EXHIBIT (h)(1)
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 1st day of November, 2002, by and
between Choice Funds, a Delaware business trust (the "Trust"), and UMB
Fund Services, Inc., a Wisconsin corporation (the "Administrator").
WHEREAS, the Trust is an open-end investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act") and
is authorized to issue shares of beneficial interest (the "Shares") in
separate series with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust and the Administrator desire to enter into an
agreement pursuant to which the Administrator shall provide
administration and fund accounting services to such investment portfolios
of the Trust as are listed on Schedule A hereto and any additional
investment portfolios the Trust and Administrator may agree upon and
include on Schedule A as such Schedule may be amended from time to time
(such investment portfolios and any additional investment portfolios are
individually referred to as a "Fund" and collectively, the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and
agreements 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
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The Trust hereby appoints the Administrator as administrator and
fund accountant of the Funds for the period and on the terms set forth in
this Agreement. The Administrator accepts such appointment and agrees to
render the services herein set forth, for the compensation herein
provided.
2. Services as Administrator
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(a) In performing its duties, the Administrator will act under the
direction and control of the Trust's Board of Trustees and in accordance
with the Trust's Agreement and Declaration of Trust, By-Laws,
Registration Statement and in compliance with the requirements of the
1940 Act and all other applicable federal or state laws and will consult
with legal counsel to the Trust as necessary and appropriate. The
expense of legal counsel will be the responsibility of the Trust. The
duties of the Administrator shall be confined to those expressly set
forth herein, and no implied duties are assumed by or may be asserted
against the Administrator hereunder In conformance with the foregoing
and utilizing information provided by the Trust and its agents, the
Administrator will:
(1) provide office space, facilities, equipment and personnel
to carry out its services hereunder;
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(2) compile data for and prepare with respect to the Funds
timely Notices to the Securities and Exchange Commission (the
"Commission") required pursuant to Rule 24f-2 under the 1940 Act and
Semi-Annual Reports on Form N-SAR;
(3) assist in the preparation for execution by the Trust and
file for all Funds and the Trust all federal income and excise tax
returns and state income tax returns (and such other required tax filings
as may be agreed to by the parties) other than those required to be made
by the Trust's custodian or transfer agent, subject to review and
approval of the Trust and the Trust's independent accountants;
(4) prepare the financial statements (including footnotes to
financial statements) for the Annual and Semi-Annual Reports required
pursuant to Section 30(d) under the 1940 Act;
(5) assist the Trust's legal counsel in the preparation of the
Registration Statement for the Trust (on Form N-1A or any replacement
therefor) and any pre- or post-effective amendments thereto, and file the
same;
(6) determine and periodically monitor each Fund's income and
expense accruals and cause all appropriate expenses to be paid from Trust
assets on proper authorization from the Trust;
(7) calculate daily net asset values and income factors of each
Fund;
(8) maintain all general ledger accounts and related
subledgers;
(9) perform security valuations;
(10) assist in the acquisition of the Trust's fidelity bond
required by the Act, monitor the amount of the bond and make the
necessary Commission filings related thereto;
(11) from time to time as the Administrator deems appropriate,
check each Fund's compliance with the policies and limitations of each
Fund relating to the portfolio investments as set forth in the Prospectus
and Statement of Additional Information and monitor each Fund's status as
a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, as amended (but these functions shall not relieve the
Trust's investment adviser and sub-advisers, if any, of their primary
day-to-day responsibility for assuring such compliance);
(12) maintain, and/or coordinate with the other service
providers the maintenance of, the accounts, books and other documents
required pursuant to Rule 31a-1(a) and (b) under the 1940 Act for periods
proscribed by Rule 31a-2 under the 1940 Act during the term of this
Agreement;
(13) prepare and/or file securities registration compliance
filings with appropriate state authorities so as to enable each Fund to
make a continuous offering of its shares in the states identified by the
Trust in a written instruction to the Administrator, with the advice of
the Trust's legal counsel;
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(14) develop with legal counsel and secretary of the Trust an
agenda for each board meeting and, if requested by the Trustees, attend
all regular and special board meetings and prepare and distribute minutes
of such meetings;
(15) prepare Form 1099s for Trustees and other Trust vendors;
(16) calculate dividend and capital gains distributions subject
to review and approval by the Trust and its independent accountants; and
(17) generally assist in the Trust's administrative operations
as mutually agreed to by the parties.
(b) The Trustees of the Trust shall cause the officers, investment
adviser, legal counsel, independent accountants, transfer agent and
custodian for the Funds to cooperate with the Administrator and to
provide the Administrator, upon request, with such information, documents
and advice relating to the Funds and the Trust as is within the
possession or knowledge of such persons, in order to enable the
Administrator to perform its duties hereunder. In connection with its
duties hereunder, the Administrator shall be entitled to rely, and shall
be held harmless by the Trust when acting in reliance, upon the
instruction, advice, information or any documents relating to the Funds
provided to the Administrator by an officer or representative of the
Funds or by any of the aforementioned persons. The Administrator shall be
entitled to rely on any document which it reasonably believes to be
genuine and to have been signed or presented by the proper party. Fees
charged by such persons shall be an expense of the Trust. The
Administrator shall not be held to have notice of any change of authority
of any officer, agent, representative or employee of the Trust until
receipt of written notice thereof from the Trust.
(c) 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. Subject to the terms of Section 6, the Administrator further
agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records described in (a) above which are maintained by the
Administrator for the Trust.
(d) It is understood that in determining security valuations, the
Administrator employs one or more pricing services to determine
valuations of portfolio securities for purposes of calculating net asset
values of the Funds. The Administrator shall identify to the Trust and
the Board of Trustees any such pricing service utilized on behalf of the
Trust. The Administrator is authorized to rely on the prices provided by
such service(s) or by the Funds' investment adviser or other authorized
representative of the Funds, and shall not be liable for losses to the
Trust or its securityholders as a result of its reliance on the
valuations provided by the approved pricing service(s) or the
representative.
(e) The Trust's Board of Trustees and the Funds' investment adviser
have and retain primary responsibility for all compliance matters
relating to the Funds, including, but not limited to, compliance with the
Investment Company Act of 1940, as amended, the Internal Revenue Code of
1986, as amended, and the policies and limitations of each Fund relating
to the portfolio investments as set forth
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in the Prospectus and Statement of Additional Information. The
Administrator's monitoring and other functions hereunder shall not
relieve the Board and the investment adviser of their primary day-to-day
responsibility for assuring such compliance.
3. Fees; Delegation; Expenses
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(a) In consideration of the services rendered pursuant to this
Agreement, the Trust will pay the Administrator a fee, computed daily and
payable monthly, plus out-of-pocket expenses, each as provided in
Schedule B hereto. The Trust shall also pay the Administrator for
organizational start-up services provided on behalf of the Funds as
specified in Schedule B.
(b) For the purpose of determining fees payable to the
Administrator, net asset value shall be computed in accordance with the
Trust's Prospectuses and resolutions of the Trust's Board of Trustees.
The fee for the period from the day of the month this Agreement is
entered into until the end of that month shall be pro-rated according to
the proportion which such period bears to the full monthly period. Upon
any termination of this Agreement before the end of any month, the fee
for such part of a month shall be pro-rated according to the proportion
which such period bears to the full monthly period and shall be payable
upon the date of termination of this Agreement. Should the Trust be
liquidated, merged with or acquired by another fund or investment
company, any accrued fees shall be immediately payable. Such fee as is
attributable to each Fund shall be a separate charge to each Fund and
shall be the several (and not joint or joint and several) obligation of
each such Fund.
(c) The Administrator will bear all expenses in connection with the
performance of its services under this Agreement except as otherwise
provided herein. Other costs and expenses to be incurred in the
operation of the Funds, including, but not limited to: taxes; interest;
brokerage fees and commissions, if any; salaries, fees and expenses of
officers and Trustees; Commission fees and state Blue Sky fees; advisory
fees; charges of custodians, transfer agents, dividend disbursing and
accounting services agents; security pricing services; insurance
premiums; outside auditing and legal expenses; costs of organization and
maintenance of corporate existence; typesetting, printing, proofing and
mailing of prospectuses, statements of additional information,
supplements, notices and proxy materials for regulatory purposes and for
distribution to current shareholders; typesetting, printing, proofing and
mailing and other costs of shareholder reports; expenses in connection
with the electronic transmission of documents and information including
electronic filings with the Commission and the states: expenses
incidental to holding meetings of the Fund's shareholders and Trustees;
and any extraordinary expenses; will be borne by the Funds or their
investment adviser, as appropriate. Expenses incurred for distribution
of shares, including the typesetting, printing, proofing and mailing of
prospectuses for persons who are not shareholders of the Trust, will be
borne by the investment adviser, except for such expenses permitted to be
paid by the Trust under a distribution agreement and/or plan adopted in
accordance with applicable laws. The Administrator shall not be required
to pay any Blue Sky registration or filing fees unless and until it has
received the amount of such fees from the Trust
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4. Proprietary and Confidential Information
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The Administrator agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Trust all
records relative to the Trust and/or Funds and prior, present or future
shareholders of the Trust, and not to use such records and information
for any purpose other than 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 the Administrator may be exposed to civil or criminal
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, when subject to governmental
or regulatory audit or investigation, or when so requested by the Trust.
Records and information which have become known to the public through no
wrongful act of the Administrator or any of its employees, agents or
representatives shall not be subject to this paragraph.
5. Limitation of Liability
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(a) The Administrator shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Funds in connection
with the matters to which this Agreement relates, except for a loss
resulting from the Administrator's willful misfeasance, bad faith or
gross negligence in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
Furthermore, the Administrator shall not be liable for any action taken
or omitted to be taken in good faith in accordance with written or oral
instructions received by the Administrator from an officer or
representative of the Trust.
(b) The Administrator shall indemnify and hold the Trust, its
Trustees or its duly authorized officers harmless from and against any
and all claims, demands, losses, expenses and liability (whether with or
without basis in fact or law) of any nature (including reasonable
attorney's fees which may be asserted against any or all of them by any
person arising out of any action taken or omitted to be taken by the
Administrator as a result of the Administrator's refusal or failure to
comply with the terms of this Agreement, its willful misfeasance, bad
faith, negligence or willful misconduct, and will cooperate in the
transfer of the Administrators duties and responsibilities. The Trust on
behalf of the Funds agrees to indemnify and hold harmless the
Administrator, its officers, directors, employees, agents and nominees
from and against any and all claims, demands, losses, expenses and
liability (whether with or without basis in fact or law) of any nature
(including reasonable attorney's fees which may be asserted against any
or all of them by any person arising out of the Administrator's actions
taken or nonactions with respect to the performance of services under
this Agreement or based, if applicable, upon good faith reliance on
information, records, instructions (oral or written) or requests given or
made to the Administrator by the Trust, its officers, directors, agents
or representatives; provided that this indemnification shall not apply to
actions or omissions of the Administrator in cases of its own willful
misfeasance, bad faith, negligence or willful misconduct. The indemnity
and defense provisions provided hereunder shall indefinitely survive the
termination of this Agreement
(c) The Administrator assumes no responsibility hereunder, and
shall not be liable, for any damage, loss of data, errors, delay or any
other loss whatsoever caused by events beyond its reasonable control.
The Administrator will, however, take all reasonable steps to minimize
service interruptions for
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any period that such interruption continues beyond its control. At the
request of the Trust, the Administrator will provide to the Trust a copy
of the Administrator's current disaster recovery plan, or, at the
discretion of the Administrator, a summary thereof.
6. Term
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(a) This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to
each Fund not in existence on that date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed. If not
terminated as provided herein, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods
provided that the continuance of the Agreement is approved by the
Trustees of the Trust.
(b) This Agreement may be terminated with respect to any one or
more particular Funds without penalty (i) upon mutual consent of the
parties, or (ii) by either party upon not less than sixty (60) days'
written notice to the other party (which notice may be waived by the
party entitled to the notice). The terms of this Agreement shall not be
waived, altered, modified, amended or supplemented in any manner
whatsoever except by a written instrument signed by the Administrator and
the Trust.
(c) Notwithstanding anything herein to the contrary, upon the
termination of this Agreement or the liquidation of a Fund or the Trust,
the Administrator shall deliver all data and the records and any other
records or data established or maintained by the Administrator under this
Agreement and will cooperate in the transfer of the Administrator's
duties and responsibilities of the Fund(s) and/or Trust as the case may
be to the Trust or person(s) designated by the Trust as successor to the
Administrator and thereafter the Trust or its designee shall be solely
responsible for preserving the records for the periods required by all
applicable laws, rules and regulations. In the absence of such
designation by the Trust, upon the date specified in the notice of
termination of this Agreement and delivery of the records maintained
hereunder, the Administrator shall be relieved of all duties and
responsibilities pursuant to this Agreement. In addition, in the event
of termination of this Agreement, or the proposed liquidation or merger
of the Trust or a Fund(s), and the Trust requests the Administrator to
provide services in connection therewith, the Administrator shall provide
such services and be entitled to such compensation as the parties may
mutually agree.
7. Non-Exclusivity
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The services of the Administrator rendered to the Trust are not
deemed to be exclusive. The Administrator may render such services and
any other services to others, including other investment companies. The
Trust recognizes that from time to time directors, officers and employees
of the Administrator may serve as trustees, directors, officers and
employees of other entities (including other investment companies), that
such other entities may include the name of the Administrator as part of
their name and that the Administrator or its affiliates may enter into
investment advisory or other agreements with such other entities.
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8. Governing Law; Invalidity
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Wisconsin. To the extent that the applicable
laws of the State of Wisconsin, 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 Commission thereunder. Any
provision of this Agreement which may be determined by competent
authority to be prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability and shall not invalidate or render unenforceable such
provision in any other jurisdiction.
9. Notices
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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 when
sent by registered or certified mail, postage prepaid, return receipt
requested, as follows: Notice to the Administrator shall be sent to UMB
Fund Services, Inc., 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx X, Xxxxxxxxx, XX,
00000, Attention: General Counsel, and notice to the Trust shall be sent
to Choice Funds, 0000 XXX Xxxxxxxxx, Xxxxx 0000, Xxxxxxxxx Xxxxxxx, XX,
00000, Attention: Xxxxxxx X. Xxxxx, President.
10. Trust Limitations
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This Agreement is executed by the Trust with respect to each of the
Funds and the obligations hereunder are not binding upon any of the
trustees, officers or shareholders of the Trust individually but are
binding only upon the Fund to which such obligations pertain and the
assets and property of such Fund. All obligations of the Trust under
this Agreement shall apply only on a Fund-by-Fund basis, and the assets
of one Fund shall not be liable for the obligations of another Fund. The
Fund's Declaration of Trust is on file with the Secretary of State of
Delaware.
11. Entire Agreement
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This Agreement constitutes the entire Agreement of the parties
hereto.
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12. Counterparts
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This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original agreement but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer as of the day and year first
above written.
CHOICE FUNDS
(the "Trust")
By:__________________________________
Xxxxxxx X. Xxxxx, President
UMB FUND SERVICES, INC.
("Administrator")
By:__________________________________
Xxxxx X. Xxxxxxx, Executive Vice
President
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