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Exhibit (h)(2)
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 23rd day of April, 2000, by and
between e-xxxxxx Funds, a Delaware business trust (the "Trust"), and Sunstone
Financial Group, Inc., a Wisconsin corporation (the "Administrator").
WHEREAS, the Trust is an open-end investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act") and is
authorized to issue shares of beneficial interests (the "Shares") in separate
series with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust and the Administrator desire to enter into an
agreement pursuant to which the Administrator shall provide administration and
fund accounting services to such investment portfolios of the Trust as are
listed on Schedule A hereto and any additional investment portfolios the Trust
and Administrator may agree upon and include on Schedule A as such Schedule may
be amended from time to time (such investment portfolios and any additional
investment portfolios are individually referred to as a "Fund" and collectively
the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT
The Trust hereby appoints the Administrator as administrator and fund
accountant of the Funds for the period and on the terms set forth in this
Agreement. The Administrator accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. SERVICES AS ADMINISTRATOR
(a) Subject to the direction and control of the Trust's Board of
Trustees and utilizing information provided by the Trust and its agents, the
Administrator will provide the services listed on Schedule B hereto. The duties
of the Administrator shall be confined to those expressly set forth therein, and
no implied duties are assumed by or may be asserted against the Administrator
hereunder.
(b) The Trustees of the Trust shall cause the officers, investment
adviser, legal counsel, independent accountants, transfer agent, custodian and
other service providers for the Funds to cooperate with the Administrator and to
provide the Administrator with such information, documents and advice relating
to the Funds and the Trust as reasonably requested by the Administrator, in
order to enable the Administrator to perform its duties hereunder. In connection
with its duties hereunder, the Administrator shall be entitled to rely, and
shall be held harmless by the Trust when acting in reliance (without
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investigation or verification), upon the instruction, advice, information or any
documents relating to the Funds or the Trust provided to the Administrator by an
officer or representative of the Funds or by any of the aforementioned persons.
Fees charged by such persons shall be an expense of the Trust. The Administrator
shall be entitled to rely on any document that it reasonably believes to be
genuine and to have been signed or presented by the proper party. The
Administrator shall not be held to have notice of any change of authority of any
officer, agent, representative or employee of the Trust until receipt of written
notice thereof from the Trust.
(c) To the extent required by Rule 31a-3 under the 1940 Act, the
Administrator hereby agrees that all records which it maintains for the Trust
pursuant to its duties hereunder are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the Trust's
request. Subject to the terms of Section 6, and where applicable, the
Administrator further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records described in Schedule B which are
maintained by the Administrator for the Trust.
(d) It is understood that in determining security valuations, the
Administrator employs one or more pricing services to determine valuations of
portfolio securities for purposes of calculating net asset values of the Funds.
The Administrator shall identify to the Trust and the Board of Trustees any such
pricing service(s) utilized on behalf of the Trust. The Administrator is
authorized to rely on the prices provided by such service(s) or by the Funds'
investment adviser(s) or other authorized representatives of the Funds, and
shall act in accordance with pricing procedures approved by Sunstone and the
Board of the Trust. Sunstone shall not be liable for losses to the Trust, its
securityholders or otherwise as a result of its reliance on the valuations
provided by the approved pricing service(s) or representatives or its reliance
on security valuation procedures established by the Trust.
(e) The Trust's Board of Trustees and the Funds' investment adviser
have and retain primary responsibility for all compliance matters relating to
the Funds including but not limited to compliance with the 1940 Act, the
Internal Revenue Code of 1986, as amended, and the policies and limitations of
each Fund relating to the portfolio investments as set forth in the Prospectus
and Statement of Additional Information. Sunstone's monitoring and other
functions hereunder shall not relieve the Board and the investment adviser of
their primary day-to-day responsibility for assuring such compliance.
3. FEES; DELEGATION; EXPENSES
(a) In consideration of the services rendered pursuant to this
Agreement, the Trust will pay the Administrator a fee, computed daily and
payable monthly, plus out-of-pocket expenses, each as provided in Schedule C
hereto. The Trust shall also pay the Administrator for organizational start-up
services provided on behalf of the Funds as specified in Schedule B. Fees shall
be paid by each Fund at a rate that would aggregate at least the applicable
minimum fee for each Fund.
(b) For the purpose of determining fees payable to the Administrator,
net asset value shall be computed in accordance with the Trust's Prospectuses
and resolutions of the Trust's Board of Trustees. The fee for the period from
the day of the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion that such period bears to the
full monthly period.
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Upon any termination of this Agreement before the end of any month, the fee for
such part of a month shall be pro-rated according to the proportion which such
period bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. Should the Trust be liquidated, merged with or
acquired by another fund or investment company, any accrued fees shall be
immediately payable.
(c) The Administrator will bear all expenses incurred by it in
connection with the performance of its services under Section 2, except as
otherwise provided herein. The Administrator shall not be required to pay or
finance any costs and expenses incurred in the operation of the Funds,
including, but not limited to: taxes; interest; brokerage fees and commissions;
salaries, fees and expenses of officers and Trustees; Securities and Exchange
Commission (the "Commission") fees and state Blue Sky fees; advisory fees;
charges of custodians, transfer agents, dividend disbursing and accounting
services agents and other service providers; security pricing services;
insurance premiums; outside auditing and legal expenses; costs of organization
and maintenance of trust existence; taxes and fees payable to federal, state and
other governmental agencies; preparation, typesetting, printing, proofing and
mailing of prospectuses, statements of additional information, supplements,
notices, forms and applications and proxy materials for regulatory purposes and
for distribution to current shareholders; preparation, typesetting, printing,
proofing and mailing and other costs of shareholder reports; expenses in
connection with the electronic transmission of documents and information
including electronic filings with the Commission and the states; research and
statistical data services; expenses incidental to holding meetings of the Fund's
shareholders and Trustees; fees and expenses associated with internet, e-mail
and other related activities; and extraordinary expenses. Expenses incurred for
distribution of shares, including the typesetting, printing, proofing and
mailing of prospectuses for persons who are not shareholders of the Trust, will
be borne by the Funds' investment adviser, except for such expenses permitted to
be paid by the Trust under a distribution plan adopted in accordance with
applicable laws. Administrator shall not be required to pay any Blue Sky fees
unless and until it has received the amount of such fees from the Trust.
4. PROPRIETARY AND CONFIDENTIAL INFORMATION
The Administrator agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds' shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval 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 proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Trust. Records and information which have become
known to the public through no wrongful act of the Administrator or any of its
employees, agents or representatives, and information which was already in the
possession of the Administrator prior to receipt thereof, shall not be subject
to this paragraph.
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5. LIMITATION OF LIABILITY
(a) The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds in connection with the
matters to which this Agreement relates, except for a loss resulting from the
Administrator's willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Furthermore, the Administrator shall not be
liable for any action taken or omitted to be taken in accordance with written or
oral instructions received by the Administrator from an officer or
representative of the Trust.
(b) The Administrator assumes no responsibility hereunder, and shall
not be liable, for any default, damage, loss of data, errors, delay or any other
loss whatsoever caused by events beyond its reasonable control. The
Administrator will, however, take all reasonable steps to minimize service
interruptions for any period that such interruption continues beyond its
control.
(c) In no event and under no circumstances shall the Administrator, its
affiliates or any of its or their officers, directors, members, agents or
employees be liable to anyone, including, without limitation, the other party,
under any theory of tort, contract, strict liability or other legal or equitable
theory for lost profits, exemplary, punitive, special, indirect or consequential
damages for any act or failure to act under any provision of this Agreement
regardless of whether such damages were foreseeable and even if advised of the
possibility thereof.
6. TERM
(a) This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to each Fund
not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed. This Agreement shall continue in
effect with respect to each Fund until April 23, 2002 (the "Initial Term").
Thereafter, if not terminated, this Agreement shall continue automatically in
effect as to each Fund for successive annual periods, provided such continuance
is specifically approved at least annually by (i) the Trust's Board of Trustees,
and (ii) by the Administrator.
(b) This Agreement may be terminated with respect to any one or more
particular Funds without penalty after the Initial Term (i) upon mutual consent
of the parties, or (ii) by either party upon not less than ninety (90) days'
written notice to the other party (which notice may be waived by the party
entitled to the notice). The terms of this Agreement shall not be waived,
altered, modified, amended or supplemented in any manner whatsoever except by a
written instrument signed by the Administrator and the Trust.
(c) Notwithstanding anything herein to the contrary, upon the
termination of this Agreement or the liquidation of a Fund or the Trust, the
Administrator shall deliver the records of the Fund(s) and/or Trust as the case
may be to the Trust or person(s) designated by the Trust at the Trust's cost and
expense, and thereafter the Trust or its designee shall be solely responsible
for preserving the records for
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the periods required by all applicable laws, rules and regulations. In addition,
in the event of termination of this Agreement, or the proposed liquidation or
merger of the Trust or a Fund(s), and the Trust requests the Administrator to
provide services in connection therewith, the Administrator shall provide such
services and be entitled to such compensation as the parties may mutually agree.
7. NON-EXCLUSIVITY
The services of the Administrator rendered to the Trust are not deemed
to be exclusive. The Administrator may render such services and any other
services to others, including other investment companies. The Trust recognizes
that from time to time directors, officers and employees of the Administrator
may serve as trustees, directors, officers and employees of other entities
(including other investment companies), and that the Administrator or its
affiliates may enter into other agreements with such other entities.
8. GOVERNING LAW; INVALIDITY
This Agreement shall be governed by Wisconsin law, excluding the laws
on conflicts of laws. To the extent that the applicable laws of the State of
Wisconsin, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or order of
the Commission thereunder. Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the parties.
9. NOTICES
Any notice required or permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given when sent by
registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Administrator shall be sent to Sunstone Financial Group,
Inc., 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX, 00000, Attention:
Xxxxxx X. Xxxxxxx, with a copy to General Counsel, and notice to the Trust shall
be sent to e-xxxxxx Funds, 000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxx Xxx Xxxxxxxx, with a copy to Xxxxxxx Xxxxxx,
Xxxxxxx, Carton & Xxxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000-0000.
10. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement of the parties hereto.
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11. TRUST LIMITATIONS
This Agreement is executed by the Trust with respect to each of the
Funds and the obligations hereunder are not binding upon any of the Trustees,
officers or shareholders of the Trust individually but are binding only upon the
Fund to which such obligations pertain and the assets and property of such Fund.
All obligations of the Trust under this Agreement shall apply only on a
Fund-by-Fund basis, and the assets of one Fund shall not be liable for the
obligations of another Fund.
12. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
E-XXXXXX FUNDS
(the "Trust")
By:
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President
SUNSTONE FINANCIAL GROUP, INC.
("Administrator")
By:
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President
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SCHEDULE A
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
e-XXXXXX FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
NAME OF FUNDS
e-xxxxxx Internet Fund
e-xxxxxx Net30 Index Fund
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SCHEDULE B
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
e-XXXXXX FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
SERVICES
Subject to the direction and control of the Trust's Board of Trustees and
utilizing information provided by the Trust and its agents, the Administrator
will:
o provide office space, facilities, equipment and personnel to carry out its
services hereunder
o compile data for and prepare with respect to the Funds timely Notices to the
Commission required pursuant to Rule 24f-2 under the 1940 Act and
Semi-Annual Reports on Form N-SAR;
o assist in the preparation for execution by the Trust and file all federal
income and excise tax returns and state income tax returns (and such other
required tax filings as may be agreed to by the parties) other than those
required to be made by the Trust's custodian or transfer agent, subject to
review and approval of the Trust and the Trust's independent accountants;
o prepare the financial statements for the Annual and Semi-Annual Reports
required pursuant to Section 30(d) under the 1940 Act;
o provide financial and Fund performance information for inclusion in the
Registration Statement for the Trust (on Form N-1A or any replacement
therefor) and any amendments thereto, and Fund performance information for
inclusion in Fund advertising materials;
o determine and periodically monitor each Fund's income and expense accruals
and cause all appropriate expenses to be paid from Trust assets on proper
authorization from the Trust;
o calculate daily net asset values and income factors of each Fund;
o maintain all general ledger accounts and related subledgers;
o perform security valuations using pricing services;
o assist in the acquisition of the Trust 's fidelity bond required by the 1940
Act, monitor the amount of the bond and make the necessary Commission
filings related thereto;
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o from time to time as the Administrator deems appropriate, check each Fund's
compliance with the policies and limitations of each Fund relating to the
portfolio investments as set forth in the Prospectus and Statement of
Additional Information and monitor each Fund's status as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (but these functions shall not relieve the Trust 's investment
adviser and sub-advisers, if any, of their primary day-to-day responsibility
for assuring such compliance);
o maintain, and/or coordinate with the other service providers the maintenance
of, the accounts, books and other documents required pursuant to Rule
31a-1(a) and (b) under the 1940 Act;
o prepare and/or file state securities registration compliance filings, with
the advice of the Trust's legal counsel, in accordance with instructions
from the Trust, which instructions will include the states to qualify in,
the amounts of Shares to initially and subsequently qualify and the warning
threshold to be maintained;
o develop with legal counsel and the secretary of the Trust an agenda for each
board meeting and, if requested by the Trustees, attend board meetings and
prepare minutes;
o prepare Form 1099s for Trustees and other fund vendors;
o calculate dividend and capital gains distributions subject to review and
approval by the Trust and its independent accountants; and
o generally assist in the Trust 's administrative operations as mutually
agreed to by the parties.
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.
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SCHEDULE C
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
e-XXXXXX FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
ASSET BASED FEES
MINIMUM
NAME OF FUND AVERAGE NET ASSETS BASIS POINTS* ANNUAL FEE*
------------ ------------------ ------------ -----------
Net30 Index Fund Up to $50 Million 15.0 $70,000
$50 Million to $100 million 7.5
$100 Million to $250 Million 5.0
$250 Million to $500 Million 3.0
Over $500 Million 2.0
MINIMUM
NAME OF FUND AVERAGE NET ASSETS BASIS POINTS* ANNUAL FEE*
------------ ------------------ ------------ -----------
Internet Fund Up to $50 Million 15.0 $70,000
$50 Million to $100 million 7.5
$100 Million to $250 Million 5.0
$250 Million to $500 Million 3.0
Over $500 Million 2.0
The minimum annual fee is subject to an annual escalation of five percent (5%),
which escalation shall be effective commencing one year from the effective date
of each Fund and the corresponding date each year thereafter. No amendment of
this Schedule B shall be required with each escalation. The foregoing fee
schedule assumes one class of shares for the e-xxxxxx Net30 Index Fund and one
class for the e-xxxxxx Internet Fund. For each additional class, two basis
points are added for asset levels up to $250 million, and $5,000 per additional
class is added to each minimum fee. Additional fees shall apply when adding any
additional Fund(s) and/or classes as compensation for the Administrator's
services in connection with the organization of the new Fund(s) or classes. The
Administrator shall provide such services and be entitled to such compensation
as the parties may mutually agree in writing.
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OUT-OF-POCKET AND OTHER RELATED EXPENSES
The Trust shall also pay/reimburse the Administrator's out-of-pocket and other
related expenses. Out-of-pocket expenses include, but are not limited to,
travel, lodging and meals in connection with travel in connection with Board
meetings and otherwise on behalf of the Trust, programming and related expenses
(previously incurred or to be incurred by Administrator) in connection with
providing electronic transmission of data between the Administrator and the
Funds' other service providers, brokers, dealers and depositories, fees and
expenses of pricing services, fees of research services including Lexis/Nexis,
Morningstar and Lipper, NASDAQ and other service interface fees, XXXXX related
fees, long distance telephone charges, and photocopying, faxes, postage and
overnight delivery expenses.
XXXXX FILING PRODUCTION MANAGEMENT FEES
oo Annual Registration Statements (e.g., 485) $1,000
oo Follow-up 497 filings to Annual Registration Statements, $ 850
excluding 497J (see below)
oo Annual and Semiannual Reports (N30D) $ 650
oo Quarterly Reports (N30B-2) $ 400
oo Notice to Accompany SEC Registration Fees (24f-2) $ 300
oo Certification of No Change to Prospectus and/or SAI (497J) $ 300
oo Certificate of Accounting of Securities (N17f-2) $ 300
oo Ads and Sales Literature (482) $ 300
oo Correspondence $ 300
SUNSTONE 4.NAVSM SERVICES (DAILY UPLOADS OF NAVS TO WEBSITE)
oo Set Up Fee (per fund family) $2,000
oo Monthly maintenance fee (perfund) $ 150
