Exhibit 99.k.1
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 19th day of October, 2004, by and
between Madison Harbor Balanced Strategies, Inc. (the "Fund"), a Maryland
corporation, and SEI Investments Global Funds Services (the "Administrator"), a
Delaware business trust.
WHEREAS, the Fund is a registered, non-diversified, closed-end
management investment company under the Investment the Company Act of 1940, as
amended (the "1940 Act") consisting of shares of beneficial interest ("Shares");
and
WHEREAS, the Fund desires the Administrator to provide, and the
Administrator is willing to provide, administrative and accounting services to
the Fund on the terms and conditions hereinafter set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Fund and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Fund hereby retains
the Administrator to furnish the Fund with accounting and administrative
services as set forth in this Agreement, and the Administrator hereby accepts
such employment. The Administrator shall be deemed to be an independent
contractor for all purposes herein.
ARTICLE 2. ADMINISTRATIVE AND ACCOUNTING SERVICES. The Administrator
shall perform or supervise the performance by others of the accounting and
administrative services set forth in Schedule A hereto. In performing its duties
under this Agreement, the Administrator will act in all material respects in
accordance with the Fund's governing documents and Prospectus as they may be
amended (provided copies are delivered to the Administrator). The Administrator
(i) shall not have or be required to have any authority to supervise the
investment or reinvestment of the securities or other properties which comprise
the assets of the Fund and (ii) shall not provide any investment advisory
services to the Fund, and shall have no liability related to the foregoing. The
Administrator shall provide the Fund with all necessary office space, equipment,
personnel, compensation and facilities (including facilities for Shareholder'
and Board of Trustees' meetings) for providing such services identified in
Schedule A. The Administrator may sub-contract with third parties to perform
certain of the services to be performed by the Administrator hereunder;
provided, however, that the Administrator shall remain principally responsible
to the Fund for the acts and omissions of such other entities. In meeting its
duties hereunder, the Administrator shall have the general authority to do all
acts deemed in the Administrator's good faith belief to be necessary and proper
to perform its obligations under this Agreement.
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 pay all
compensation, if any, of officers of the Fund 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 Fund retained by
the Trustees of the Fund to perform services on behalf of the Fund.
(B) FUND EXPENSES. The Fund assumes and shall pay or cause to be
paid all expenses of the Fund not otherwise allocated in this Agreement,
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 and tender offer materials 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 any affiliated
corporation of the Administrator, the costs of Trustees' meetings, insurance,
interest, brokerage costs, litigation and other extraordinary or nonrecurring
expenses, and all fees and charges of service providers to the Fund. The Fund
shall reimburse the Administrator for its reasonable out-of-pocket expenses,
including all reasonable charges for SAS 70 audit charges, and reasonable
copying, postage, telephone, and fax charges incurred by the Administrator in
the performance of its duties.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR. The Fund shall pay
to the Administrator compensation at the annual rate specified in Schedule B to
this Agreement until this Agreement is terminated in accordance with Article 6.
Such compensation shall be calculated and accrued monthly, and paid to the
Administrator monthly, within 30 days of month-end, otherwise the Administrator
shall be entitled to charge and/or set-off such amounts against any account of
the Fund. 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
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.
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. (As used in this Article 5, the term "Administrator" shall
include officers, employees and other agents of the Administrator as well as
that entity itself.) Under no circumstances shall the Administrator be liable to
the Fund for consequential, indirect or punitive damages.
So long as the Administrator, or its agents, acts without willful
misfeasance, bad faith or gross negligence in the performance of its duties, and
without reckless disregard of its obligations and duties hereunder, the Fund
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 any act or omission of the Administrator in carrying out
its duties hereunder. The indemnity and defense provisions set forth herein
shall indefinitely survive the termination of this Agreement.
The indemnification 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. If in any case the Fund may be asked to indemnify or hold
the Administrator harmless, the Administrator shall promptly advise the Fund of
the pertinent facts concerning the situation in question, and the Administrator
will use all reasonable care to identify and notify the Fund promptly concerning
any situation which presents or appears likely to present the probability of
such a claim for indemnification, but failure to do so shall not affect the
rights hereunder.
The Fund 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 Fund elects to assume the defense of
any such claim, the defense shall be conducted by counsel chosen by the Fund and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Fund elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Fund does not elect to assume the
defense of a suit, it will reimburse the Administrator for the fees and expenses
of any counsel retained by the Administrator.
The Administrator may apply to the Fund at any time for instructions
and may consult counsel for the Fund or its own counsel and with accountants and
other experts, at the Fund's expense, 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 Fund
until receipt of written notice thereof from the Fund.
Nothing herein shall make the Administrator liable for the performance
or omissions of unaffiliated third parties not under the Administrator's
reasonable control such as, by way of example and not limitation, custodians,
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investment advisers or sub-advisers, postal or delivery services,
telecommunications providers and processing and settlement services.
ARTICLE 6. VALUATION. The Administrator is entitled to rely on the
price information provided by the underlying funds into which the Fund invests,
brokers and custodians in order to calculate the Fund's net asset value (and the
value of Shareholders' capital accounts based upon such valuation) and the
Administrator shall not be liable for any valuation errors resulting from the
use of such information.
ARTICLE 7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement
shall become effective on the date set forth in Schedule B hereto and shall
remain in effect for the full duration of the Initial Term and each Renewal
Term, each as set forth in Schedule B, unless terminated in accordance with the
provisions of this Article 6. This Agreement may be terminated only: (a) by
either party at the end of the Initial Term or the end of any Renewal Term on 90
days' prior written notice; (b) by either party hereto on such date as is
specified in written notice given by the terminating party, in the event of a
material breach of this Agreement by the other party, provided the terminating
party has notified the other party of such material breach at least 45 days
prior to the specified date of termination and the breaching party has not
remedied such breach by the specified date; or (c) effective upon the
liquidation of the Fund. For purposes of this paragraph, the term "liquidation"
shall mean a transaction in which the assets of the Fund 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 Fund.
ARTICLE 8. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Fund 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.
ARTICLE 9. CONFIDENTIALITY. The Administrator agrees on behalf of
itself and its employees to treat confidentially all records and other
information relative to the Fund and its Shareholders received by the
Administrator in connection with this Agreement, including any non-public
personal information as defined in Regulation S-P, and that it shall not use or
disclose any such information except for the purpose of carrying out the terms
of this Agreement; provided, however, that Administrator may disclose such
information as required by law or after prior notification to and approval in
writing by the Fund, which approval may not be withheld where the Administrator
may be exposed to civil or criminal contempt proceedings or penalties for
failure to comply.
ARTICLE 10. 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 Fund shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Fund and will be made available
to or surrendered promptly to the Fund on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Fund and follow the Fund'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 Fund has
agreed to indemnify the Administrator against such liability.
ARTICLE 11. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The
Administrator undertakes to comply in all material respects with applicable
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934,
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 including any applicable anti-money laundering laws and
regulations.
ARTICLE 12. INTERNET ACCESS. Data and information may be made
electronically accessible to the Fund and its adviser and/or sub-adviser(s)
through Internet access to one or more links provided by the Administrator ("Web
Links"). All rights in Web Links (including text and "look and feel" attributes)
are owned by the Administrator. Any commercial use of the content or any other
aspect of Web Link requires the written permission
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of the Administrator. Use of the Web Links by the Fund or its agents will be
subject to any terms of use set forth on the web site. All Web Links and the
information (including text, graphics and functionality) in the Web Links is
presented "As Is" and "As Available" without express or implied warranties
including, but not limited to, implied warranties of non-infringement,
merchantability and fitness for a particular purpose. The Administrator neither
warrants that the Web Links will be uninterrupted or error free, nor guarantees
the accessibility, reliability, performance, timeliness, sequence, or
completeness of information provided on the Web Links.
ARTICLE 13. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the entire agreement between the parties hereto and supersedes any prior
agreement, draft or proposal with respect to the subject matter hereof. 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 14. ASSIGNMENT. This Agreement shall not be assignable by
either party without the prior written consent of the other party.
ARTICLE 15. AGREEMENT FOR SOLE BENEFIT OF THE ADMINISTRATOR AND THE
FUND. This Agreement is for the sole and exclusive benefit of the Administrator
and the Fund and will not be deemed to be for the direct or indirect benefit of
the clients or customers of the Administrator or the Fund. The clients or
customers of the Administrator or the Fund will not be deemed to be third party
beneficiaries of this Agreement nor to have any other contractual relationship
with the Administrator by reason of this Agreement and each party hereto agrees
to indemnify and hold harmless the other party from any claims of its clients or
customers against the other party including any attendant expenses and
attorneys' fees, based on this Agreement or the services provided hereunder.
ARTICLE 16. WAIVER. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by written
instrument executed by such party. No failure of either party hereto to exercise
any power or right granted hereunder, or to insist upon strict compliance with
any obligation hereunder, and no custom or practice of the parties with regard
to the terms of performance hereof, will constitute a waiver of the rights of
such party to demand full and exact compliance with the terms of this Agreement.
ARTICLE 17. 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, federal express (or substantially similar delivery service),
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 notice: if to the
Fund, at Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; and
if to the Administrator, Attention: General Counsel, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
ARTICLE 18. FORCE MAJEURE. No breach of any obligation of a party to
this Agreement will constitute an event of default or breach to the extent it
arises out of a cause, existing or future, that is beyond the control and
without negligence of the party otherwise chargeable with breach or default,
including without limitation: work action or strike; lockout or other labor
dispute; flood; war; riot; theft; earthquake or natural disaster. Either party
desiring to rely upon any of the foregoing as an excuse for default or breach
will, when the cause arises, give to the other party prompt notice of the facts
which constitute such cause; and, when the cause ceases to exist, give prompt
notice thereof to the other party.
ARTICLE 19. EQUIPMENT FAILURES. In the event of equipment failures
beyond the Administrator's control, the Administrator shall take reasonable and
prompt 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 20. DEFINITIONS OF CERTAIN TERMS. The term "affiliated
person," when used in this Agreement, shall have the meaning specified in the
1940 Act and the rules and regulations thereunder, subject to such exemptions as
may be granted by the Securities and Exchange Commission.
ARTICLE 21. HEADINGS. All Article headings contained in this Agreement
are for convenience of reference only, do not form a part of this Agreement and
will not affect in any way the meaning or interpretation of
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this Agreement. Words used herein, regardless of the number and gender
specifically used, will be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as the
contract requires.
ARTICLE 22. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware without giving effect to the
conflicts of laws principles therof, and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Delaware, or any of
the provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control.
ARTICLE 23. 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 24. BINDING AGREEMENT. This Agreement, and the rights and
obligations of the parties hereunder, shall be binding on, and inure to the
benefit of, the parties and their respective successors and assigns.
ARTICLE 25. 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 the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
MADISON HARBOR BALANCED STRATEGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
SEI INVESTMENTS GLOBAL FUNDS SERVICES
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
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SCHEDULE A
LIST OF SERVICES
1. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
The Administrator will perform the following accounting services for the Fund:
(i) Journalize investment, capital and income and expense
activities;
(ii) Receive investment activity for investments from investment
adviser in written form and facilitate notification and wire
movement process to such funds;
(iii) Receive buy/sell trade tickets from the Adviser, process the
activity on the books and records of the funds and reconcile
such activity with the fund's custodian;
(iv) Maintain historical tax lots for each security;
(v) Record and reconcile corporate action activity and all other
capital changes;
(vi) Reconcile cash and investment balances of the Fund with the
Fund's custodian(s), and provide the Adviser with the
beginning cash balance available for investment purposes;
(vii) Calculate contractual expenses, including management fees and
incentive allocation, as applicable, in accordance with the
Fund's prospectus;
(viii) Post to and prepare the Statement of Assets and Liabilities
and the Statement of Operations in U.S. dollar terms;
(ix) Prepare and monitor the expense accruals and notify an officer
of the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such disbursements
from the Fund's account with the custodian(s) upon Written
Instructions;
(xi) Calculate capital gains and losses;
(xiii) Determine net income;
(xiv) Determine applicable foreign exchange gains and losses on
payables and receivables, if applicable;
(xv) Transmit or mail copy of the monthly portfolio valuation to
the Adviser;
(xvi) Arrange for the computation of the net asset value in
accordance with the provisions of the Fund's governing
documents and prospectus; and
(xvii) As appropriate, compute total return and expenses.
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2. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
The Administrator will perform the following administration services:
(i) Prepare and file the Fund's Annual and Semi-Annual Reports
with the SEC on Form N-SAR via ▇▇▇▇▇;
(ii) Coordinate with the adviser the preparation and printing of
the Fund's annual and semi-annual shareholder reports;
(iii) Provide such fund accounting and financial reports in
connection with quarterly meetings of the Board of Trustees as
are required or as the Board may reasonably request;
(iv) Manage the tender offer process, including coordinating with
outside service provider to distribute tender offers, track
shareholder responses and tabulate tender offer results;
(v) Coordinate with the Fund's counsel on drafting, reviewing and
filing registration statements and tender offers, and
coordinate printing and delivery of prospectus and tender
offers;
(vi) Assist the Fund in handling and responding to routine
regulatory examinations with respect to records retained or
services provided by the Administrator, and coordinate with
the Fund's legal counsel in responding to any non-routine
regulatory matters with respect to such matters;
(vii) Coordinate as necessary the registration or qualification of
Shares of the Fund with appropriate state securities
authorities; and
(viii) Perform such additional administrative duties relating to the
administration of the Fund as may subsequently be agreed upon
in writing between the Fund and the Administrator.
3. DESCRIPTION OF INVESTOR SERVICES ON A CONTINUOUS BASIS.
The Administrator will perform the following functions:
(i) Maintain the register of Shareholders and enter on such
register all issues, transfers and repurchases of Shares in
the Fund;
(ii) Arrange for the calculation of the issue and repurchase prices
of Shares in the Fund in accordance with the Fund's governing
documents;
(iii) Provide statements to Shareholders on a quarterly basis or as
frequently as may otherwise be agreed that set forth the value
of and appropriate detail for the Shareholder' Shares in the
Fund.
[END OF SCHEDULE A]
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SCHEDULE B
FEES & EXPENSES
ADMINISTRATION, ACCOUNTING SERVICES AND INVESTOR SERVICING FEE:
ASSET BASED FEES - CALCULATED ON THE NET ASSETS OF THE FUND
FUND
-------------------------------------------------------------
FIRST $250 MILLION 10 BP
IN EXCESS OF $250 MILLION 8 BP
ANNUAL MINIMUM FEES - CALCULATED AND PAID MONTHLY
FUND
-------------------------------------------------------------
MINIMUM PER FUND+ $110,000 PER FUND PLUS
$15,000 PER ADDITIONAL
FEEDER
INVESTOR SERVICING AND DIVIDEND DISBURSEMENT FEE:*
All Investor servicing, stock transfer and dividend disbursement to be
outsourced to Forum Financial
$20,000 per year base fee plus $28 per new investor
$3 closed account fee
INTERNET ACCESS TO REGISTRAR SYSTEM: $500 PER MONTH MAINTENANCE FEE
OTHER: All reasonable out of pocket expenses (i.e., blue sky fees,
fulfillment charges, pricing service fees, postage,
registration fees, facsimile and telephone charges) incurred
by the Administrator on behalf of the Fund will be billed to
the Fund quarterly in arrears.
Tax Services (1099's, etc) are not included in the above fee
and will be specifically addressed with the client upon
completion of the offering documents.
TERM: This Agreement shall become effective upon the initial
closing of the Fund, ("Effective Date") and shall remain in
effect through December 31, 2006, 2006 ("Initial Term") and,
thereafter, for successive terms of three years each (each a
"Renewal Term"), unless and until this Agreement is
terminated in accordance with the provisions of Article 6
hereof.
[END OF SCHEDULE B]
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