EXHIBIT (H)(2)
CLASS II
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 18th day of May, 2005, by and between
▇▇▇▇▇▇ Funds, a Massachusetts business trust (the "Trust") on behalf of its
Class II shares ("Class II Shares"), and ▇▇▇▇▇▇ Investment Partners, Inc. (the
"Administrator"), a Pennsylvania corporation.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of common stock;
WHEREAS, each series of common stock of the Trust is issued in one or
more classes;
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
Class II Shares of such portfolios of the Trust as the Trust and the
Administrator may agree on ("Portfolios") and as listed on the "schedule
attached hereto ("Schedule") and made a part of this Agreement, on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Trust hereby retains the
Administrator to act as the administrator of Class II Shares of the Portfolios
and to furnish Class II Shares of the Portfolios with the management and
administrative services as set forth in Article 2 below. The Administrator
hereby accepts such employment to perform the duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust or the Class II Shares
in any way and shall not be deemed an agent of the Trust or the Class II Shares.
ARTICLE 2. ADMINISTRATIVE AND ACCOUNTING SERVICES. The Administrator
shall perform or supervise the performance by others of other administrative
services in connection with the operations of the Class II Shares of the
Portfolios, and, on behalf of the Trust, will investigate, assist in the
selection of and conduct relations with custodians, depositories, accountants,
legal counsel, underwriters, brokers and dealers, corporate fiduciaries,
insurers, banks and persons in any other capacity deemed to be necessary or
desirable for the Class II Shares' operations. The Administrator shall provide
the Trustees of the Trust with such reports regarding investment performance and
compliance with investment policies and applicable laws, rules and regulations
as they may reasonably request but shall have no responsibility for supervising
the performance by any investment adviser or sub-adviser of its
responsibilities. The Administrator may appoint a sub-administrator to perform
certain of the services to be performed by the Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund accounting' and related portfolio accounting
services, all necessary office space, equipment, personnel, compensation and
facilities (including facilities for shareholders' and Board of Trustees'
meetings) for handling the affairs of the Class II Shares of the Portfolios and
such other services as the Trustees may, from time to time reasonably request
and the Administrator shall, from time to time, reasonably determine to be
necessary to perform its obligations under this Agreement. In addition, at the
request of the Trusts Board of Trustees (the "Trustees"), the Administrator
shall make reports to the Trustees concerning the performance of its obligations
hereunder.
Without limiting the generality of the foregoing, the Administrator
shall, with respect to Class II Shares of the Portfolios,:
(A) calculate contractual Trust expenses and control all
disbursements for the Trust, and as appropriate compute the
Trust's yields, total return, expense ratios, portfolio
turnover rate and, if required, portfolio average
dollar-weighed maturity;
(B) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements,
proxy materials, and exemptive applications;
(C) prepare such reports, applications and documents (including
reports regarding the sale and redemption of shares as maybe
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register the Trust's
shares with state securities authorities, monitor sale of
Trust shares for compliance with state securities laws, and
file with the appropriate state securities authorities the
registration statements and reports for the Trust and the
Trust's shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Trust and the
Trust's shares with state securities authorities to enable the
Trust to make a continuous offering of its shares;
(D) develop and prepare communications to shareholders, including
the annual report to shareholders, coordinate mailing
prospectuses, notices, proxy statements, proxies and other
reports to Trust shareholders, and supervise and facilitate
the solicitation of proxies solicited by the Trust for all
shareholder meetings, including tabulation process for
shareholder meetings;
(E) coordinate with Trust counsel the preparation and: negotiation
of, and administer contracts on behalf of the Trust with,
among others, the Trust's investment adviser, distributor,
custodian, and transfer agent;
(F) maintain the Trust's general ledger and prepare the Trust's
financial statements, including expense accruals and payments,
determine the net asset value of the Trust's assets and of the
Trust's shares, and supervise the Trust's transfer agent with
respect to the payment of dividends and other distributions to
shareholders;
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(G) calculate performance data of the Trust and its portfolios for
dissemination to information services covering the investment
company industry;
(H) coordinate and supervise the preparation and filing of the
Trust's tax returns;
(I) examine and review the operations and performance of the
various organizations providing services to the Trust or any
Portfolio of the Trust, including, without limitation, the
Trust's investment adviser, distributor, custodian, transfer
agent, outside legal counsel and independent public
accountants, and at the request of the Trustees, report to the
Trustees on the performance of organizations;
(J) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and
printing of the Trust's semi-annual and annual reports to
shareholders;
(K) provide internal legal and administrative services as
requested by the Trust from time to time;
(L) assist with the design, development, and operation of the
Trust, including new portfolio and Class investment
objectives, policies and structure;
(M) provide individuals acceptable to the Trustees for nomination,
appointment, or election as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trustees;
(N) advise the Trust and its Trustees on matters concerning the
Trust and its affairs;
(O) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as such bonds and policies are
approved by the Trustees;
(P) monitor and advise the Trust and its Portfolios on their
registered investment company status under the Internal
Revenue Code of 1986, as amended;
(Q) perform all administrative services and functions of the Trust
and each Portfolio to the extent administrative services and
functions are not provided to the Trust or such Portfolio
pursuant to the Trust's or such Portfolio's investment
advisory agreement, distribution agreement, custodian
agreement and transfer agent agreement;
(R) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Trust and the Administrator shall determine desirable; and
(S) prepare and file with the Securities and Exchange Commission
("SEC") the semi-annual report for the Trust on Form N-SAR and
all required notices pursuant to Rule 24f-2.
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Also, the Administrator will perform other services for the Trust on behalf of
Class II Shares as agreed from time to time, including, but not limited to
performing internal audit examinations; mailing the annual reports of the
Portfolios; preparing an annual list of shareholders; and mailing notices of
shareholders' meetings, proxies and proxy statements, for all of which the Trust
will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel
necessary to perform its obligations under this Agreement. The
Administrator shall also provide the items which it is
obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all
Trustees of the Trust who are affiliated persons of the
Administrator or any affiliated corporation of the
Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be
obligated to pay the compensation of any employee of the Trust
retained by the Trustees of the Trust to perform services on
behalf of the Trust.
(B) THE TRUST. The Trust on behalf of the Class II Shares assumes
and shall pay or cause to be paid all other expenses of the
Class II Shares not otherwise allocated herein, including,
without limitation, organizational costs, taxes, expenses for
legal and auditing services, the expenses of preparing
(including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy
solicitation material and notices to existing shareholders,
all expenses incurred in connection with issuing and redeeming
shares, the costs of pricing services, the costs of custodial
services, the cost of initial and ongoing registration of the
shares under Federal and state securities laws, fees and
out-of-pocket expenses of Trustees who are not affiliated
persons of the Administrator or the investment adviser to the
Trust or any affiliated corporation of the Administrator or
the investment adviser, the costs of Trustees' meetings,
insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and
charges of investment advisers to the Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the
facilities furnished and the expenses assumed by the
Administrator pursuant to this Agreement, the Trust on behalf
of the Class II Shares shall pay to the Administrator
compensation at an annual rate specified in the Schedules.
Such compensation shall be calculated and accrued daily, and
paid to the Administrator monthly. The Trust on behalf of the
Class II Shares shall also reimburse the Administrator for its
reasonable out-of-pocket expenses, including the travel and
lodging expenses incurred by its officers and employees in
connection with attendance at meetings of the Trustees.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
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shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) SURVIVAL OF COMPENSATION RATES. All rights of compensation
under this Agreement for services performed as of the
termination date shall survive the termination of this
Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. 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. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Administrator" shall include directors, officers, employees and other
agents of the Administrator as well as that corporation itself).
So long as the Administrator, or its agents, acts in good faith and
with due diligence the Trust, on behalf of the Class II Shares, assumes full
responsibility and shall indemnify the Administrator and hold it harmless from
and against any and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses, damages, costs, charges,
reasonable counsel fees and disbursements, payments, expenses and liabilities
(including reasonable investigation expenses) arising directly or indirectly out
of said administration, transfer agency, and dividend disbursing relationships
to the Class II Shares of the Trust or any other service rendered to the Class
II Shares of the Trust hereunder. The indemnity and defense provisions set forth
herein Shall indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust on behalf of the Class II Shares may be
asked to indemnify or hold the Administrator harmless, the Trust on behalf of
the Class II Shares shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further understood that the
Administrator will use all reasonable care to identify and notify the Trust on
behalf of the Class II Shares promptly concerning any situation which presents
or appears likely to present the probability of such a claim for indemnification
against the Trust on behalf of the Class II Shares, but failure to do so in good
faith shall not affect the rights hereunder.
The Trust on behalf of the Class II Shares shall be entitled to
participate at its own expense or, if it so elects, to assume the defense of any
suit brought to enforce any claims subject to this indemnity provision. If the
Trust on behalf of the Class II Shares elects to assume the defense of any such
claim, the defense shall be conducted by counsel chosen by the Trust on behalf
of the Class II Shares and satisfactory to the Administrator, whose approval
shall not be unreasonably withheld. In the event that the Trust on behalf of the
Class II Shares elects to assume the defense of any suit and retain counsel, the
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Administrator shall bear the fees and expenses of any additional counsel
retained by it. If the Trust on behalf of the Class II Shares does not elect to
assume the defense of a suit, it will reimburse the Administrator for the
reasonable fees and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Trust on behalf of the Class II
Shares at any time for instructions and may consult counsel for the Trust or its
own counsel and with accountants and other experts with respect to any matter
arising in connection with the Administrator's duties, and the Administrator
shall not be liable or accountable for any action taken or omitted by it in good
faith in accordance with such instruction or with the opinion of such counsel,
accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests, including, without limitation, other classes of shares
of the Trust. It is understood that Trustees, officers, employees and
shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 7. CONFIDENTIALITY. The Administrator agrees on behalf of
itself and its employees to treat confidentially all records and other
information relative to the Trust and the Class II Shares and for prior present
or potential shareholders and relative to the Administrator and its prior,
present or potential customers, 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
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
ARTICLE 8. EQUIPMENT FAILURES. In the event of equipment failures
beyond the Administrator's control, the Administrator shall, at no additional
expense to the Class II Shares, take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto. The
Administrator shall develop and maintain a plan for recovery from equipment
failures which may include contractual arrangements with appropriate parties
making reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
ARTICLE 9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The
Administrator undertakes to comply with all applicable requirements of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
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amended, the 1940 Act and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be performed by
the Administrator hereunder.
ARTICLE 10. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement
shall become effective on the date set forth in the Schedules and shall remain
in effect for the initial term of the Agreement (the "Initial Term") and each
renewal term thereof (each, a "Renewal Term"), each as set forth in the
Schedules, unless terminated in accordance with the provisions of this Article
10. This Agreement may be terminated only (a) by the mutual written agreement of
the parties; (b) by either party hereto on 90 days' written notice; or (c) as to
Class II Shares of any Portfolio or the Trust, effective upon the liquidation of
such Portfolio, Class II Shares of the Portfolio or the Trust, as the case may
be. For purposes of this Article 10, the term "liquidation" shall mean a
transaction in which the assets of the Trust, a Portfolio, or Class II Shares of
a Portfolio are sold or otherwise disposed of and proceeds therefrom are
distributed in cash to the shareholders in complete liquidation of the interests
of such shareholders in the entity.
This Agreement shall not be assignable by the Administrator, without
the prior written consent of the Trust, except to an entity that is controlled
by, or under common control, with, the Administrator.
ARTICLE 11. AMENDMENTS. This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such, change or waiver is sought.
ARTICLE 12. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Administrator against such liability.
ARTICLE 13. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the SEC.
ARTICLE 14. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
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notice: if to the Trust, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: President; and if to the Administrator at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Operating Officer.
ARTICLE 15. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 16. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. LIMITATION OF LIABILITY. The Administrator is hereby
expressly put on notice of the limitation of liability as set forth in Article
XI of the Trust's Declaration of Trust and agrees that the obligations pursuant
to this Agreement of a particular Portfolio, Class and of the Trust with respect
to that Portfolio or Class shall be limited solely to the assets of that
Portfolio or Class, and the Administrator shall not seek satisfaction of any
such obligation from any other Portfolio or Class, the shareholders of any
Portfolio or Class, the Trustees, officers, employees or agents of the Trust, or
any of them.
ARTICLE 18. BINDING AGREEMENT. This Agreement, and the rights and
obligations of the parties and the Class II Shares and Portfolios hereunder,
shall be binding on, and inure to the benefit of, the parties and the Portfolios
and the respective successors and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
▇▇▇▇▇▇ FUNDS
On behalf of its Class II Shares
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Chief Compliance Officer and Secretary
▇▇▇▇▇▇ INVESTMENT PARTNERS, INC.
By: /S/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Chairman and Chief Investment Officer
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SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF MAY 18, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ BEHALF OF ITS CLASS II SHARES
AND
▇▇▇▇▇▇ INVESTMENT PARTNERS, INC.
Portfolios: This Agreement shall apply to Class II Shares of all
Portfolios of the Trust, either now in the future created.
Fees: Pursuant to Article 4, Section A, the Trust shall pay the
Administrator compensation for services rendered to the Class
II Shares of Portfolios at an annual rate, which is calculated
daily and paid monthly, equal to 0.15 % of the Trust's average
daily net assets attributable to Class II Shares up to and
including $2 billion, and 0.12% of all such assets in excess
of $2 billion.
Term: This Agreement shall become effective on May 18, 2005, and
shall remain in effect for an Initial Term of two (2) years
from such date and, thereafter, for successive Renewal Terms
of one (1) year each, unless and until this Agreement is
terminated in accordance with the provisions of Article 10
hereof.
