Exhibit 99(2)
AMENDED AND RESTATED SUB-ADMINISTRATION AGREEMENT
AMENDED AND RESTATED SUB-ADMINISTRATION AGREEMENT made as of November
1, 2004 by and between Xxxxxx Xxxxxxx Investment Management Inc. (formerly,
Xxxxxx Xxxxxxx Asset Management Inc.) ("MSIM"), and X.X. Xxxxxx Investor
Services Co., a Delaware corporation (the "Administrator").
W I T N E S S E T H:
WHEREAS, The Xxxxxx Xxxxxxx Institutional Fund, Inc. (the "Fund") is
registered as a no-load, diversified, open-end, management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act") and
currently consists of separate operating portfolios; and
WHEREAS, MSIM is responsible for the provision of certain transfer
agent, fund accounting and administration services to the Fund pursuant to the
Agreement between MSIM and the Fund dated as of October 1, 1988 (the "MSIM
Administration Agreement") and entered into an Administration Agreement with the
Administrator (f/k/a United States Trust Company of New York), effective as of
February 24, 1992, as amended (the "Current Sub-Administration Agreement") to
provide certain services with respect to the Fund; and
WHEREAS, on the date hereof, MSIM and the Fund are entering into an
Amended and Restated Administration Agreement to remove from the MSIM
Administration Agreement provisions relating to transfer agency and dividend
disbursing services; and
WHEREAS, MSIM wishes to retain the Administrator to provide certain
fund accounting and administration services with respect to the Fund, and the
Administrator is willing to furnish such services;
WHEREAS, this Agreement amends and restates, in its entirety, the
Current Sub-Administration Agreement to remove the provisions relating to
transfer agency and dividend disbursing services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT AND DELEGATION. (a) MSIM hereby appoints the Administrator
to provide fund accounting and fund administration services for MSIM for the
benefit of the Fund, subject to the supervision of MSIM and the Board of
Directors of the Fund (the "Board"), for the period and on the terms set forth
in this Agreement. The Administrator accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Paragraph 4 of this Agreement. In the event that the Fund establishes one or
more additional portfolios with respect to which MSIM decides to retain the
Administrator to act as administrator hereunder, MSIM shall notify the
Administrator in writing. If the Administrator is willing to render such
services to a new portfolio, they shall so notify MSIM in writing whereupon such
portfolio shall become subject to the provisions of this Agreement to the same
extent as the existing portfolios of the Fund, except to the extent that said
provisions (including those relating to the compensation payable by MSIM) may be
modified with respect to such portfolio in writing by MSIM and the Administrator
at the time of the addition of such new portfolio.
2. DELIVERY OF DOCUMENTS. The Fund has furnished the Administrator with
copies, properly certified or authenticated, of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing the
appointment of the Administrator to provide certain transfer agency, fund
accounting and administration services to the Fund and approving this Agreement;
(b) The Fund's Articles of Incorporation ("Charter");
(c) The Fund's By-Laws ("By-Laws");
(d) The Fund's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Fund's current registration statement on Form N-lA (the
"Registration Statement") under the Securities Act of 1933 and the 1940 Act, as
filed with the SEC; and
2
(f) The Fund's most recent Prospectus and Statement of Additional
Information and all amendments and supplements thereto (such Prospectus and
Statement of Additional Information and supplements thereto, as presently in
effect and as from time to time hereafter amended and supplemented, herein
called the "Prospectus").
MSIM will timely furnish the Administrator from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing, if any.
3. SERVICES PROVIDED BY THE ADMINISTRATOR. The Administrator shall
discharge the following responsibilities subject to the control of MSIM and the
Fund's Board of Directors, and in compliance with the objectives, policies and
limitations set forth in the Fund's registration statement, By-Laws and
applicable laws and regulations.
A. GENERAL ADMINISTRATION. Under the direction of MSIM and the Fund's
Board of Directors, the Administrator shall manage, administer, and conduct
the general business activities of the Fund other than those which have
been contracted to third parties by the Fund. The Administrator shall
provide the personnel and facilities necessary to perform such general
business activities under the supervision of MSIM and the Fund's Board of
Directors and Executive Officers. A detailed description of these services
is included in Attachment A of this agreement.
B. FUND ACCOUNTING. The Administrator shall provide the following
accounting services to the Fund:
1) Maintenance of the books and records and accounting controls for
the Fund's assets, including records of all securities transactions;
2) Calculation and transmission of the Fund's Net Asset Value to the
NASD source for publication of prices in accordance with the prospectus and
to such other entities as directed by MSIM;
3
3) Accounting for dividends and interest received and distributions
made by the Fund;
4) Preparation and filing of the Fund's tax returns and Semi-Annual
Reports;
5) Production of transaction data, financial reports and such other
periodic and special reports as the Board of Directors of the Fund may
reasonably request;
6) The preparation of financial statements for the semi-annual and
annual reports and other shareholder communications;
7) Liaison with the Fund's independent registered public accounting
firms; and
8) Monitoring and administration of arrangements with the Fund's
custodian and depository banks.
A descriptions of reports that will be available to the Fund is
included in Attachment A of this Agreement.
The Administrator will also:
(a) Provide office facilities (which may be in the offices of the
Administrator or a corporate affiliate of them, but shall be in such location as
the Fund shall reasonably approve) and the services of a principal financial
officer to be appointed by the Fund;
(b) Furnish statistical and research data, clerical services, and
stationery and office supplies;
(c) Assist in the monitoring of regulatory and legislative
developments which may affect the Fund and, in response to such developments,
counsel and assist the Fund in routine regulatory examinations or investigations
of the Fund, and work with outside counsel to the Fund in connection with
regulatory matters or litigation.
In performing its duties as administrator of the Fund, the Administrator
(a) will act in accordance with the Fund's Articles of Incorporation, By-Laws,
Prospectus, Statement of Additional Information and the instructions and
directions of the Fund's Board of Directors and will conform to, and comply
with, the
4
requirements of the 1940 Act and all other applicable Federal or state laws and
regulations, and (b) will consult with outside legal counsel to the Fund, as
necessary or appropriate.
The Administrator will preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under
said Act in connection with the services required to be performed hereunder. The
Administrator further agrees that all such records which it maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to
the Fund any of such records upon the Fund's request.
4. FEES; EXPENSES; EXPENSE REIMBURSEMENT. For the services rendered
pursuant to this Agreement for the Fund, the Administrator shall be entitled to
a fee as provided for in Attachment A of this agreement. Such fees are to be
computed daily and paid monthly within the first fifteen days of the following
month. Upon any termination of this Agreement before the end of any month, the
fee for such part of the month shall be prorated 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.
For the purpose of determining fees payable to the Administrator, the value
of the Fund's net assets shall be computed as required by its Prospectus,
generally accepted accounting principles and resolutions of the Fund's Board of
Directors.
The Administrator will from time to time employ or associate with
themselves such person or persons as they may believe to be fitted to assist
them in the performance of this Agreement. Such person or persons may be
officers and employees who are employed by both the Administrator and the Fund.
The compensation of such person or persons for such employment shall be paid by
the Administrator and no obligation may be incurred on behalf of the Fund in
such respect.
The Administrator will bear all expenses in connection with the performance
of its services under this Agreement except as otherwise expressly provided
herein. Other expenses to be incurred in the operation of the Fund, including
taxes, interest, brokerage fees and commissions, if any, salaries and fees of
officers and Directors who are not officers, directors, shareholders or
employees of the Administrator, or the Fund's investment adviser or distributor
for the Fund, SEC fees and state Blue Sky qualification
5
fees, advisory and administration fees, charges of custodians, certain insurance
premiums including fidelity bond premiums, outside auditing and legal expenses,
costs of maintenance of corporate existence, typesetting and printing of
prospectuses for regulatory purposes and for distribution to current
shareholders of the Fund, costs of shareholders' reports and corporate meetings
and any extraordinary expenses, will be borne by the Fund, provided, however,
that, except as provided in any distribution plan adopted by the Fund, the Fund
will not bear, directly or indirectly, the cost of any activity which is
primarily intended to result in the distribution of shares of the Fund, and
further provided that the Administrator may utilize one or more independent
pricing services, approved from time to time by the Board of Directors of the
Fund, to obtain securities prices in connection with determining the net asset
value of the Fund. The Fund will reimburse the Administrator for its share of
the cost of such services based upon its actual use of the services.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION. The Administrator agrees on
behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund all records and other information relative to the Fund's
prior, present or potential shareholders, and not to use such records and
information for any purpose other than performance of their responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Fund, which approval shall not be unreasonably withheld and may not be
withheld where the Administrator 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 Fund.
6. LIMITATION OF LIABILITY. The Administrator shall not be liable for any
error of judgement or mistake of law or for any loss or expense suffered by the
Fund, in connection with the matters to which this Agreement relates, except for
a loss or expense resulting from willful misfeasance, bad faith or negligence on
its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement.
7. TERM. This Agreement may be modified or amended from time to time by
mutual agreement between the parties hereto. The Agreement shall continue in
effect unless terminated by either
6
party on 90 days' prior written notice. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall terminate on the termination of
the MSIM Administration Agreement. Upon termination of the Agreement, MSIM shall
pay to the Administrator such compensation as may be due under the terms hereof
as of the date of such termination. This agreement shall automatically terminate
upon its assignment by the Administrator without the prior written consent of
MSIM, provided, however, that no such assignment shall release the Administrator
from its obligations under this Agreement.
8. HIRING OF EMPLOYEES. The Fund and the Administrator agree that they
will not enter into discussions of employment or make offers of employment to
each others' employees without written approval from the other.
9. GOVERNING LAW. This Agreement shall be governed by New York law.
10. AMENDMENTS. No provision of this Agreement may be changed, discharged,
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, discharge or termination is sought.
11. MISCELLANEOUS. The parties to this Agreement acknowledge and agree
that all liabilities arising, directly or indirectly, under this Agreement, of
any and every nature whatsoever, including without limitation, liabilities
arising in connection with any agreement of the Fund set forth herein to
indemnify any party to this Agreement or any other person, shall be satisfied
out of the assets of the Fund and that no Director, officer or shareholder of
the Fund shall be personally liable for any of the foregoing liabilities.
If a change or discharge is sought against the Fund, the instrument must be
signed by the Administrator.
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date indicated below.
XXXXXX XXXXXXX INVESTMENT MANAGEMENT
INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Title: Managing Director
X.X. XXXXXX INVESTOR SERVICES CO.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Title: Vice President
8
ATTACHMENT A: FEE SCHEDULE
Fund Administration Fee Schedule:
Whichever is the GREATER amount, (1) fund complex minimum, or (2) basis
point charge plus additional revenue components (see itemized list below).
OPEN END FUNDS
(1) FUND COMPLEX MINIMUM CALCULATED AS FOLLOWS:
- Number of funds * $45,000
(2) BASIS POINT CHARGE CALCULATED AS FOLLOWS:
- All funds: 1.175bps on first $40bln, 1.1bps on next $10bln, 1bps on all
assets over $50bln. (Basis point charge will be applied to the aggregate
level of Xxxxxx Xxxxxxx Open End fund assets with JPMorgan)
COMPLIANCE AND TREASURY--CORE SERVICE SET (INCLUDING PREPARATION,
REVIEW, AND DISTRIBUTION OF THE FOLLOWING: )
Daily 1940 Act Compliance Monitoring
Daily Prospectus/SAI and Board Directive Compliance Monitoring
Provide Form N-1A and Proxy Filing Data
Budgeting Expense Accruals and Review and Submit for Approval (as
necessary) Cash Disbursements
Administration of deferred Directors' compensation plan
Audit and Regulatory Examination Co-ordination and Support
REPORTING
Quarterly Board Reporting
Monthly Management Reporting
Monthly Survey Reporting
Web-site Reporting
Portfolio Turnover
Monthly Performance Reporting
Blue Sky Reporting, Registration and Monitoring
Prepare and File Form 24f-2 (Open End Funds)
Serve as an Officer of the Funds and Attend Board Meetings
Obtain EINs and CUSIP Numbers
1
COMPLIANCE & TREASURY - ADDITIONAL SERVICES
ADDITIONAL SERVICES CURRENTLY USED BY XXXXXX
XXXXXXX
1940 ACT COMPLIANCE MONITORING No charge
Rule 18/f/10666
Fund Mergers / Liquidations No charge
TOTAL RETURN PERFORMANCE REPORTING
Pre-Tax Reporting (monthly) No charge
Pre & Post Tax Reporting (annually) No charge
Customized Programming At Cost
Out of Pocket Expenses At Cost
TAX CORE SERVICE SET (INCLUDING PREPARATION, REVIEW, AND DISTRIBUTION
OF THE FOLLOWING:)
Fiscal and excise tax provisions (includes all standard book
adjustments (except those noted in optional services))
Fiscal, state and excise tax returns
Preparation of form 1099 including all year end re-characterizations
Preparation of form 1099-MISC to persons other than corporations
(i.e., Directors)
Tax basis year end shareholder reporting
Quarterly IRS asset diversification and annual good income tests
Periodic distributions (non-daily dividend excluded)
Quarterly tax exempt asset test and annual foreign security asset test
TAX DISCLOSURE
ROC SOP
Tax Footnote
Applicable Tax 60 day notice information
Review complex corporate action for tax implications
TAX - ADDITIONAL SERVICES
ADDITIONAL SERVICES CURRENTLY USED BY XXXXXX
XXXXXXX
Tax Equalization No charge
REIT Analysis (Nonstandard Book Tax Adjustments) No charge
Partnership Holdings (Non-standard Book Tax Adjustments) No charge
Mid Year Income and/or Capital Gains Estimates No charge
Dividend and Distribution Calculations (monthly or more No charge
frequent)
REMIC OID Analysis (Non-standard Book Tax Adjustments) No charge
Customized Programming At Cost
2
TAX - ADDITIONAL SERVICES
Out of Pocket Expenses At Cost
FINANCIAL REPORTING CORE SERVICE SET (INCLUDES PREPARATION, REVIEW,
AND DISTRIBUTION OF THE FOLLOWING: )
CO-ORDINATION, PREPARATION AND REVIEW OF FINANCIAL STATEMENTS (ANNUAL
AND SEMI-ANNUAL), INCLUDING:
- Statement of Investments, Statement of Assets & Liabilities,
Statement of Operations
- Statement of Changes in Net Assets, Statement of Cash Flows
- Financial Highlights
- Notes to Financial Statements
- Review of MD&A
- Preparation and review of line graphs and performance information
Preparation, review and filing of SEC Form N-SAR and Form N-CSR
FINANCIAL REPORTING - ADDITIONAL SERVICES
ADDITIONAL SERVICES CURRENTLY USED BY XXXXXX
XXXXXXX
Quarterly Reporting Services (Form N-Q) No charge
Additional Production Drafts (greater than 4) No charge
Customized Programming At Cost
Out of Pocket Expenses At Cost
3
Fund Accounting Fee Schedule:
Open End Funds
Whichever is the GREATER amount, (1) fund complex minimum, or (2) basis
point charge plus additional revenue components (see itemized list below).
(1) FUND COMPLEX MINIMUM CALCULATED AS FOLLOWS:
- Number of "Straight Forward" funds * $35,000, plus
- Number of "Standard" funds * $40,000, plus
- Number of "Complex" funds * $85,000
JPMorgan would categorize the Xxxxxx Xxxxxxx book of Open End funds as
follows: 2 Straight Forward funds, 62 Standard funds, and 12 Complex funds.
(DETAILS OF FUND CATEGORIZATION WILL BE PROVIDED)
(2) BASIS POINT CHARGE CALCULATED AS FOLLOWS:
Open End Funds: 1.26bps on first $40bln, 1.2bps on next $10bln, 1bps on all
assets over $50bln. (Basis point charge will be applied to the aggregate level
of Xxxxxx Xxxxxxx Open End fund assets with JPMorgan)
DAILY FUND ACCOUNTING - CORE SERVICE SET
Standard/Automated Inputs
Trade Processing
Capital Stock Processing
Expense Processing
Portfolio Income Recognition
Corporate Actions Processing
Daily Market Value Calculations utilizing automated price vendors
Standard/Automated Reporting & Deadlines
NAV Calculation (single class)
Standard NAV Delivery Timeframe (Based on market close)
Rate Calculation for daily distributing funds
NAV/Rate reporting to four parties
Fund Information Reporting to Client & 3rd Party Reporting Agency
Risk Reporting (e.g., Statistics, Past Due Income, etc.)
Daily Cash Reconciliation
Weekly Asset Reconciliation
Monthly SEC Yield calculations
Other Core Services
External Audit, SAS 70 & Client Due Diligence Co-ordination
Generally Accepted Accounting Principles and Materially Thresholds to
Support a daily valuation environment
4
FUND ACCOUNTING - ADDITIONAL SERVICES
ADDITIONAL SERVICES CURRENTLY USED BY XXXXXX
XXXXXXX
Additional Classes of shares No charge
Fair Market Value Calculations No charge
Market Value Calculations utilizing Manual Price Vendors No charge
Non-standard delivery timeframe of NAV's/Rates No charge
Manual End of Day NAV/Rate Reporting No charge
End of Day NAV/Rate Delivery for more than Four Parties No charge
Additional Classes of shares No charge
Materiality thresholds below market accepted levels based No charge
on Industry Standards
Monthly SEC yield calculations No charge
Projection of income & expenses No charge
Customized Programming At Cost
Out of Pocket Expenses At Cost
5
