Exhibit 13(ii)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 12th day of January, 1998, by and between
The Monitor Funds, a Massachusetts business trust (the "Trust"), and The
Huntington National Bank (the "Administrator"), a national banking association.
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series of shares of Common Stock; and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such portfolios of the Trust as the Trust and the Administrator may agree on
("Portfolios") and as listed on the schedules attached hereto ("Schedules") and
made a part of this Agreement, on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. Retention of the Administrator. The Trust hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Administrative and Accounting Services. The Administrator
shall perform or supervise the performance by others of other administrative
services in connection with the operations of the Portfolios, and, on behalf of
the Trust, will investigate, assist in the selection of and conduct relations
with custodians, depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolios' operations.
The Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance by any investment adviser
or sub-adviser of its responsibilities. The Administrator may appoint a sub-
administrator to perform certain of the services to be performed by the
Administrator hereunder, provided, however, that the Administrator is not
relieved of its obligations to the Trust as set forth hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund accounting and related portfolio accounting services,
all necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Trustees' meetings
but not Trustees' meetings that are not held at offices of the Administrator)
for handling the affairs of the Portfolios and such other services as the
Trustees may, from time to time, reasonably request and the Administrator shall,
from time to time, reasonably determine to be necessary to perform its
obligations under this Agreement. In addition, at the request of the Trust's
Board of Trustees (the "Trustees"), the Administrator shall make reports to the
Trustees concerning the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Trust expenses and control all disbursements for
the Trust, and as appropriate compute the Trust's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighed maturity;
(b) assist Trust counsel with the preparation of prospectuses, statements
of additional information, registration statements, and proxy
materials;
(c) develop and prepare communications to shareholders, including the
annual report to shareholders, coordinate mailing prospectuses,
notices, proxy statements, proxies and other reports to Trust
shareholders, and supervise and facilitate the solicitation of proxies
solicited by the Trust for all shareholder meetings, including
tabulation process for shareholder meetings;
(d) coordinate with Trust counsel the preparation and negotiation of, and
administer, contracts on behalf of the Trust with, among others, the
Trust's investment adviser, distributor, custodian, and transfer
agent;
(e) maintain the Trust's general ledger and prepare the Trust's financial
statements, including expense accruals and payments, determine the net
asset value of the Trust's assets and of the Trust's shares, and
supervise the Trust's transfer agent with respect to the payment of
dividends and other distributions to shareholders;
(f) examine and review the operations and performance of the various
organizations providing services to the Trust or any Portfolio of the
Trust, including, without limitation, the Trust's investment adviser,
distributor, custodian, transfer agent, outside legal Trust counsel
and independent public accountants, and at the request of the
Trustees, report to the Trustees on the performance of organizations;
(g) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Trust's semi-annual and annual reports to shareholders;
(h) provide administrative services as requested by the Trust from time to
time;
2
(i) assist with the design, development, and operation of the Trust,
including new portfolio and class investment objectives, policies and
structure;
(j) provide (directly or through a sub-administrator) individuals
acceptable to the Trustees for nomination, appointment, or election as
officers of the Trust, who will be responsible for the management of
certain of the Trust's affairs as determined by the Trustees;
(k) advise the Trust and its Trustees on matters concerning the Trust and
its affairs;
(l) obtain (directly or through a sub-administrator) and keep in effect
fidelity bonds and directors and officers/errors and omissions
insurance policies for the Trust in accordance with the requirements
of Rules 17g-1 and 17d-1(7) under the 1940 Act as such bonds and
policies are approved by the Trust's Board of Trustees;
(m) monitor and advise the Trust and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(n) perform all administrative services and functions of the Trust and
each Portfolio to the extent administrative services and functions are
not provided to the Trust or such Portfolio pursuant to the Trust's or
such Portfolio's investment advisory agreement, distribution
agreement, custodian agreement and transfer agent agreement;
(o) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Trust and the
Administrator shall determine desirable; and
(p) prepare the semi-annual report for the Trust on Form N-SAR;
(q) monitor each Fund's compliance with the 1940 Act and the applicable
investment policies set forth in the Trust's prospectuses and SAI; and
(r) assist in the training and oversight of third parties used to perform
any of the services described herein.
The Administrator will perform other services for the Trust as agreed from
time to time, including, but not limited to:performing internal audit
examinations; mailing the annual reports of the Portfolios; preparing an annual
list of shareholders; and mailing notices of shareholders' meetings, proxies and
proxy statements, for all of which the Trust will pay the Administrator's out-
of-pocket expenses.
In the performance of its duties hereunder, the Administrator will comply
with the provisions of the Declaration of Trust and the Bylaws of the Trust,
will safeguard and promote the welfare of
3
the Trust, and will comply with the policies that the Trustees may from time to
time reasonably determine; provided that such policies are not in conflict with
this Agreement, the Trust's governing documents, or any applicable statutes or
regulations.
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 provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust 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 Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, 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 material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, 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 the investment adviser to
the Trust or any affiliated corporation of the Administrator or the Investment
Adviser, the costs of Trustee's meetings, insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, and all fees and
charges of investment advisers to the Trust.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedules. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly.
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.
(B) Compensation from Transactions. The Trust hereby authorizes any entity
or person associated with the Administrator which is a member of a national
securities exchange to effect any transaction on the exchange for the account of
the Trust which is permitted by Section 11 (a) of the
4
Securities Exchange Act of 1934, as amended (the "1934 Act") and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T) (a) (2) (iv).
(C) Survival of Compensation Rates. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Standard of Care Limitation of Liability of the Administrator;
Indemnification. 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
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder, except as may otherwise be provided
under provisions of applicable law which cannot be waived or modified hereby.
(As used in this Article 7, the term "Administrator" shall include directors,
officers, employees and other corporate agents of the Administrator as well as
that corporation itself.)
So long as the Administrator or its agents acts in good faith and with due
diligence and without negligence, the Trust 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 said
administration, transfer agency, and dividend disbursing relationships to the
Trust or any other service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement.
The 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. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but good faith failure to do so in good faith shall not affect the
rights hereunder.
The Trust 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 Trust elects to assume the defense of any
such claim, the defense shall be conducted by counsel chosen by the Trust and
satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust 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 Trust
5
does not elect to assume the defense of a suit, it will reimburse the
Administrator for the reasonable fees and expenses of any counsel retained by
the Administrator.
The Administrator may apply to the Trust at any time for instructions and
may consult counsel or the independent accountants for the Trust or its own
counsel and with accountants and other experts 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,
or 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
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Trust 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. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 7. Confidentiality. The Administrator agrees on behalf of itself
and its employees to treat confidentially all records and other information
relative to the Trust and its prior, present or potential Shareholders and
relative to the Adviser and its prior, present or potential customers, except,
after prior notification to and approval in writing 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 contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
ARTICLE 8. Equipment Failures. In the event of equipment failures beyond
the Administrator's control, the Administrator shall, at no additional expense
to the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect to such service interruptions if such reasonable
steps are taken 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 9. Compliance With Governmental Rules and Regulations. The
Administrator undertakes to comply with all applicable requirements of the
Securities Act of 1933, as amended,
6
the 1934 Act, 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.
ARTICLE 10. Compliance With Year 2000. The Administrator warrants that
all software code owned by or under the Administrator's control, used in the
performance of the Administrator's obligations under this contract, will be Year
2000 compliant. For purposes of this Article, "Year 2000 Compliant" means that
the software will continue to operate beyond December 31, 1999 without creating
any logical or mathematical inconsistencies concerning any date after December
31, 1999 and without decreasing the functionality of the system applicable to
dates prior to January 1, 2000 including, but not limited to, making changes to
[a] date and data century recognition; [b] calculations which accommodate same-
and multi- century formulas and date values; and [c] input/output of date values
which reflect century dates. All changes described in this Article will be made
at no additional cost to the Trust.
ARTICLE 11. Duration of this Agreement. The Term of this Agreement shall
be as specified in the Schedules.
This Agreement shall not be assignable by either party without the written
consent of the other party. As used in this paragraph, the term "assignment"
shall be construed by reference to the term as defined and interpreted under the
1940 Act.
The Administrator shall be entitled to collect from the Trust, in addition
to any other compensation owing to the Administrator, the amount of all the
Administrator's cash disbursements for services in connection with the
Administrator's activities in effecting termination as discussed in the Schedule
to this Agreement, including without limitation, the delivery to the Trust
and/or its designees of the Trust's property, records, instruments and
documents, or any copies thereof. Subsequent to such termination for a
reasonable fee to be paid by the Trust, the Administrator will provide the Trust
with reasonable access to any Trust documents or records remaining in its
possession.
ARTICLE 12. Amendments. 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 13. 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 Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing
7
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 Trust has agreed to indemnify the Administrator against
such liability.
ARTICLE 14. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings 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 15. 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, 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 Trust, at c/o Xxxxxxx Xxxxxxxx, Senior Vice President, The
Huntington National Bank, 00 X. Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxx
00000Xxxxx X. Xxxxxx, General Counsel, SEI Financial Management Corporation, 000
Xxxx Xxxxxxxxxx Xxxx, Xxxxx, XX 00000; and if to the Administrator at c/o
Xxxxxxx Xxxxxxxx, Senior Vice President, The Huntington National Bank, 00 X.
Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxxx 00000.
ARTICLE 16. Governing Law. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 17. 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 18. Limitation of Liability. The Administrator is hereby
expressly put on notice of the limitation of liability as set forth in Article
IV of the Trust's Declaration of Trust and agrees that the obligations pursuant
to this Agreement of a particular Portfolio and of the Trust with respect to
that Portfolio shall be limited solely to the assets of that Portfolio, and the
Administrator shall not seek satisfaction of any such obligation from any other
Portfolio, the shareholders of any Portfolio, the Trustees, officers, employees
or agents of the Trust, or any of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
THE MONITOR FUNDS
[NAME OF TRUST]
By: _______________________ Attest: _________________
8
Name:
Title:
THE HUNTINGTON NATIONAL BANK
By: _______________________ Attest: _________________
Name:
Title:
9
SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 12, 1998
BETWEEN
THE MONITOR FUNDS
AND
THE HUNTINGTON NATIONAL BANK
Portfolios: This Agreement shall apply to all Portfolios of the Trust, either
now in the future created. The following is a listing of the
current portfolios of the Trust: Money Market Fund, Ohio
Municipal Money Market Fund, U.S. Treasury Securities Money
Market Fund, Fixed Income Securities Fund, Growth Fund, Income
Equity Fund, Mortgage Securities Fund, Short/Intermediate
TermFixed Income Securities Fund, Ohio Tax Free Fund, Michigan
Tax-Free Fund and Intermediate Government Income Fund
(collectively, the "Portfolios").
Fees: Pursuant to Article 46, Section A, the Trust shall pay the
Administrator compensation for services rendered to the
Portfolios at an annual rate, which is calculated daily and paid
monthly, at a maximum administrative fee equal to 0.11% of each
Portfolios' average daily net assets.
Term: Pursuant to Article 10, the term of this Agreement shall commence
on January 12, 1998 December and shall remain in effect through
January 12, 2000 ("Initial Term"). This Agreement shall continue
in effect for successive periods of one years after the Initial
Term, unless terminated by either party, with or without cause,
on not less than 60 days prior written notice to the other party.
In the event of a material breach of this Agreement by either
party, the non-breaching party shall notify the breaching party
in writing of such breach and upon receipt of such notice, the
breaching party shall have 45 days to remedy the breach or the
non-breaching party may immediately terminate this Agreement.
In addition, the Trust may terminate this Agreement immediately upon:
(i) the issuance of a final judgment by a court of competent jurisdiction
or of a final order by the Securities and Exchange Commission, which
judgment or order holds that the Administrator has committed a felony
or a misdemeanor involving the purchase or sale of any security, or
arising out of its conduct as an administrator, a distributor, or an
affiliate of an investment company;
(ii) the dissolution or liquidation of the Administrator or other cessation
of its business other than a reorganization or recapitalization of the
Administrator as an ongoing business; or
10
(iii) [a] the authorization of commencement of a voluntary case regarding
the Administrator under Title 11 of the United States Code, as from
time to time amended, or any other applicable law of any jurisdiction
relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors; [b] consent to
or acquiescence in any involuntary case under such Title 11 or other
such law; or [c] the commencement of any involuntary case under such
Title 11 or other such law, which case is not dismissed within 30
days after the filing thereof.
11