FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of July, 2003,
by and between The Merger Fund VL, a Delaware statutory trust (the "Fund") and
U.S. Bancorp Fund Services, LLC, a Wisconsin limited liability company
("USBFS").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company, and
is authorized to issue shares of beneficial interest in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, USBFS is, among other things, in the business of providing fund
administration services for the benefit of its customers; and
WHEREAS, the Fund desires to retain USBFS to provide fund administration
services for each series of the Fund listed on Exhibit A hereto (as amended from
time to time) (each a "Fund", collectively the "Funds").
NOW, THEREFORE, in consideration of the promises and mutual covenants
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 of USBFS as Administrator
The Fund hereby appoints USBFS as administrator of the Fund on the terms
and conditions set forth in this Agreement, and USBFS hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement.
2. Services and Duties of USBFS
USBFS shall provide the following fund administration services for the
Funds, including but not limited to:
A. General Fund Management:
(1) Act as liaison among all Fund service providers.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in USBFS's or its
affiliate's own offices).
c. Non-investment-related statistical and research data as
needed.
(3) Coordinate the Fund's Board of Trustees' (the "Board of Trustees"
or the "Trustees") communications, such as:
a. Establish meeting agendas.
b. Prepare reports for the Board of Trustees based on financial
and administrative data.
c. Evaluate independent auditor.
d. Secure and monitor fidelity bond and director and officer
liability coverage, and make the necessary Securities and
Exchange Commission (the "SEC") filings relating thereto.
e. Recommend dividend declarations to the Board of Trustees,
prepare and distribute to appropriate parties notices
announcing declaration of dividends and other distributions
to shareholders.
f. Provide personnel to serve as officers of the Fund if so
elected by the Board of Trustees, attend Board of Trustees
meetings and present materials for Trustees' review at such
meetings.
(4) Audits:
a. Prepare appropriate schedules and assist independent
auditors.
b. Provide information to the SEC and facilitate audit process.
c. Provide office facilities.
(5) Assist in overall operations of the Fund.
(6) Pay Fund expenses upon written authorization from the Fund. (7)
Monitor arrangements under shareholder services or similar plan.
B. Compliance:
(1) Regulatory Compliance:
a. Monitor compliance with the 1940 Act requirements,
including:
(i) Asset diversification tests.
(ii) Total return and SEC yield calculations.
(iii) Maintenance of books and records under Rule 31a-3.
(iv) Code of Ethics requirements for the disinterested
Trustees of the Fund.
b. Monitor Fund's compliance with the policies and investment
limitations of the Fund as set forth in its current
prospectus (the "Prospectus") and statement of additional
information (the "SAI").
c. Maintain awareness of applicable regulatory and operational
service issues and recommend dispositions.
(2) Blue Sky Compliance:
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings relating
to the qualification of the securities of the Fund, each
Fund , or class of shares of a Fund, as applicable, so as to
enable the Fund to make a continuous offering of its shares
in all states.
b. Monitor status and maintain registrations in each state.
c. Provide information regarding material developments in state
securities regulation.
(3) SEC Registration and Reporting:
a. Assist Fund counsel in updating the Prospectus and SAI and
in preparing proxy statements and Rule 24f-2 notices.
b. Prepare and file annual and semiannual reports, Form N-SAR
filings and Rule 24f-2 notices.
c. Coordinate the printing, filing and mailing of publicly
disseminated Prospectuses and reports, and amendments and
supplements thereto.
d. File fidelity bond under Rule 17g-1.
e. File shareholder reports under Rule 30b2-1.
f. Monitor sales of each Fund's shares and ensure that such
shares are properly registered or qualified, as applicable,
with the SEC and the appropriate state authorities.
(4) IRS Compliance:
a. Monitor the Fund's status as a regulated investment company
under Subchapter M, including without limitation, review of
the following:
(i) Asset diversification requirements.
(ii) Qualifying income requirements.
(iii) Distribution requirements.
b. Calculate required distributions (including excise tax
distributions).
C. Financial Reporting:
(1) Provide financial data required by the Fund's Prospectus and SAI.
(2) Prepare financial reports for officers, shareholders, tax
authorities, performance reporting companies, the Board of
Trustees, the SEC, and independent auditors.
(3) Supervise the Fund's custodian and fund accountants in the
maintenance of the Fund's general ledger and in the preparation
of the Fund's financial statements, including oversight of
expense accruals and payments, of the determination of net asset
value of the Fund's net assets and of the Fund's shares, and of
the declaration and payment of dividends and other distributions
to shareholders.
(4) Compute the yield, total return and expense ratio of each class
of each Fund, and each Fund's portfolio turnover rate.
(5) Monitor the expense accruals and notify the Fund's management of
any proposed adjustments.
(6) Prepare monthly financial statements, which include without
limitation the following items:
a. Schedule of Investments.
b. Statement of Assets and Liabilities.
c. Statement of Operations.
d. Statement of Changes in Net Assets.
e. Cash Statement.
f. Schedule of Capital Gains and Losses.
(7) Prepare quarterly broker security transaction summaries.
D. Tax Reporting:
(1) Prepare and file on a timely basis appropriate federal and state
tax returns including, without limitation, Forms 1120/8610 with
any necessary schedules.
(2) Prepare state income breakdowns where relevant.
(3) File Form 1099 Miscellaneous for payments to Trustees and other
service providers.
(4) Monitor wash sale losses.
(5) Calculate eligible dividend income for corporate shareholders.
3. Compensation
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit B hereto
(as amended from time to time). The Fund shall pay all fees and
reimbursable expenses within thirty (30) calendar days following receipt of
the billing notice, except for any fee or expense subject to a good faith
dispute. The Fund shall notify USBFS in writing within thirty (30) calendar
days following receipt of each invoice if the Fund is disputing any amounts
in good faith. The Fund shall settle such disputed amounts within ten (10)
calendar days of the day on which the parties agree to the amount to be
paid. With the exception of any fee or expense the Fund is disputing in
good faith as set forth above, unpaid invoices shall accrue a finance
charge of one and one-half percent (1 1/2%) per month, after the due date.
Notwithstanding anything to the contrary, amounts owed by the Fund to USBFS
shall only be paid out of the assets and property of the particular Fund
involved.
4. Indemnification; Limitation of Liability
A. USBFS shall exercise reasonable care in the performance of its duties
under this Agreement. USBFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond USBFS's control, except a loss
arising out of or relating to USBFS's refusal or failure to comply
with the terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its duties under
this Agreement. Notwithstanding any other provision of this Agreement,
if USBFS has exercised reasonable care in the performance of its
duties under this Agreement, the Fund shall indemnify and hold
harmless USBFS from and against any and all claims, demands, losses,
expenses, and liabilities of any and every nature (including
reasonable attorneys' fees) which USBFS may sustain or incur or which
may be asserted against USBFS by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder, except for any and all claims, demands, losses, expenses,
and liabilities arising out of or relating to USBFS's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence or from willful misconduct on its part in performance of
its duties under this Agreement, (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction
provided to USBFS by any duly authorized officer of the Fund, such
duly authorized officer to be included in a list of authorized
officers furnished to USBFS and as amended from time to time in
writing by resolution of the Board of Trustees.
USBFS shall indemnify and hold the Fund harmless from and against any
and all claims, demands, losses, expenses, and liabilities of any and
every nature (including reasonable attorneys' fees) that the Fund may
sustain or incur or that may be asserted against the Fund by any
person arising out of any action taken or omitted to be taken by USBFS
as a result of USBFS's refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, USBFS shall take all reasonable
steps to minimize service interruptions for any period that such
interruption continues beyond USBFS's control. USBFS will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of USBFS. USBFS
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision for emergency
use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund shall be entitled
to inspect USBFS's premises and operating capabilities at any time
during regular business hours of USBFS, upon reasonable notice to
USBFS.
Notwithstanding the above, USBFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may
be asked to indemnify or hold the indemnitee harmless, the indemnitor
shall be fully and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood that the
indemnitee will use all reasonable care to notify the indemnitor
promptly concerning any situation that presents or appears likely to
present the probability of a claim for indemnification. The indemnitor
shall have the option to defend the indemnitee against any claim that
may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon
the indemnitor shall take over complete defense of the claim, and the
indemnitee shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this section.
The indemnitee shall in no case confess any claim or make any
compromise in any case in which the indemnitor will be asked to
indemnify the indemnitee except with the indemnitor's prior written
consent.
5. Proprietary and Confidential Information
USBFS agrees on behalf of itself and its directors, officers, and employees
to treat confidentially and as proprietary information of the Fund all
records and other information relative to the Fund and prior, present, or
potential shareholders of the Fund (and clients of said shareholders), and
not to use such records and information for any purpose other than the
performance of its responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld and may not be withheld where USBFS 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 Fund.
Further, USBFS will adhere to the privacy policies adopted by the Fund
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from
time to time (the "Act"). Notwithstanding the foregoing, USBFS will not
share any nonpublic personal information concerning any of the Fund's
shareholders to any third party unless specifically directed by the Fund or
allowed under one of the exceptions noted under the Act.
6. Term of Agreement; Amendment
This Agreement shall become effective as of the date first written above
and will continue in effect for a period of one year. Subsequent to the
initial one-year term, this Agreement may be terminated by either party
upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However,
this Agreement may be amended by mutual written consent of the parties.
7. Records
USBFS shall keep records relating to the services to be performed hereunder
in the form and manner, and for such period, as it may deem advisable and
is agreeable to the Fund, but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section
31 of the 1940 Act and the rules thereunder. USBFS agrees that all such
records prepared or maintained by USBFS relating to the services to be
performed by USBFS hereunder are the property of the Fund and will be
preserved, maintained, and made available in accordance with such
applicable sections and rules of the 1940 Act and will be promptly
surrendered to the Fund on and in accordance with its request.
8. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin, without regard to conflicts of law principles. 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 SEC thereunder.
9. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
USBFS's duties or responsibilities hereunder is designated by the Fund by
written notice to USBFS, USBFS will promptly, upon such termination and at
the expense of the Fund, transfer to such successor all relevant books,
records, correspondence, and other data established or maintained by USBFS
under this Agreement in a form reasonably acceptable to the Fund (if such
form differs from the form in which USBFS has maintained, the Fund shall
pay any expenses associated with transferring the data to such form), and
will cooperate in the transfer of such duties and responsibilities,
including provision for assistance from USBFS's personnel in the
establishment of books, records, and other data by such successor.
10. No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower USBFS to
act as agent for the other party to this Agreement, or to conduct business
in the name, or for the account, of the other party to this Agreement.
11. Data Necessary to Perform Services
The Fund or its agent shall furnish to USBFS the data necessary to perform
the services described herein at such times and in such form as mutually
agreed upon. If USBFS is also acting in another capacity for the Fund,
nothing herein shall be deemed to relieve USBFS of any of its obligations
in such capacity.
12. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other party.
13. 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 on the date
delivered personally or by courier service, or three (3) days after sent by
registered or certified mail, postage prepaid, return receipt requested, or
on the date sent and confirmed received by facsimile transmission to the
other party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: _Jim Xxxxx
Facsimile No.: 000-000-0000
and notice to the Fund shall be sent to:
The Merger Fund VL
000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Attn.: Xxxxxxxxx X. Xxxxx
Facsimile No: 000-000-0000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.
The MERGER FUND VL U.S. BANCORP FUND SERVICES, LLC
By: /s/ Xxxxxxxxx X. Xxxxx By: /s/ Xxx X. Xxxxxxx
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Xxxxxxxxx X. Xxxxx Xxx X. Xxxxxxx
Title: President Title: President
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