees, or an independent legal
counsel in a written opinion, shall have determined, 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 entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the
Administrator referred to in this Subsection 8(b), pursuant to a
consent decree or otherwise, no such indemnification either for said
payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of the Independent
trustees or (ii) by an independent legal counsel in a written opinion.
Approval by the Independent trustees pursuant to clause (i) shall not
prevent the recovery from the Administrator of any amount paid to the
Administrator in accordance with either of such clauses as
indemnification of the Administrator is subsequently adjudicated by a
court of competent jurisdiction not to have acted in good faith in the
reasonable belief that the Administrator's action was in or not opposed
to the best interests of the trust or to have been liable to the trust
or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in its conduct
under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not
be exclusive of or affect any of the rights to which the Administrator
may be entitled. Nothing contained in this Subsection 8(b) shall affect
any rights to indemnification to which trustees, officers or other
personnel of the trust, and other persons may be entitled by contract
or otherwise under law, nor the power of the trust to purchase and
maintain liability insurance on behalf of any such person.
The board of trustees of the trust shall take all such action as may be
necessary and appropriate to authorize the trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the
Administrator is entitled to indemnification hereunder and the
reasonable amount of any indemnity due it hereunder, or employ
independent legal counsel for that purpose.
8.(c) The provisions contained in Section 8 shall survive the expiration
or other termination of this Agreement, shall be deemed to include and
protect the Administrator and its directors, officers, employees and
agents and shall inure to the benefit of its/their respective
successors, assigns and personal representatives.
9. Duration and Termination. This Agreement shall become effective as of
the date hereof and shall thereafter continue in effect unless
terminated as herein provided. This Agreement may be terminated by
either party hereto at any time by giving not less than 60 days' prior
written notice to the other party hereto. If such termination is `with
cause', then such termination is without penalty. The Administrator
will charge a full month's fees for the period during which all records
are transferred, plus appropriate out of pocket expenses. If such
termination is without cause, a fee equal to one-fourth of the most
recent annual fee paid by each fund of the trust shall be paid to the
Administrator for its services during the transition. Upon termination
of this Agreement, the trust shall pay to TNC such compensation as may
be due as of the date of such termination, and shall likewise reimburse
TNC for any out-of-pocket expenses and disbursements reasonably
incurred by TNC to such date.
10. Amendment. This Agreement may be amended by mutual written consent of
the parties. If, at any time during the existence of this Agreement,
the trust deems it necessary or advisable in the best interests of the
trust that any amendment of this Agreement be made in order to comply
with the recommendations or requirements of the Securities and Exchange
Commission or state regulatory agencies or other governmental
authority, or to obtain any advantage under state or federal laws, and
shall notify the Administrator of the form of Amendment which it deems
necessary or advisable and the reasons therefor, and if the
Administrator declines to assent to such amendment, the trust may
terminate this Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed
or delivered, or mailed postpaid to the other party at the principal
place of business of such party.
12. Construction. This Agreement shall be governed and enforced in
accordance with the laws of the State of North Carolina. If any
provision of this Agreement, or portion thereof, shall be determined to
be void or unenforceable by any court of competent jurisdiction, then
such determination shall not affect any other provision of this
Agreement, or portion thereof, all of which other provisions and
portions thereof shall remain in full force and effect. If any
provision of this Agreement, or portion thereof, is capable of two
interpretations, one of which would render the provision, or portion
thereof, void and the other of which would render the provision, or
portion thereof, valid, then the provision, or portion thereof, shall
have the meaning which renders it valid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
NOTTINGHAM INVESTMENT TRUST II
By: /S/ Xxxx X. Xxxxxxx (SEAL)
___________________________
THE NOTTINGHAM COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxx, III (SEAL)
____________________________
Exhibit A
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FUND ACCOUNTING AND RECORDKEEPING SERVICES
Portfolio Accounting Services:
------------------------------
(1) Maintain portfolio records using security trade information
communicated from the investment manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing source approved
by the board of trustees and apply those prices to the portfolio
positions. For those securities where market quotations are not readily
available, the board of trustees shall approve, in good faith, the
method for determining the fair market value for such securities.
(3) Identify interest and dividend accrual balances as of each valuation
date.
(4) Determine gain/loss on security sales. Account for periodic
distributions of gain to shareholders and maintain undistributed gain
or loss balances as of each valuation date.
Expense Accrual and Payment Services:
-------------------------------------
(5) For each valuation date, calculate the expense accrual amounts as
directed by the trust as to methodology, rate, or dollar amount.
(6) Issue payments for fund expenses upon receipt of funds from the trust's
custodian.
(7) Account for fund expenditures and maintain expense accrual balances at
the level of accounting detail specified by the fund.
(8) Support periodic expense accrual review, i.e., comparison of actual
expense activity versus accrual amounts.
(9) Provide expense accrual and payment reporting.
Fund Valuation and Financial Reporting Services:
------------------------------------------------
(10) Account for fund share purchases, sales, exchanges, transfers, dividend
reinvestments, and other fund share activity, for each of the funds, as
reported by the trust on a timely basis.
(11) Determine net investment income (earnings) for each of the funds as of
each valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances
as of each valuation date.
(12) Maintain a general ledger for each of the funds in the form defined by
the trust and assist in producing a set of financial statements as may
be agreed upon from time to time as of each valuation date.
(13) For each day the funds are opened as defined in the prospectuses,
determine the net asset value of each of the funds according to the
accounting policies and procedures set forth in the prospectuses.
(14) Calculate per share net asset value, per share net earnings, and other
per share amounts reflective of fund operation at such time as required
by the nature and characteristics of the funds. Perform the
calculations using the number of shares outstanding reported by the
trust to be applicable at the time of calculation.
(15) Communicate, at an agreed upon time, the per share price for each
valuation date to parties as agreed upon from time to time.
(16) Prepare monthly reports which document the adequacy of accounting
detail to support month-end ledger balances.
Tax Accounting Services:
------------------------
(17) Maintain tax accounting records for each of the funds' investment
portfolios so as to support tax reporting required for IRS defined
regulated investment companies.
(18) Maintain tax lot detail for the investment portfolio.
(19) Calculate taxable gain/loss on security sales using the tax cost basis
defined for each fund.
(20) Report the taxable components of income and capital gains distributions
to the trust to support tax reporting to the shareholders.
Compliance Control Services:
----------------------------
(21) Maintain accounting records to support compliance monitoring by the
trust.
(22) Support reporting to regulatory bodies and support financial statement
preparation by making the fund accounting records available to the
trust, the Securities and Exchange Commission, and the outside
auditors.
(23) Maintain accounting records according to the Investment Company Act of
1940 and regulations provided thereunder.
Registration Services:
----------------------
(24) Assist in the preparation of all reports and filings required to
maintain the registration and qualification of the fund and its shares
under federal and state securities laws, including the annual amendment
to its Registration Statement on From N-1A containing an updated
Prospectus and Statement of Additional Information.
SEC Filing Services:
--------------------
(25) Assist in the preparation of periodic SEC filings, including Form
N-SAR, annual and semi-annual shareholder reports, other shareholder
reports, and fidelity bond amendments but not including preparation and
filing of any sales literature and preparation of President's letter
contained in shareholder reports.
Proxy Material Services:
------------------------
(26) Assist in the preparation of any proxy material and related shareholder
meetings and records.
Exhibit B
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ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING AND COMPLIANCE ADMINISTRATION
AGREEMENT, the Administrator shall be compensated monthly, as of the last day of
each month, within five business days of the month end, a base fee plus a fee
based upon net assets according to the following schedule. The fee is calculated
based upon the average daily net assets of each fund:
Base fee: $2,000 per month
--------
Class Fee: $ 750 per month for each additional Class
---------
Asset based fee:
---------------
Equity and Balanced funds
Annual
Net Assets Fee
-------------------- ------
On the first $50 million 0.175%
On the next $50 million 0.150%
On the next $50 million 0.125%
On all assets over $150 million 0.100%
Fixed Income funds
On all assets 0.125%
Securities pricing:
------------------
$0.20 per equity per pricing day priced
$0.70 per foreign security per pricing day
$0.20 per U.S. Treasury
$1.00 per asset backed security per pricing day
$0.40 per corporate bond per pricing day
$2.00 per equity per month for corporate action
Blue Sky administration:
-----------------------
$160 per registration per state per year
Minimum Aggregate Fee:
---------------------
Minimum fee of $4,000 per fund of the trust per month for all fees paid
to the Administrator (excluding securities pricing and blue sky
administration), analyzed monthly.
