Exhibit 9(a)
THE HIGHLAND FAMILY OF FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made the 14th day of March, 1997, between The Highland Family
of Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts with its principal place of business at Two
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000 and Forum Administrative Services, LLC
(the "Administrator"), a limited liability corporation organized under the laws
of the State of Delaware with its principal place of business at Xxx Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxx 00000.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
may issue its shares of beneficial interest, par value $0.0001 per share (the
"Shares"), in separate series and classes; and
WHEREAS, the Trust desires that the Administrator perform administrative
services for series of the Trust now existing or that in the future may be
created, and for classes that may in the future be created in each of the
separate investment portfolios of the Trust as listed on Schedule A hereto, as
it may be amended from time to time (each a "Fund" and, collectively, the
"Funds"), and the Administrator is willing to provide those services on the
terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Administrator do hereby agree as
follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints the Administrator, and the Administrator hereby
agrees, to act as administrator of the Trust for the period and on the terms
set forth in this Agreement. In connection therewith, the Trust has delivered
to the Administrator copies of its Declaration of Trust and Bylaws, the Trust's
Registration Statement and all amendments thereto filed with the Securities and
Exchange Commission ("SEC") pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), or the Act (the "Registration Statement") and the
current Prospectus and Statement of Additional Information of each Fund
(collectively, as currently in effect and as amended or supplemented, the
"Prospectus") and shall promptly furnish the Administrator with all amendments
of or supplements to the foregoing.
SECTION 2. ADMINISTRATIVE DUTIES
(a) Subject to the direction and control of the board of trustees of the
Trust (the "Board"), the Administrator shall manage all aspects of the Trust's
operations with respect to the Funds except those which are the responsibility
of Highland Investment Group L.P., or any other investment adviser to a Fund or
the Funds (the "Adviser").
(b) With respect to the Trust or each Fund, as applicable, the
Administrator shall:
(i) at the Trust's expense, provide the Trust with, or arrange for the
provision of, the services of persons competent to perform such
legal, administrative and clerical functions not otherwise described
in this Section 2(b) as are necessary to provide effective operation
of the Trust;
(ii) oversee (A) the preparation and maintenance by the Adviser and the
Trust's custodian, transfer agent, dividend disbursing agent and
fund accountant (or if appropriate, prepare and maintain) in such
form, for such periods and in such locations as may be required by
applicable law, of all documents and records relating to the
operation of the Trust required to be prepared or maintained by
the Trust or its agents pursuant to applicable law; (B) the
reconciliation of account information and balances among the
Adviser and the Trust's custodian, transfer agent, dividend
disbursing agent and fund accountant; (C) the transmission of
purchase and redemption orders for Shares; (D) the notification to
the Adviser of available funds for investment; and (E) the
performance of fund accounting, including the calculation of the net
asset value of the Shares;
(iii) oversee the performance of administrative and professional services
rendered to the Trust by others, including its custodian, transfer
agent and dividend disbursing agent as well as legal, auditing,
shareholder servicing and other services performed for the Funds;
(iv) file or oversee the filing of each document required to be filed by
the Trust in electronic format with the SEC;
(v) be responsible for and assist in the preparation and the printing of
the periodic updating of the Registration Statement and Prospectus;
(vi) prepare and file or oversee the preparation and filing of the
Trust's tax returns;
(vii) oversee the preparation of financial statements and related reports
to the Trust's shareholders, the SEC and state and other securities
administrators;
(viii) be responsible for and assist in the preparation of proxy and
information statements and any other communications to shareholders;
(ix) at the request of the Board, provide the Trust with adequate general
office space and facilities and provide persons suitable to the
Board to serve as officers of the Trust;
(x) assist the Adviser in monitoring Fund holdings for compliance with
Prospectus investment restrictions and assist in preparation of
compliance reports;
(xi) prepare, file and maintain the Trust's governing documents,
including the Declaration of Trust, the Bylaws and minutes of
meetings of trustees and shareholders;
(xii) with the cooperation of the Trust's counsel, the Adviser, the
officers of the Trust and other relevant parties, prepare and
disseminate materials for meetings of the Board;
(xiii) maintain the Trust's existence in good standing under applicable
state law;
(xiv) ensure that such Shares are properly and duly registered with the
SEC and oversee the registration, or preparation of applicable
filings with respect to the Shares with the various state and other
securities commissions and the monitoring of sales of Shares;
(xv) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for
sales literature of the Trust and other appropriate purposes;
(xvi) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of
each Fund as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), and satisfy the
diversification requirements applicable to insurance products under
the Code, and prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other distributions to
shareholders;
(xvii) advise the Trust and the Board on matters concerning the Trust and
its affairs;
(xviii) calculate, review and account for Fund expenses, report on Fund
expenses on a periodic basis and pay all Fund bills;
(xix) prepare Fund budgets, pro-forma financial statements, expense and
profit/loss projections and fee waiver/expense reimbursement
projections on a periodic basis;
(xx) prepare financial statement expense information; and
(xxi) perform the recordkeeping, reporting and other tasks required to be
performed by the Trust's administrator as specified in the various
procedures adopted by the Board; provided, that Forum need not
perform any such task except upon 60 days notice.
(c) Forum shall provide such other services and assistance relating to
the affairs of the Trust as the Trust or an Adviser may, from time to time,
reasonably request.
(d) Forum shall maintain records relating to its services, such as
journals, ledger accounts and other records, as are required to be maintained
under the Act and Rule 31a-1 thereunder. The books and records pertaining to
the Trust that are in possession of the Administrator shall be the property of
the Trust. The Trust, or the Trust's authorized representatives, shall have
access to such books and records at all times during the Administrator's normal
business hours. Upon the reasonable request of the Trust, copies of any such
books and records shall be provided promptly by the Administrator to the Trust
or the Trust's authorized representatives. In the event the Trust designates a
successor to any of the Administrator's obligations under this Agreement, the
Administrator shall, at the expense and direction of the Trust, transfer to
such successor all relevant books, records and other data established or
maintained by the Administrator under this Agreement.
SECTION 3. STANDARD OF CARE
The Administrator shall give the Trust the benefit of its best judgment
and efforts in rendering its services to the Trust and 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, the Administrator against any
liability to 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 gross
negligence in the performance of its duties hereunder, or by reason of reckless
disregard of its obligations and duties under this Agreement.
SECTION 4. EXPENSES
The Trust shall be responsible for and assumes the obligation for payment
of all of its other expenses, including: (a) the fee payable under Section 5
hereof; (b) the fees payable to the Adviser under an agreement between the
Adviser and the Trust; (c) expenses of issue, repurchase and redemption of
Shares; (d) interest charges, taxes and brokerage fees and commissions,
including the fees and commissions of introducing brokers; (e) premiums of
insurance for the Trust, its trustees and officers and fidelity bond premiums;
(f) fees, interest charges and expenses of third parties, including the Trust's
custodian, transfer agent, dividend disbursing agent and fund accountant; (g)
fees of pricing, interest, dividend, credit and other reporting services; (h)
costs of membership in trade associations; (i) telecommunications expenses; (j)
funds transmission expenses; (k) auditing, legal and compliance expenses; (l)
costs of forming the Trust and maintaining its existence; (m) costs of
preparing and printing Trust's Prospectuses, subscription application forms and
shareholder reports and delivering them to existing shareholders; (n) expenses
of meetings of shareholders and proxy solicitations therefor; (o) costs of
maintaining books of original entry for portfolio and fund accounting and other
required books and accounts, of calculating the net asset value of Shares of
the Trust and of preparing tax returns; (p) costs of reproduction, stationary
and supplies and postage; (q) fees and expenses of the Trust's trustees; (r)
compensation of the Trust's officers and employees who are not employees of the
Adviser or the Administrator or their respective affiliated persons and costs
of other personnel (who may be employees of the Adviser, Forum or their
respective affiliated persons) performing services for the Trust; (s) costs of
Board, Board committee, shareholder and other corporate meetings; (t) SEC
registration fees and related expenses; (u) state or foreign securities laws
registration fees and related expenses; and (v) all fees and expenses paid by
the Trust in accordance with any distribution plan adopted pursuant to Rule
12b-1 under the Act or under any shareholder service plan or agreement.
SECTION 5. COMPENSATION
(a) For the administrative services provided by the Administrator
pursuant to this Agreement, the Trust shall pay the Administrator, with respect
to each of the Funds, a fee at an annual rate equal to the amount set forth in
Schedule B hereto. Such fees shall be accrued by the Trust daily and shall be
payable monthly in arrears on the first day of each calendar month for services
performed under this Agreement during the prior calendar month. Upon the
termination of this Agreement, the Trust shall pay to the Administrator such
compensation as shall be payable prior to the effective date of such
termination. Fees will begin to accrue for each Fund on the latter of the
effective date of this agreement or the date of commencement of operations of
the Fund.
(b) Notwithstanding anything in this Agreement to the contrary, the
Administrator and its affiliated persons may receive compensation or
reimbursement from the Trust with respect to (i) the provision of services on
behalf of the Funds in accordance with any distribution plan adopted by the
Trust pursuant to Rule 12b-1 under the Act, (ii) the provision of shareholder
support or other services or (iii) service as a trustee or officer of the
Trust.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund on
the date on which the Trust's Registration Statement relating to the Shares of
the Fund become effective.
(b) This Agreement shall continue in effect for twelve months and,
thereafter, shall be in effect indefinitely.
(c) Nothwithstanding the provisions of the foregoing paragraph (b), this
Agreement may be terminated with respect to a Fund at any time, without the
payment of any penalty (i) by the Board on not less than 60 days' written
notice to the Administrator or (ii) by the Administrator on not less than 60
days' written notice to the Trust. The obligations of sections 3, 4, and 5
shall survive this Agreement.
(d) This Agreement and the rights and duties under this Agreement shall
not be assignable by either the Administrator or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 7. ACTIVITIES OF ADMINISTRATOR
Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the
Administrator's right, or the right of any of its officers, directors or
employees (whether or not they are a trustee, officer, employee or other
affiliated person of the Trust) to engage in any other business or to devote
time and attention to the Administration 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, trust, firm, individual or association.
SECTION 8. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and the Administrator agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Administrator's rights or claims relate in settlement of such
rights or claims, and not to the trustees of the Trust, the shareholders of the
Funds, or any Fund other than the Fund to which the Administrator's rights or
claims relate.
SECTION 9. MISCELLANEOUS
(a) Except for the Schedules, no provisions of this Agreement may be
amended or modified in any manner except by a written agreement properly
authorized and executed by both parties hereto and, if required by the Act, by
a vote of a majority of the outstanding voting securities of the Trust.
(b) 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 the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(c) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(f) The terms "vote of a majority of the outstanding voting securities,"
"interested person," and "affiliated person" shall have the meanings ascribed
thereto in the Act.
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 HIGHLAND FAMILY OF FUNDS
Xxxxxx Xxxx III
_______________________________
Xxxxxx Xxxx III
President
FORUM ADMINISTRATIVE
SERVICES, LLC
Xxxx X. Xxxxxx
_______________________________
Xxxx X. Xxxxxx
President
THE HIGHLAND FAMILY OF FUNDS
ADMINISTRATION AGREEMENT
SCHEDULE A
FUNDS OF THE TRUST
AS OF MARCH 14, 1997
Highland Growth Fund
Highland Aggressive Growth Fund
SCHEDULE B
FEES AND EXPENSES
(I) ADMINISTRATION SERVICE FEES
Fee as a % of the Annual
Fund Average
Daily Net Assets of the Fund
Highland Growth Fund 0.10% on the first $100 million
Highland Aggressive Growth Fund of each Fund's average daily net
assets
plus
0.05% on the balance of each
Fund's average daily net assets
Note 1. Notwithstanding the table above, the minimum fee per Fund shall
be $3,334 per month subject to the accrual provisions set forth in
Section 5(a).
(II) OTHER FEES
Preparation of Federal income tax return, $1,800
including any extenstions or amendments.
Preparation and execution of excise tax return, $1,000
including any extensions or amendments
Preparation and filing of a document with the $200 plus (i) $5/text page
SEC in electronic format and
(ii) $15/tabular page
