ADMINISTRATION AGREEMENT
XXXXX XXXXXX SHEARSON AGGRESSIVE GROWTH FUND INC.
April 21, 1994
Xxxxx, Xxxxxx Advisers, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Xxxxx Xxxxxx Shearson Aggressive Growth Fund Inc. (the
"Fund"), a corporation organized under the laws of the State of
Maryland, confirms its agreement with Xxxxx, Xxxxxx Advisers, Inc.
("SBA") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing
and reinvesting in investments of the kind and in accordance with
the limitations specified in its Articles of Incorporation dated
May 12, 1983 as amended from time to time (the "Articles of
Incorporation"), in its Prospectus and Statement of Additional
Information as from time to time in effect and in such manner and
to such extent as may from time to time be approved by the Board
of Directors of the Fund (the "Board"). Copies of the Fund's
Prospectus, Statement of Additional Information and Articles of
Incorporation have been or will be submitted to SBA. Asset
Management (the "Adviser") serves as the Fund's investment
adviser, and the Fund desires to employ and hereby appoints SBA to
act as its administrator. SBA accepts this appointment and agrees
to furnish the services to the Fund for the compensation set forth
below. SBA is hereby authorized to retain third parties and is
hereby authorized to delegate some or all of its duties and
obligations hereunder to such persons provided that such persons
shall remain under the general supervision of SBA.
2. Services as Administrator
Subject to the supervision and direction of the Board,
SBA will: (a) assist in supervising all aspects of the Fund's
operations except those performed by the Fund's investment adviser
under its investment advisory agreement; (b) supply the Fund with
office facilities (which may be in SBA's own offices), statistical
and research data, data processing services, clerical, accounting
and bookkeeping services, including, but not limited to, the
calculation of (i) the net asset value of shares of the Fund, (ii)
applicable contingent deferred sales charges and similar fees and
charges and (iii) distribution fees, internal auditing and legal
services, internal executive and administrative services, and
stationary and office supplies; and (c) prepare reports to
shareholders of the Fund, tax returns and reports to and filings
with the Securities and Exchange Commission (the "SEC") and state
blue sky authorities.
3. Compensation
In consideration of services rendered pursuant to this
Agreement, the Fund will pay SBA on the first business day of each
month a fee for the previous month at an annual rate of .20 of
1.00% of the Fund's average daily net assets. The fee for the
period from the date the Fund's initial registration statement is
declared effective by the SEC to the end of the month during which
the initial registration statement is declared effective shall be
prorated according to the proportion that 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 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 SBA, the value of the Fund's net
assets shall be computed at the times and in the manner specified
in the Fund's Prospectus and Statement of Additional Information
as from time to time in effect.
4. Expenses
SBA will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will
bear certain other expenses to be incurred in its operation,
including: taxes, interest, brokerage fees and commissions, if
any; fees of the members of the Board of the Fund who are not
officers, directors or employees of Xxxxx Xxxxxx Shearson Inc. or
its affiliates or any person who is an affiliate of any person to
whom duties may be delegated hereunder; SEC fees and state blue
sky qualification fees; charges of custodians and transfer and
dividend disbursing agents; the Fund's and Board members'
proportionate share of insurance premiums, professional
association dues and/or assessments; outside auditing and legal
expenses; costs of maintaining the Fund's existence; costs
attributable to investor services, including, without limitation,
telephone and personnel expenses; costs of preparing and printing
prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders;
costs of shareholders' reports and meetings of the officers or
Board and any extraordinary expenses. In addition, the Fund will
pay all distribution fees pursuant to a Distribution Plan adopted
under Rule 12b-1 of the Investment Company Act of 1940, as amended
(the "1940 Act").
5. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to this Agreement and the Fund's
investment advisory agreement (s), but excluding distribution
fees, interest, taxes, brokerage and, if permitted by state
securities commissions, extraordinary expenses) exceed the expense
limitations of any state having jurisdiction over the Fund, SBA
will reimburse the Fund for that excess expense to the extent
required by state law in the same proportion as its respective
fees bear to the combined fees for investment advice and
administration. The expense reimbursement obligation of SBA will
be limited to the amount of its fees hereunder. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
6. Standard of Care
SBA shall exercise its best judgment in rendering the
services listed in paragraph 2 above, and SBA shall not be liable
for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the matters to which this
Agreement relates, provided that nothing herein shall be deemed to
protect or purport to protect SBA against liability to the Fund or
to its shareholders to which SBA would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason of SBA's
reckless disregard of its obligations and duties under this
Agreement.
7. Term of Agreement
This Agreement shall continue automatically for
successive annual periods, provided such continuance is
specifically approved at least annually by the Board.
8. Service to Other Companies or Accounts
The Fund understands that SBA now acts, will continue
to act and may act in the future as administrator to one or more
other investment companies, and the Fund has no objection to SBA
so acting. In addition, the Fund understands that the persons
employed by SBA or its affiliates to assist in the performance of
its duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or
restrict the right of SBA or its affiliates to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
9. Indemnification
The Fund agrees to indemnify SBA and its officers,
directors, employees, affiliates, controlling persons, agents
(including persons to whom responsibilities are delegated
hereunder) ("indemnitees") against any loss, claim, expense or
cost of any kind (including reasonable attorney's fees) resulting
or arising in connection with this Agreement or from the
performance or failure to perform any act hereunder, provided that
no such indemnification shall be available if the indemnitee
violated the standard of care in paragraph 6 above. This
indemnification shall be limited by the 1940 Act, and relevant
state law. Each indemnitee shall be entitled to advancement of
its expenses in accordance with the requirements of the 1940 Act
and the rules, regulations and interpretations thereof as in
effect from time to time.
10. Limitation of Liability
The Fund, SBA and Boston Advisors agree that the
obligations of the Fund under this Agreement shall not be binding
upon any of the Board members, shareholders, nominees, officers,
employees or agents, whether past, present or future, of the Fund
individually, but are binding only upon the assets and property of
the Fund, as provided in the Articles of Incorporation.
The execution and delivery of this Agreement has been duly
authorized by the Fund, SBA and Boston Advisors, and signed by an
authorized officer of each, acting as such. Neither the
authorization by the Board members of the Fund, nor the execution
and delivery by the officer of the Fund shall be deemed to have
been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and
property of the Fund as provided in the Articles of Incorporation.
If the foregoing is in accordance with your understanding,
kindly indicate your acceptance hereof by signing and returning to
us the enclosed copy hereof.
Very truly yours,
Xxxxx Xxxxxx Shearson
Aggressive Growth Fund
Inc.
By: /s/Xxxxx X.
XxXxxxxx
Name: Xxxxx X. XxXxxxxx
Title: Chairman of
the Board
Accepted:
Xxxxx, Xxxxxx Advisers, Inc.
By: /s/ Xxxxxxxxx Xxxxx
Name: Xxxxxxxxx Xxxxx
Title: Secretary
APPENDIX A
ADMINISTRATIVE SERVICES
Fund Accounting. Fund accounting services involve comprehensive
accrual-based recordkeeping and management information. They include
maintaining a fund's books and records in accordance with the Investment
Company Act of 1940, as amended (the "1940 Act"), net asset value
calculation, daily dividend calculation, tax accounting and portfolio
accounting.
The designated fund accountants interact with the Fund's
custodian, transfer agent and investment adviser daily. As required,
the responsibilities of each fund accountant may include:
* Cash Reconciliation - Reconcile prior day's ending cash
balance per custodian's records and the accounting system to
the prior day's ending cash balance per fund accounting's
cash availability report;
* Cash Availability - Combine all activity affecting the
Fund's cash account and produce a net cash amount available
for investment;
* Formal Reconciliations - Reconcile system generated reports
to prior day's calculations of interest, dividends,
amortization, accretion, distributions, capital stock and
net assets;
* Trade Processing - Upon receipt of instructions from the
investment adviser review, record and transmit buys and
sells to the custodian;
* Journal Entries - Input entries to the accounting system
reflecting shareholder activity and Fund expense accruals;
* Reconcile and Calculate N.O.A. (net other assets) - Compile
all activity affecting asset and liability accounts other
than investment account;
* Calculate Net Income, Mil Rate and Yield for Daily
Distribution Funds - Calculate income on purchase and sales,
calculate change in income due to variable rate change,
combine all daily income less expenses to arrive at net
income, calculate mil rate and yields (1 day, 7 day and 30
day);
* Mini-Cycle (except for Money Market Funds) - Review intra
day trial balance and reports, review trial balance N.O.A.;
* Holdings Reconciliation - Reconcile the portfolio holdings
per the system to custodian records;
* Pricing - Determine N.A.V. for Fund using market value of
all securities and currencies (plus N.O.A.), divided by the
shares outstanding, and investigate securities with
significant price changes (over 5%);
* Money Market Fund Pricing - Monitor valuation for compliance
with Rule 2a-7;
* System Check-Back - Verify the change in market value of
securities which saw trading activity per the system;
* Net Asset Value Reconciliation - Identify the impact of
current day's Fund activity on a per share basis;
* Reporting of Price to NASDAQ - 5:30 P.M. is the final
deadline for Fund prices being reported to the newspaper;
* Reporting of Price to Transfer Agent- N.A.V.s are reported
to transfer agent upon total completion of above activities.
In addition, fund accounting personnel: communicate corporate
actions of portfolio holdings to portfolio managers; initiate
notification to custodian procedures on outstanding income receivables;
provide information to the Fund's treasurer for reports to shareholders,
SEC, Board members, tax authorities, statistical and performance
reporting companies and the Fund's auditors; interface with the Fund's
auditors; prepare monthly reconciliation packages, including expense pro
forma; prepare amortization schedules for premium and discount bonds
based on the effective yield method; prepare vault reconciliation
reports to indicate securities currently "out-for-transfer;" and
calculate daily expenses based on expense ratios supplied by Fund's
treasurer.
Financial Administration. The financial administration services made
available to the Fund fall within three main categories: Financial
Reporting; Statistical Reporting; and Publications. The following is a
summary of the services made available to the Fund by the Financial
Administration Division:
Financial Reporting
* Coordinate the preparation and review of the annual,
semi-annual and quarterly portfolio of investments and
financial statements included in the Fund's
shareholder reports.
Statistical Reporting
* Total return reporting;
* SEC 30-day yield reporting and 7-day yield reporting
(for money market funds);
* Prepare dividend summary;
* Prepare quarter-end reports;
* Communicate statistical data to the financial media
(Donoghue, Lipper, Morningstar, et al.)
Publications
* Coordinate the printing and mailing process with
outside printers for annual and semi-annual reports,
prospectuses, statements of additional information,
proxy statements and special letters or supplements;
* Provide graphics and design assistance relating to the
creation of marketing materials and shareholder
reports.
Treasury. The following is a summary of the treasury services available
to the Fund:
* Provide a Treasurer and Assistant Treasurer for the
Fund;
* Determine expenses properly chargeable to the Fund;
* Authorize payment of bills for expenses of the Fund;
* Establish and monitor the rate of expense accruals;
* Prepare financial materials for review by the Fund's
Board (e.g., Rule 2a-7, 10f-3, 17a-7 and 17e-1
reports, repurchase agreement dealer lists, securities
transactions);
* Recommend dividends to be voted by the Fund's Board;
* Monitor xxxx-to-market comparisons for money market
funds;
* Recommend valuation to be used for securities which
are not readily saleable;
* Function as a liaison with the Fund's outside auditors
and arrange for audits;
* Provide accounting, financial and tax support relating
to portfolio management and any contemplated changes
in the Fund's structure or operations;
* Prepare and file forms with the Internal Revenue
Service
* Form 8613
* Form 1120-RIC
* Board Members' and Shareholders' 1099s
* Mailings in connection with Section 852 and
related regulations.
Legal and Regulatory Services. The legal and regulatory services made
available to the Fund fall within four main areas: SEC and Public
Disclosure Assistance; Corporate and Secretarial Services; Compliance
Services; and Blue Sky Registration. The following is a summary of the
legal and regulatory services available to the Fund:
SEC and Public Disclosure Assistance
* File annual amendments to the Fund's registration
statements, including updating the prospectus and
statement of additional information where applicable;
* File annual and semi-annual shareholder reports with
the appropriate regulatory agencies;
* Prepare and file proxy statements;
* Review marketing material for SEC and NASD clearance;
* Provide legal assistance for shareholder
communications.
Corporate and Secretarial Services
* Provide a Secretary and an Assistant Secretary for the
Fund;
* Maintain general corporate calendar;
* Prepare agenda and background materials for Fund board
meetings, make presentations where appropriate,
prepare minutes and follow-up matters raised at Board
meetings;
* Organize, attend and keep minutes of shareholder
meetings;
* Maintain Articles of Incorporation and By-Laws of the
Fund.
Legal Consultation and Business Planning
* Provide general legal advice on matters relating to
portfolio management, Fund operations and any
potential changes in the Fund's investment policies,
operations or structure;
* Maintain continuing awareness of significant emerging
regulatory and legislative developments which may
affect the Fund, update the Fund's Board and the
investment adviser on those developments and provide
related planning assistance where requested or
appropriate;
* Develop or assist in developing guidelines and
procedures to improve overall compliance by the Fund
and its various agents;
* Manage Fund litigation matters and assume full
responsibility for the handling of routine Fund
examinations and investigations by regulatory
agencies.
Compliance Services
The Compliance Department is responsible for preparing
compliance manuals, conducting seminars for fund accounting and advisory
personnel and performing on-going testing of the Fund's portfolio to
assist the Fund's investment adviser in complying with prospectus
guidelines and limitations, 1940 Act requirements and Internal Revenue
Code requirements. The Department may also act as liaison to the SEC
during its routine examinations of the Fund.
State Regulation
The State Regulation Department operates in a fully
automated environment using blue sky registration software developed by
Price Waterhouse. In addition to being responsible for the initial and
on-going registration of shares in each state, the Department acts as
liaison between the Fund and state regulators, and monitors and reports
on shares sold and remaining registered shares available for sale.
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