ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT made as of the 21st day of September, 1999 between and
among The Saratoga Advantage Trust (the "Trust"), a Delaware business trust,
Saratoga Capital Management ("Saratoga"), a Delaware general partnership and
Funds Distributor, Inc.
("FDI"), a Massachusetts corporation.
WHEREAS, the Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), currently
comprised of seven separate investment portfolios (each a "Portfolio,"
collectively, the "Portfolios") as listed on Schedule A, as such Schedule may be
amended from time to time;
WHEREAS, Saratoga serves as investment manager to the Trust;
WHEREAS, the Trust has entered into a Distribution Agreement with FDI for the
distribution by FDI of certain classes of shares of beneficial interest (the
"Shares") in the Trust;
WHEREAS, certain employees of Saratoga will be registered with the National
Association of Securities Dealers, Inc. ("NASD") as representatives of FDI (such
persons shall hereinafter be referred to as "Registered Representatives") and
will be wholesaling the Portfolios' Shares;
WHEREAS, the Trust desires to retain FDI to assist it in performing certain
services with respect to the Shares of the Trust and FDI is willing to perform
such services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual agreements herein contained, the
parties agree as follows:
1. Services and Duties of FDI. FDI will serve as the Trust's administrative
services agent and further agrees to perform the specific administrative duties
and provide the specific administrative services for the Trust, as listed in
Exhibit A.
2. Services Provided by Saratoga. In furtherance of the responsibilities under
this Agreement, Saratoga will provide or cause the provision of certain
services, as listed in Exhibit B.
3. Compensation; Reimbursement of Expenses.
(a) The Trust shall pay FDI for the services provided under this
Agreement an aggregate annual fee in the first year of $337,000 (the "Minimum
Fee"), payable monthly on the first business day of each month. During the
second and third year of the Agreement, the Trust shall pay FDI the Minimum Fee
plus 7.5 basis points on the average monthly net assets in the Class B Shares
and Class C Shares of each Portfolio of the Trust, subject to a maximum limit on
all fees of $460,000 per year (the "Maximum Fee"). Such aggregate annual fees
are based on seven (7) Portfolios. The addition of any new portfolio will
increase, on an annual basis, the Maximum Fee by the following amounts:
Additional Annual Fee
First Additional Portfolio: $50,550
Second Additional Portfolio: $47,180
Third Additional Portfolio: $43,810
Fourth Additional Portfolio: $40,440
Fifth Additional Portfolio: $37,070
Sixth Additional Portfolio $33,700
The Trust shall pay FDI an annual fee for the provision of blue sky
services in the amount of $72 per registration/permit, payable monthly on the
first business day of each month. Saratoga and the Trust acknowledge that FDI
provides this service through a sub-contractual arrangement with ClearSky
Corporation or other mutually acceptable provider.
(b) The fee as stated above under Section 3(a) is subject to the
following conditions: (i) that FDI shall only sponsor 15 or fewer Registered
Representatives (additional sponsorships shall be subject to a $2,500 annual fee
per Registered Representative sponsored by FDI in excess of the 15 Registered
Representatives); and (ii) that advertising legal review shall be for the lesser
of 45 marketing pieces or 165 pages per calendar year (advertising legal review
in excess of 45 pieces or 165 pages for the relevant annual contract period
shall be subject to a flat fee of $300 per 1-10 page piece and $10 per page
thereafter for such piece).
(c) All fees to FDI for the services described in this Agreement are
exclusive of out-of-pocket costs. Saratoga or the Trust, as appropriate, agree
to reimburse FDI for FDI's reasonable out-of-pocket expenses incurred in
providing the services hereunder. The out-of-pocket costs associated with
medallion distribution include, but are not limited to, travel expenses,
broker/dealer costs, registered representative fees, sponsorship and maintenance
of registered representative licenses, annual compliance meetings and NASD
filing fees for sales literature. The out-of -pocket costs associated with legal
administration include, but are not limited to, travel expenses, postage and
other mail-related costs, NASD and Securities and Exchange Commission (the
"SEC") filing fees, courier fees, XXXXX related services, and related printing
charges. The out-of-pocket costs associated with financial administration
include, but are not limited to travel expenses, postage and other mail-related
costs and telephone charges associated with receiving reports via modem.
Expenses incurred out of the ordinary course in providing the services hereunder
are subject to prior approval by the Trust. Such out-of-pocket expenses shall be
paid by the Trust within 30 days from the date of invoice.
The Trust will bear all expenses incurred in the operation of the
Portfolios and the Trust, including, but not limited to, taxes, interest,
brokerage fees and commissions, salaries (if any) and fees of employees,
officers and directors who are not officers, directors, shareholders or
employees of FDI, SEC fees and state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, fund accounting agents' fees, insurance premiums, outside auditor
and legal expenses, costs of maintenance of the Trust's existence, costs of
independent pricing services, mutual fund industry fee and performance
information, typesetting and printing of prospectuses for regulatory purposes
and for distribution to current Trust shareholders, costs of shareholders'
reports and corporate mailing costs, administrative services fees for
preparation, stuffing and distribution of literature other than those required
by federal or state regulatory authority, meetings and any other routine or
extraordinary expenses. FDI will bear all expenses incurred by it in connection
with the performance by FDI of the services hereunder this Agreement, except
that the Trust shall pay to or reimburse FDI any reasonable and necessary
out-of-pocket expenses incurred by FDI on behalf of the Trust, as described
above. In addition, FDI shall have no obligation to make any payments pursuant
to a Portfolio's plan of distribution adopted pursuant to Rule 12b-1 under the
1940 Act until FDI has received monies therefor from the Portfolio.
(d) For the period from the date hereof through September 30, 1999, FDI
shall rebate 100% of the Minimum Fee that it is entitled to receive under the
Agreement, in recognition of FDI's obligation to provide only the Medallion
Distribution Services described in Exhibit A. Beginning October 1, 1999 and
concurrent with the commencement of Legal Administration Services and Financial
Administration Services by FDI as described in Exhibit A, the rebate will be
eliminated and FDI shall be entitled to receive the full compensation described
in Section 3(a) of the Agreement.
(e) If this Agreement becomes effective subsequent to the first day of
a month or shall terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees as set forth above.
4. Effective Date and Term.
(a) This Agreement shall become effective with respect to the Trust as
of the date first written above (or, if a particular Portfolio is not in
existence on that date, on the date FDI becomes the distributor of the Shares of
such Portfolio; Schedule A to this Agreement shall be deemed amended to include
such Portfolio and any classes of Shares of such Portfolio from and after such
date).
(b) This Agreement shall continue for an initial three-year period
ending September 30, 2002 and shall continue thereafter for successive one-year
terms unless terminated pursuant to the provision of sub-section (c) or (d) of
this Section 4.
(c) This Agreement shall automatically terminate upon termination of
the Distribution Agreement between the Trust and FDI. This Agreement may be
terminated at any time without payment of any penalty, upon 60 days' written
notice by the Trust pursuant to the vote of a majority of its Board of Trustees.
This Agreement may be terminated at any time without payment of any penalty upon
120 days' written notice by FDI. In any event, the provisions of Section 5 and 6
shall survive termination of this Agreement and continue in full force and
effect. Compensation due FDI and unpaid upon such termination shall be
immediately due and payable upon and notwithstanding such termination.
(d) Either the Trust or FDI shall have the right to immediately
terminate this Agreement, if (i) a material breach of any provision of this
Agreement has been committed by FDI or the Trust/Saratoga; (ii) the
non-breaching party delivers notice that the other party is in breach of any of
its obligations under this Agreement; and (iii) either (a) the action or
inaction of the breaching party giving rise to the cause for termination is not
capable of being remedied or (b) if such action or inaction is capable of being
remedied, the breaching party shall not have remedied such action or inaction
within thirty (30) days after such notice.
5. Standard of Care and Indemnification.
(a) FDI shall give the Trust the benefit of its best judgment and
efforts in rendering its services to the Trust and, except as specifically
provided herein, shall not be liable for error of judgment or mistake of law,
for any loss arising out of any investment, or in any event whatsoever, provided
that nothing herein shall be deemed to protect, or purport to protect, FDI
against any liability to Saratoga or the Trust or to the security holders of the
Trust to which it would otherwise be subject by reason of willful misfeasance,
bad faith or negligence in the performance of its duties hereunder, or by reason
of reckless disregard of its obligations and duties hereunder.
(b) The Trust and Saratoga shall indemnify and hold FDI, its officers,
directors, employees, shareholders, affiliated persons (as such term is defined
in the 0000 Xxx) and agents (collectively the "FDI Indemnified Parties" and each
individually an "FDI Indemnified Party") harmless from and against any and all
losses, claims, damages, expenses and liabilities, joint or several (including,
but not limited to, any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit, proceeding or claim), which such FDI Indemnified Party or FDI Indemnified
Parties may be or become subject to or liable for by reason of or in connection
with (i) the Agreement, (ii) FDI's provision of services pursuant to the
Agreement, (iii) any materially false or inaccurate information or data provided
by the Trust, Saratoga or one of its agents for use by FDI in providing its
services hereunder or under the Distribution Agreement, or (iv) any information
or data created by FDI that is materially changed by the Trust or Saratoga
without FDI's approval; provided, however, that an FDI Indemnified Party shall
not be entitled to indemnification hereunder to the extent, but only to the
extent, that it shall have been finally determined by a court of competent
jurisdiction that such loss, claim, damage, expense or liability was caused
directly and proximately by action or omission of FDI and that such action or
omission involved bad faith, negligence, reckless disregard of its obligations
hereunder, or intentional misconduct by FDI.
(c) FDI shall indemnify and hold Saratoga and the Trust, their
officers, directors, employees, shareholders, affiliated persons (as such term
is defined in the 0000 Xxx) and agents (collectively the "Saratoga Indemnified
Parties" and each individually a " Saratoga Indemnified Party") harmless from
and against any and all losses, claims, damages, expenses and liabilities, joint
or several (including, but not limited to, any reasonable investigation, legal
and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit, proceeding or claim), which such Saratoga
Indemnified Party or Saratoga Indemnified Parties may be or become subject to or
liable for by reason of or in connection with (i) the Agreement, (ii) under the
Securities Act of 1933, the 1934 Act, the 1940 Act, common law or otherwise,
(iii) any breach of any covenant or obligation of FDI contained in the
Agreement, (iv) any failure by FDI to comply with any laws applicable to its
performance of services under the Agreement, (v) any materially false or
inaccurate information or data provided by FDI to Saratoga or the Trust pursuant
to FDI's obligations hereunder or under the Distribution Agreement, (vi) any
information or data provided by Saratoga or the Trust that is materially changed
by FDI without Saratoga's or the Trust's approval or (vi) a final determination
by a court of competent jurisdiction that such loss, claim, damage, expense or
liability was caused directly or proximately by an action or omission of FDI
involving bad faith, negligence, reckless disregard of its obligations
hereunder, or intentional misconduct by FDI; provided, however, that a Saratoga
Indemnified Party shall not be entitled to indemnification hereunder to the
extent, but only to the extent, that it shall have been finally determined by a
court of competent jurisdiction that such loss, claim, damage, expense or
liability was caused directly and proximately by action or omission of Saratoga
or the Trust and that such action or omission involved bad faith, negligence,
reckless disregard of the obligations hereunder of Saratoga or the Trust, or
intentional misconduct by Saratoga or the Trust.
(d) In order to provide for just and equitable contribution in
circumstances in which the terms of Section 5(b) or Section 5(c) are applicable,
but for any reason the indemnification provided for therein is held to be
unavailable, Saratoga, the Trust and FDI shall contribute to the aggregate
losses, claims, damages, expenses and liabilities (including, but not limited
to, any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit,
proceeding or claim) which any of the FDI Indemnified Parties or Saratoga
Indemnified Parties (as defined above), respectively, may be subject to or
liable for in proportion to the relative fault of Saratoga or the Trust, on the
one hand, and FDI, on the other hand; provided, however, that in determining
relative fault, there shall be considered the relative benefits received by each
party from the transactions giving rise to the loss, claim, damage, expense or
liability, the parties' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances; provided, further, that in
no event shall FDI, Saratoga or the Trust be required to contribute in the
aggregate hereunder any amount in excess of the aggregate compensation received
by FDI for its services during the immediately preceding 12 month period.
Saratoga, the Trust and FDI shall not have any other right of contribution in
connection herewith.
(e) The applicable indemnified party, promptly and in any event within
ten (10) days after receipt of notice of commencement of any action, suit,
proceeding or claim in respect of which a claim for indemnification may be made
by it, shall notify the applicable indemnifying party in writing of the
commencement of such action, suit, proceeding or claim, enclosing a copy of all
papers served. However, the omission to so notify the applicable indemnifying
party of any such action, suit, proceeding or claim shall not relieve such
indemnifying party from any liability that it may have under Section 5(b) or
5(c), as applicable, of this Agreement except to the extent that the ability of
such indemnifying party to defend such action, suit, proceeding or claim is
materially adversely affected.
(f) In case any such action, suit, proceeding or claim for which
indemnity may be payable hereunder shall be brought against an FDI Indemnified
Party or Saratoga Indemnified Party, as applicable (an "Indemnified Party"), and
such Indemnified Party shall notify the applicable indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to participate
in, and to the extent that such indemnifying party shall wish to assume the
defense thereof, with counsel reasonably satisfactory to such Indemnified Party,
subject to the further provisions of this paragraph. After written notice from
such indemnifying party to such Indemnified Party of its election to so assume
the defense thereof, such indemnifying party shall not be liable to the
applicable Indemnified Parties for any additional attorneys' fees or other
expenses of litigation, other than reasonable costs of investigation
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, unless (i) the employment of counsel by such Indemnified Parties has
been authorized in writing by such indemnifying party, such authorization not to
be unreasonably withheld or delayed; (ii) such Indemnified Parties shall have
obtained a written opinion of counsel reasonably acceptable to such indemnifying
party that there exists a conflict of interest between such Indemnified Parties
and the relevant party in the conduct of the defense of such action or that
there are one or more defenses available to such Indemnified Parties that are
unavailable to such indemnifying party (in which case such indemnifying party
shall not have the right to direct the defense of such action on behalf of such
Indemnified Parties); or (iii) such indemnifying party shall not in fact have
employed counsel reasonably satisfactory to such Indemnified Parties to assume
the defense of such action, in each of which cases the reasonable fees and
expenses of counsel utilized by such Indemnified Parties shall be at the expense
of such indemnifying party, it being understood, however, that such indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for an Indemnified
Party, which firm shall be designated in writing by the Indemnified Party.
Notwithstanding the foregoing, under the circumstances described in clause (ii)
above, the applicable Indemnified Parties shall be entitled to retain an
additional law firm, in any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, provided such Indemnified Parties have
obtained a written opinion of counsel reasonably acceptable to the indemnifying
party that a conflict of interest exists that would preclude the use of a single
law firm, in which case the indemnifying party shall be liable for the
reasonable fees and expenses of counsel designated by the Indemnified Parties in
writing. All such fees and expenses which are at the expense of an indemnifying
party hereunder shall be promptly paid by such indemnifying party.
(g) Nothing in this Agreement shall be construed as limiting an
Indemnified Party's rights to employ counsel at its own expense or to obtain
indemnification for amounts reasonably paid to adverse claimants in satisfaction
of any judgments or in settlement of any actions, suit, proceeding or claims,
except that no party hereto shall be liable for any settlement of any action,
suit, proceeding or claim effected without its written consent. None of the
parties hereto shall settle or compromise any action, suit, proceeding or claim
if such settlement or compromise provides for an admission of liability on the
part of an Indemnified Party without such Indemnified Party's written consent.
6. Confidentiality. During the term of this Agreement, the Trust, FDI and
Saratoga may have access to confidential information relating to such matters as
a party's business, trade secrets, systems, procedures, manuals, products,
contracts, personnel, and clients. As used in this Agreement, "Confidential
Information" means information belonging to a party that is of value to that
party and the disclosure of which could result in a competitive or other
disadvantage to that party. Confidential Information includes, without
limitation, financial information, proposal and presentations, reports,
forecasts; inventions, improvements and other intellectual property; trade
secrets; know-how; designs, processes or formulae; software; market or sales
information or plans; customer lists; and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses or
facilities). Confidential Information includes information developed by a party
hereto in the course of engaging in the activities provided for in this
Agreement, unless: (i) the information is or becomes publicly known through
lawful means; (ii) at the time of receipt the information was already actually
known to the other party; or (iii) the information is disclosed to the other
party without a confidential restriction by a third party who rightfully
possesses the information and did not obtain it, either directly or indirectly,
from another party hereto, or any of its respective principals, employees,
affiliated persons, or affiliated entities. The parties understand and agree
that all Confidential Information shall be kept confidential by the other both
during and after the term of this Agreement. The parties further agree that they
will not, without the prior written approval by the other party, disclose such
Confidential Information, or use such Confidential Information in any way,
either during the term of this Agreement or at any time thereafter, except as
required in the course of this Agreement and as approved by the other party or
as required by law.
7. Record Retention and Confidentiality. FDI shall keep and maintain on behalf
of the Trust all books and records which the Trust and FDI are, or may be,
required to keep and maintain in connection with the services to be provided
hereunder pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the 1940 Act. FDI further agrees
that all such books and records shall be the property of the Trust and to make
such books and records available for inspection by the Trust, by Saratoga, or by
the SEC at reasonable times and otherwise to keep confidential all books and
records and other information relative to the Trust and its shareholders; except
when requested to divulge such information by duly-constituted authorities or
court process.
8. Rights of Ownership. All computer programs and procedures developed to
perform the services to be provided by FDI under this Agreement are the property
of FDI. All records and other data except such computer programs and procedures
are the exclusive property of the Trust and all such other records and data will
be furnished to Saratoga and/or the Trust in appropriate form as soon as
practicable after termination of this Agreement for any reason.
9. Return of Records. FDI may at its option at any time, and shall promptly upon
the demand of Saratoga and/or the Trust, turn over to Saratoga and/or the Trust
and cease to retain FDI's files, records and documents created and maintained by
FDI pursuant to this Agreement so long as FDI shall be able to retain
photocopies of such documents to the extent needed by FDI in the performance of
its services or for its legal protection. If not so turned over to Saratoga
and/or the Trust, such documents and records will be retained by FDI for six
years from the end of the fiscal year of the Trust for which they were created.
At the end of such six-year period, such records and documents will be turned
over to Saratoga and/or the Trust unless the Trust authorizes in writing the
destruction of such records and documents.
10. Representations of the Trust. The Trust represents and warrants to FDI that
this Agreement has been duly authorized by the Trust and, when executed and
delivered by the Trust, will constitute a legal, valid and binding obligation of
the Trust, enforceable against the Trust in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
11. Representations of Saratoga. Saratoga represents and warrants to FDI that
this Agreement has been duly authorized by Saratoga and, when executed and
delivered by Saratoga, will constitute a legal, valid and binding obligation of
Saratoga, enforceable against Saratoga in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
12. Representations of FDI. (a) FDI represents and warrants that this Agreement
has been duly authorized by FDI and, when executed and delivered by FDI, will
constitute a legal, valid and binding obligation of FDI, enforceable against FDI
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.
(b) FDI further represents and warrants that it is a member of the NASD
and agrees to abide by all of the rules and regulations of the NASD, including,
without limitation, its Conduct Rules. FDI agrees to comply with all applicable
federal and state laws, rules and regulations. FDI agrees to notify Saratoga
immediately in the event of its expulsion or suspension by the NASD. Expulsion
of FDI by the NASD will automatically terminate this Agreement immediately
without notice. Suspension of FDI by the NASD will terminate this Agreement
effective immediately upon written notice of termination to FDI from Saratoga.
13. Notices. All notices or other communications hereunder to a party hereto
shall be in writing and shall be deemed sufficient if mailed to the Trust at the
following address: 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000-0000, Attention:
President; to Saratoga at the following address: 0000 Xxxxxxxx Xxxxxx, Xxxxxxx,
XX 00000-0000, Attention: President, with a copy to the Trust's counsel; and to
FDI at the following address: 00 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000,
Attention: President with a copy to General Counsel or at such other address as
such party may designate by written notice to the other, or in either case if
sent by telex, telecopier, telegram or similar means of same day delivery (with
a confirming copy by mail as provided herein).
14. Headings. Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
15. Assignment. This Agreement and the rights and duties hereunder shall not be
assignable by any of the parties hereto without the specific written consent of
the other parties, except that Saratoga may assign this Agreement to Saratoga
Capital Management LLC or such other business entity to which Saratoga may
succeed.
16. Governing Law. This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of The Commonwealth of Massachusetts.
17. Use of Saratoga Name. Subject to approval of the content by Saratoga, the
Trust and Saratoga will allow FDI's non-exclusive use of the "Saratoga" name and
"Saratoga Advantage Trust" name solely in connection with FDI's website, trade
advertisements, client lists and mutual fund industry conferences and displays.
FDI agrees and acknowledges that Saratoga, the Trust and/or affiliates own all
right, title, and interest in the name "Saratoga" and "Saratoga Advantage Trust"
and will only use the "Saratoga" name as stated herein.
18. Services Not Exclusive. The Trust and Saratoga hereby acknowledge that the
services provided hereunder by FDI are not exclusive. Nothing herein shall be
deemed to limit or restrict FDI's right, or the right of any of FDI's officers,
directors or employees to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, fund, firm, individual or association, as well as provide
distribution services to any other mutual fund, including any fund which may
directly compete with or be similar to Saratoga.
19. No Liability of Shareholders. This Agreement is executed by the Trustees of
the Trust, not individually, but in their capacity as Trustees under the
Declaration of Trust made April 4, 1994. None of the shareholders, Trustees,
officers, employees, or agents of the Trust shall be personally bound or liable
under this Agreement, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder but only to the property of
the Trust and, if the obligation or claim relates to the property held by the
Trust for the benefit of one or more but fewer than all Portfolios, then only to
the property held for the benefit of the affected Portfolio.
20. Severability. If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if this Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
21. Counterparts. This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
THE SARATOGA ADVANTAGE TRUST
By: /s/ Xxxxx X. Xxxxxxxxxxx
Title: Chairman, President and CEO
SARATOGA CAPITAL MANAGEMENT
By: /s/ Xxxxx X. Xxxx
Title: Managing Director
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
Dated: September 21, 1999
SCHEDULE A TO THE AGREEMENT
BETWEEN AND AMONG THE SARATOGA ADVANTAGE TRUST,
SARATOGA CAPITAL MANAGEMENT AND
FUNDS DISTRIBUTOR, INC.
THE SARATOGA ADVANTAGE TRUST
U.S. Government Money Market Portfolio
Investment Quality Bond Portfolio
Municipal Bond Portfolio
Large Capitalization Value Portfolio
Large Capitalization Growth Portfolio
Small Capitalization Portfolio
International Equity Portfolio
THE SARATOGA ADVANTAGE TRUST
By: /s/ Xxxxx X. Xxxxxxxxxxx
Title: Chairman, President and CEO
SARATOGA CAPITAL MANAGEMENT
By: /s/ Xxxxx X. Xxxx
Title: Managing Director
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
EXHIBIT A
Services and Duties of Funds Distributor, Inc.
A. Medallion Distribution Services
(a) Legal review and principal sign-off of Portfolio marketing materials and
other sales related materials to ensure compliance with the advertising rules of
the relevant regulatory authorities and file such materials, and obtain such
approvals for their use as may be required by the SEC or the NASD. FDI will
forward all NASD comments on marketing materials to Saratoga.
(b) Forward sales related complaints concerning the Portfolios to Saratoga.
(c) Coordinate registration of the Portfolios with the National Securities
Clearing Corporation ("NSCC") and file required Fund/SERV reports with the NSCC.
(d) Provide advice and counsel to the Trust with respect to regulatory matters
regarding legal review and principal sign off of Portfolio marketing material
and other sales related materials, broker/dealer and distribution related
issues, including monitoring regulatory and legislative developments that may
affect the Portfolios and assist the Trust in routine regulatory examinations or
investigations, or litigation.
(e) Prepare quarterly board materials with regard to sales and other
distribution related data reasonably requested by the Board of Trustees.
(f) Prepare materials for the Board of Trustees supporting the annual renewal of
the Distribution Agreement.
(g) Provide all necessary Blue Sky services utilizing ClearSky, a third-party
provider, on behalf of Saratoga, including but not limited to: tracking all
sales per state to registered amounts; filing all required registration
materials; and maintaining fund registrations in accordance with state
securities laws. Work with Saratoga personnel and ClearSky to ensure that the
Portfolios are in full compliance with any applicable state regulatory
requirements.
(h) Perform sales cap testing on an individual Portfolio basis as required by
the NASD and related regulatory and compliance reports, if any.
(i) Keep and maintain all books and records relating to its services in
accordance with Rule 31a-1 and Rule 31a-2 under the 1940 Act.
B. Legal Administration Services
FDI will provide the following routine legal administration services
("Routine Administrative Services"):
1. Corporate and Secretarial Services
(a) Provide the necessary complement of Assistant Secretaries for the Trust.
(b) Maintain general corporate calendar and track all legal and compliance
requirements through annual cycles.
(c) Prepare board meeting materials (four (4) quarterly board meetings per
year), including but not limited to:
o Prepare agenda and background materials for legal approval, including
explanatory memorandums and resolutions
o Make presentations
o Monitor annual approval requirements
o Prepare extensive background material for annual
review of advisory fees, major corporate structural
changes, etc.
o Prepare minutes
o Follow-up on matters raised at meetings
o Keep Trustees apprised of important and relevant industry developments
o Prepare treasury and compliance reports
(d) Maintain Agreement and Declaration of Trust and By-Laws of the Trust.
(e) Draft contracts, assist in negotiation and planning, as appropriate. For
example negotiate, draft and keep current the following contracts: (i)
investment advisory and sub-advisory contracts; (ii) distribution agreement;
(iii) bank agreements; (iv) broker/dealer agreements; (v) transfer agency
agreement; (vi) custody agreement; (vii) administration
agreement/sub-administration agreement; (viii) 12b-1 plans and related
agreements; (ix) shareholder servicing plans and related agreements; (x) XXX
custodian agreements; (xi) bi-party repurchase agreements; (xii) tri-party
repurchase agreements; (xiii) futures account agreement and procedural
safekeeping agreement; (xiv) loan agreements; and (xv) various other routine
agreements and amendments.
2. SEC and Public Disclosure Assistance
(a) Prepare and file via XXXXX one annual amendment to the Trust's registration
statement, including updating prospectuses and statement of additional
information (not including any amendment requiring major prospectus revisions or
the addition of new portfolios or classes).
(b) Review Form N-SAR, Form 24F-2, annual and semi-annual shareholder reports
for legal disclosure requirements.
(c) Monitor fidelity bond and directors' and officers' errors and omissions
policies and file such fidelity bond with the Securities and Exchange
Commission.
(d) Provide legal assistance for shareholder communications.
3. Legal Consulting and Planning
(a) Provide general legal advice on matters relating to portfolio management,
portfolio operations, mutual fund sales, development of advertising materials,
changing or improving prospectus disclosure, and any potential changes in the
fund's investment policies, operations, or structure.
(b) Provide general legal advice on reasonable routine banking, fiduciary,
corporate and securities law issues.
(c) Maintain a continuing awareness of significant emerging regulatory and
legislative developments which may affect the Portfolios, update the investment
adviser on those developments, and provide related planning assistance.
(d) Develop or assist in developing guidelines and procedures to improve overall
compliance by the Trust and its various agents.
(e) Provide advice with regard to Portfolio litigation matters, routine Trust
examinations and investigations by regulatory agencies.
(f) Provide advice regarding long term planning for the Trust including the
creation of new portfolios, corporate structural changes, mergers, acquisitions,
and other asset gathering plans including new distribution methods.
(g) Maintain effective communications with Trust counsel and counsel to the
"non-interested" Trustees.
(h) Create and implement timing and responsibility system for outside legal
counsel when necessary to implement major projects and the legal management of
such projects.
(i) Monitor activities and billing practices of outside counsel performing
services for the Trust or in connection with related Portfolio activities.
4. Compliance
(a) Consulting regarding all testing that is done by the agents of the Trust to
assist the adviser in complying with Portfolio prospectus guidelines and
limitations, 1940 Act requirements, and Internal Revenue Code requirements.
(b) Jointly create Compliance Manuals and workshops for advisory personnel with
the agents of the Trust or investment adviser.
(c) Consultation and advice for resolution of compliance questions along with
Trust counsel, the investment adviser and the fund accountant.
(d) Be actively involved with the management of SEC and other regulatory
examinations.
(e) Assist portfolio managers with compliance matters including reviewing the
Compliance Manual on a regular basis and attending compliance meetings with the
portfolio managers.
(f) Assist in developing guidelines and procedures to improve overall compliance
by the Trust and its various agents.
(g) Maintain legal liaison with and provide legal advice and counsel to the
Trust regarding its relationships, contractual or otherwise, with the various
Trust agents, such as the investment adviser, investment sub-adviser, custodian,
transfer agent, and auditors with respect to their activities on behalf of the
Trust.
(h) Provide advice regarding all Portfolio distribution arrangements for
compliance with applicable banking and broker/dealer regulations.
(i) Maintain the Trust's Code of Ethics and administer, with assistance from the
agents of the Trust, compliance by the Trustees, officers and "access persons"
under the terms of the Trust's Code of Ethics and Securities and Exchange
Commission regulations.
* * *
FDI is willing to provide any extraordinary legal administration
services ("Extraordinary Legal Administrative Services") to the Trust. All of
the extraordinary legal functions set forth below may be accomplished wholly or
partially by FDI depending upon the circumstances (e.g., work flow and timing
demands) surrounding each request.
Additional compensation payable by Saratoga to FDI for the provision of
extraordinary services is either (i) a flat fee to be negotiated after the scope
of the project has been accurately and completely defined; or (ii) a fee for a
particular project based on an hourly rate of between $125 and $150 depending
upon the complexity of the project. Only personnel with an Assistant Vice
President title or higher with FDI would xxxx on an hourly basis.
Extraordinary Legal Administrative Services may, depending upon the
circumstances, include the following:
(a) Shareholder Meetings
o Draft Proxies
o Organize, attend and keep minutes
o Work with the Transfer Agent on solicitations and vote tabulation
o Provide legal presence at meetings
(b) Draft Proxy/Solicitation Documents on Form N-14 (Fund Mergers).
(c) An annual post-effective amendment that involves major prospectus revisions
or the addition of new investment portfolios or classes.
(d) Board meeting materials for significant corporate restructuring or other
major changes as well as more than four board meetings during a twelve month
period.
(e) More than one Post-Effective Amendment in any twelve month period.
(f) Advice regarding conversion of pooled funds and certain other bank specific
advice.
(g) Monitor and participate in the preparation of no-action requests and
application documents for exemptive orders.
C. Financial Administration Services
1. Financial Administration/Compliance
(a) Provide the appropriate complement of Assistant Treasurers to assume certain
specified responsibilities (these functions will be based upon the day to day
work completed by knowledgeable staff assembled by Saratoga including the fund
accountant).
(b) Prepare and file, with assistance from the agents of the Trust: (i),
unaudited financial statements and schedules of investments as required for
annual and semi-annual reports; (ii) XXXXX on-line filings related to annual and
semi-annual reports; (iii) XXXXX on-line filings related to Form N-SAR; and (iv)
XXXXX on-line filings related to Form 24F-2
(c) Calculate with assistance from the agents of the Trust, Portfolio
performance and Saratoga's asset allocation models' performance, and report to
outside services as directed by Trust management.
(d) Prepare, with assistance from the agents of the Trust, mutually agreed upon
financial materials for review by the Board of Trustees such as: distribution
summaries, deviations of xxxx-to-market valuation and amortized cost monitoring
for the money market funds.
(e) Monitor, with assistance from the agents of the Trust, compliance with the
following: each Portfolio's investment limitations and restrictions (e.g.,
issuer or industry diversification, etc.) listed in the current Prospectus and
Statement of Additional Information; each Portfolio's requirements under Section
851 of the Internal Revenue Code for qualification as a regulated investment
company (e.g., 90% income, diversification tests); approved issuers' listings
for repurchase agreements, Rule 17a-7 and Rule 12d-3 reporting.
(f) Perform, with assistance from and based upon trial balances and portfolio
holdings supplied by the agents of the Trust, the following additional
compliance services: monthly tax qualification testing, including gross income
tests, and 25% and 50% asset diversification tests; 1940 Act testing, including
diversification, illiquid securities and investments in other investment
companies; consultation and advising to remedy compliance issues.
(g) Provide, with assistance from the agents of the Trust, all the necessary tax
compliance duties and services, including but not limited to: 90% minimum
distribution test; 50% assets test for tax-exempt funds; 50% asset test for
foreign tax credit pass through; identification of "private activity" tax
exempt; identification of passive foreign investment companies; and
identification of foreign currency transactions.
(h) Calculate, with assistance from the agents of the Trust, Portfolio expense
projections, revising accruals as needed. Review, on a monthly basis, expenses
based on actual charges annualized and accrued daily, including expenses based
on a percentage of the Portfolio's average daily net assets (advisory and
administrative fees).
(i) Calculate, with assistance from the agents of the Trust, the monthly
management and advisory fees for each Portfolio, such calculation to be approved
for payment by an officer of the Trust.
(j) Review and monitor, with assistance from the agents of the Trust,
xxxx-to-market comparisons and Rule 2a-7 requirements for money market funds.
(k) Provide mutual fund industry fee and performance information, as needed for
Board materials and the annual report management discussion and analysis, from
its own resources to the extent available or otherwise from resources acceptable
to the Trust provided that any charges associated with information provided by
third parties shall be paid by the Trust.
(l) Assist (along with the fund accountant) the Trust's adviser in valuing
securities which are not readily salable.
(m) Assist with and coordinate, with assistance from the agents of the Trust,
communications and data collections with regard to any regulatory examinations
or investigations, and yearly audits by independent accountants and be involved
with the planning and conducting of audits and examinations.
2. CDSC Financing Arrangement
(a) Recording on a Portfolio-by-Portfolio basis of all receivables purchased.
(b) Calculating and accounting for, on a Portfolio-by-Portfolio basis, all
collections related to the purchased receivables, including contingent deferred
sales charges and Rule 12b-1 fees.
(c) Maintenance of required records directly related to the purchased
receivables and the ensuing collections, including furnishing upon request any
documents as needed by the seller or purchaser.
(d) Provide a detailed monthly report summarizing receivables activity,
including calculations of fees and interest as required by the program
documents.
(e) Perform and monitor compliance testing as required by the program documents,
providing additional monthly reports to document compliance requirements.
(f) Provide control point between the purchaser, seller and service provider(s).
(g) Report receivable activity to the Board of Trustees.
(h) Respond to inquiries of the purchaser and seller.
(i) Participate in the communication among the purchaser, seller, service
provider(s), and outside auditors as needed, in connection with the review of
purchased receivables activity.
(j) Document procedures as identified and developed with all interested parties,
including auditors, associated with the purchased receivables process.
EXHIBIT B
Services Provided by Saratoga Capital Management
(a) Complete or cause the Trust's other service providers to complete the August
31, 1999 year-end audit process, including but not limited to, the preparation
and timely filing of all tax related documents and financial statements.
(b) Cause the Trust's other service providers to provide all spreadsheets and
procedures currently in place relating to the Trust's treasury/financial
administration, with historical copy and formulas intact, to FDI as soon as
practicable after the effectiveness of this Agreement.
(c) Cause the Trust's other service providers to furnish any and all information
to and assist FDI in taking any other actions that may be reasonably necessary
in connection with FDI providing those services listed in Exhibit A.
(d) Cause the Trust's transfer agent to provide sales of the Shares to FDI or
Clear Sky to assure compliance with applicable state securities and Blue Sky
laws.
(e) Cause the Trust's transfer agent to give necessary information for the
preparation of quarterly reports in a form satisfactory to FDI regarding Rule
12b-1 fees, front-end sales loads, back-end sales loads, if applicable, and
other data regarding sales and sales loads as required by the 1940 Act or as
requested by the Board of Trustees of the Trust.
(f) Cause the Trust's transfer agent to provide FDI with all necessary
information, including all historical information, so that FDI can calculate the
maximum sales charges payable by the Portfolios pursuant to the NASD's Conduct
Rules and the actual sales charges paid by the Portfolios, if applicable; and
cause the Trust's transfer agent to provide such information in a form
satisfactory to FDI no less often than monthly for every Portfolio and on a
daily basis for any Portfolio where FDI determines that the remaining limit is
approaching zero, if applicable.
(g) Submit all sales literature and advertisements to FDI for legal/compliance
review in advance of use, and incorporate such changes as FDI may reasonably
request therein. FDI will file such materials and obtain such approvals for
their use as may be required by the SEC or NASD. For purposes of this Agreement
"sales literature" and "advertisements" mean brochures, letters, electronic
media, training materials and dealers' guides, materials for oral presentations
and all other similar materials, whether transmitted directly to potential
shareholders or published in print or audio-visual media, but does not include
generic materials that do not mention the Portfolios or the Shares.
(h) Monitor the performance of the Registered Representatives with respect to
compliance with the NASD's Conduct Rules, and in particular the NASD's
interpretation of the applicability of Rule 3040 of the NASD's Conduct Rules to
certain activities of persons registered as representatives with an NASD member
and as an investment adviser with the SEC, and who conduct their advisory
activities away from their NASD employer/member as described in the NASD's
Special Notice to Members 94-44.
(i) Identify persons employed by Saratoga that will become Registered
Representatives and assist FDI in ascertaining that such persons meet all
requirements established for being a Registered Representative by the SEC, NASD
and relevant state securities commissions.
(j) (i) Identify persons to enter into appropriate agreements with FDI for the
solicitation of Portfolio Shares, such as securities dealers, financial
institutions and other industry professionals such as investment advisers and
estate planning firms (collectively referred to herein as "Selling Broker
Dealers"); (ii) assist FDI in ascertaining that such persons meet any
requirements established for Selling Broker-Dealers by law, the Trust or FDI;
(iii) request that FDI enter into selling agreements with each such Selling
Broker-Dealer ("Selling Agreements") (Exhibit C), such request to be signed by a
duly authorized officer or employee of Saratoga who shall be a person listed on
Exhibit D until such time as Saratoga amends or supplements such list, and
Saratoga will assist in the performance of the necessary due diligence to
determine the qualification of the prospective Selling Broker-Dealer pursuant to
clause (ii) above; (iv) submit such Selling Broker-Dealer request and all
related due diligence materials that Saratoga may have to FDI; (v) assist FDI in
coordinating the execution of Selling Agreements between FDI and the Selling
Broker-Dealers; and (vi) use its best efforts to insure that no sales are
executed or processed prior to obtaining an executed Selling Agreement from the
Selling Broker-Dealer making the sale.
(k) Provide administrative support (e.g. telemarketing and fulfillment services)
with regard to, and use its best efforts to monitor the performance of, the
Selling Broker-Dealers in their solicitation and execution of sales of the
Shares and all activities related thereto, including compliance with applicable
law, the Selling Agreements, and the multi-class procedures.
(l) Use reasonable efforts to monitor the Selling Broker-Dealers in their
resolution of as of trades with respect to Shares of the Portfolios in order to
mitigate the risk of loss to FDI and the Portfolios from such as of trades.
(m) Report to FDI, to the extent that Saratoga is aware, any and all actions or
inactions by any Selling Broker-Dealer that (i) fail to comply with the terms of
any Selling Agreements, (ii) violate any applicable laws of any governmental
authorities, including the NASD's Conduct Rules, or (iii) violate any other
agreements or procedures with which such Selling Broker-Dealer is required to
comply.
(n) (i) Provide the form of confirmation statement to be used for sale of the
Shares to FDI and provide or cause to be provided to customers of the Selling
Broker-Dealers and to the Selling Broker-Dealers such confirmations of all
transactions in the Shares as may be required by the 1934 Act and the Selling
Agreements, and (ii) use reasonable efforts to monitor the Trust's transfer
agent in its preparation and mailing of such confirmations regarding the sales
of the Shares and report to FDI any deficiencies of which Saratoga is aware in
the transfer agent's performance of such activities.
(o) Report sales-related complaints to FDI and consult with FDI concerning the
manner in which such complaints will be addressed.
(p) Provide FDI with copies of, or access to, any documents that FDI may
reasonably request and will notify FDI as soon as possible of any matter
materially affecting FDI's performance of its services under this Agreement.
EXHIBIT C
AUTHORIZED SARATOGA REPRESENTATIVES
The following individuals are authorized to request the issuance of
sales agreements to clients and/or potential clients of The Saratoga Advantage
Trust:
Xxxxx X. Xxxxxxxxxxx
Xxxxx X. Xxxx
