OPERATING SERVICES AGREEMENT
SANTA ▇▇▇▇▇▇▇ GROUP OF MUTUAL FUNDS, INC.
AS AMENDED AUGUST 1, 2007
This Agreement is made and entered into as of the 30th day of September,
1998, amended April 1, 2002 and August 1, 2007, by and between The Santa ▇▇▇▇▇▇▇
Group of Mutual Funds, Inc., a Maryland corporation (the "Company"), and SBG
Capital Management, Inc., a California corporation (hereinafter referred to as
"Manager").
This Agreement has been amended as of August 1, 2007 in order to (i)
reflect the name change of the Manager and the ▇▇▇▇▇▇ Growth Fund; (ii) amend
Section 1(b) of the Agreement to indicate that the Manager will not be
responsible for the fees of investing in shares of acquired funds; (iii) amend
the fee schedule in Section 3 of the Agreement; and (iv) reflect the change in
the address of the Company and the Manger in Section 6 of the Agreement.
WHEREAS, the Company is a Maryland Corporation authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ( "Advisers Act");
WHEREAS, the Company presently offers the following series:
PFW Water Fund
The Montecito Fund
(each a "Fund" and together the "Funds");
WHEREAS, the Company wishes to engage Manager, to provide, or arrange for
the provision of, certain operational services which are necessary for the
day-to-day operations of the Funds in the manner and on the terms and conditions
hereinafter set forth, and Manager wishes to accept such engagement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Funds and Manager agree as follows:
1. Obligations of Manager.
(a) Services. The Company hereby retains Manager to provide or, upon
approval of the Company, arrange for other companies to provide, the following
services to each Fund in the manner and to the extent that such services are
reasonably necessary for the operation of the Funds (collectively, the
"Services"):
i. accounting services and functions, including costs and
expenses of any independent public accountants;
ii. non-litigation related legal and compliance services,
including the expenses of maintaining registration and qualification of the
Funds under federal, state and any other applicable laws and regulations;
iii. dividend disbursing agent, dividend reinvestment agent,
transfer agent, and registrar services and functions (including answering
inquiries related to shareholder accounts);
iv. custodian and depository services and functions;
v. distribution, marketing, and/or underwriting services;
vi. independent pricing services;
vii. preparation of reports describing the operations of the
Funds, including the costs of providing such reports to broker-dealers,
financial institutions and other organizations which render services and
assistance in connection with the distribution of shares of the Funds;
viii. sub-accounting and recordkeeping services and functions
(other than those books and records required to be maintained by Manager under
the Investment Advisory Agreement between the Fund and Manager), including
maintenance of shareholder records and shareholder information concerning the
status of their Fund accounts by investment advisors, broker-dealers, financial
institutions, and other organizations on behalf of Manager;
ix. shareholder and board of directors communication services,
including the costs of preparing, printing and distributing notices of
shareholders' meetings, proxy statements, prospectuses, statements of additional
information, Fund reports, and other communications to the Funds' shareholders,
as well as all expenses of shareholders' and board of directors' meetings,
including the compensation and reimbursable expenses of the directors of the
Funds;
x. other day-to-day administrative services, including the
costs of designing, printing, and issuing certificates representing shares of
the Funds, and premiums for the fidelity bond maintained by the Funds pursuant
to Section 17(g) of the Act and rules promulgated thereunder (except for such
premiums as may be allocated to third parties, as insureds thereunder).
(b) Exclusions from Service. Notwithstanding the provisions of
Paragraph 1(a) above, the Services shall not include and Manager will not be
responsible for any of the following:
i. all brokers' commissions, issue and transfer taxes, and
other costs chargeable to the Funds in connection with securities transactions
to which a Fund is a party or in connection with securities owned by the Fund or
the Fund;
ii. borrowing costs (including dividend expenses on securities
sold short and the interest on indebtedness), if any, incurred by a Fund or the
Funds;
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iii. the taxes, including franchise, income, issue, transfer,
business license, and other corporate fees payable by a Fund or the Funds to
federal, state, county, city, or other governmental agents;
iv. the expenses, including fees and disbursements of counsel,
in connection with litigation by or against a Fund or the Funds;
v. the fees and expenses of investing in shares of acquired
funds; and
vi. any other extraordinary expense of a Fund or Funds.
(c) Books and Records. All books and records prepared and maintained
by Manager for the Funds under this Agreement shall be the property of the
Company and, upon request therefor, Manager shall surrender to the Company such
of the books and records so requested.
(d) Staff and Facilities. Manager assumes and shall pay for
maintaining the staff, personnel, space, equipment and facilities necessary to
perform its obligations under this Agreement.
2. Fees. Each Fund will pay to Manager on the last day of each month fees
at an annual rate and based upon the various classes of shares of the Fund, as
follows:
PFW Water Fund : 0.75% of net assets
Montecito Fund: 0.64% of net assets
Such fees to be computed daily based upon the net asset value of such shares as
determined by a valuation made in accordance with each Fund's procedure for
calculating Fund net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. During any period when the determination of
a Fund's net asset value is suspended by the directors of the Fund, the net
asset value of a share of that Fund as of the last business day prior to such
suspension shall, for the purpose of this Paragraph 2(a), be deemed to be the
net asset value at the close of each succeeding business day until it is again
determined.
3. Information. The Company will, from time to time, furnish or otherwise
make available to Manager such information relating to the business and affairs
of the Company as Manager may reasonably require in order to discharge its
duties and obligations hereunder.
4. Term. This Agreement shall remain in effect until terminated in
accordance with one of the following:
(a) the Company, at any time and without the payment of any penalty
may terminate this Agreement with respect to one or more Fund upon 120 days
written notice to Manager;
(b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder); and
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(c) Manager may terminate this Agreement with respect to one or more
Fund without payment of penalty on 120 days written notice to the Company.
5. Notices. Except as otherwise provided in this Agreement, any notice or
other communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
If to the Fund: If to the Manager:
The Santa ▇▇▇▇▇▇▇ Group SBG Capital Management, Inc.
of Mutual Funds, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Co-President
Co-President
6. Miscellaneous.
(a) Performance Review. Manager will permit representatives of the
Company, including the Company's independent auditors, to have reasonable access
to the personnel and records of Manager in order to enable such representatives
to monitor the quality of services being provided and the level of fees due
Manager pursuant to this Agreement. In addition, Manager shall promptly deliver
to the board of directors of the Company such information as may reasonably be
requested from time to time to permit the board of directors to make an informed
determination regarding continuation of this Agreement and the payments
contemplated to be made hereunder.
(b) Choice of Law. This Agreement shall be construed in accordance
with the laws of the State of Maryland and the applicable provisions of the Act.
To the extent the applicable law of the State of Maryland or any of the
provisions herein conflict with the applicable provisions of the Act, the latter
shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
The Santa ▇▇▇▇▇▇▇ Group of SBG Capital Management, Inc.
Mutual Funds, Inc.
By: /s/ By: /s/
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▇▇▇▇ ▇. ▇▇▇▇▇, Co-President ▇▇▇▇ ▇. ▇▇▇▇▇, Co-President
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