Exhibit (h) (2)
Administrative Services Agreement between the Registrant and American
Gas Association
ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
AMERICAN GAS ASSOCIATION and AMERICAN GAS INDEX FUND, INC.
This Administrative Services Agreement (The "Agreement") is
entered into this 27th day of April 1989 by and between the American
Gas Association (herein "A.G.A.") and the American Gas Index Fund,
Inc. (herein the "Fund").
WITNESSETH
In consideration of the mutual agreements hereinafter contained,
it is agreed as follows:
1. Employment of A.G.A. A.G.A. shall be the fund "Administrator";
that is, A.G.A. shall perform for the Fund the calculation and
maintenance of the American Gas Association Stock Index ("Index"
herein), the description of which is found in Exhibit A attached
hereto and made a part hereof. In addition, A.G.A. shall provide the
Fund with information on the natural gas industry.
2. Payment to A.G.A. In consideration for the services provided by
A.G.A., the Fund shall pay A.G.A. at an annual rate of one-tenth of
one percent (0.10%) of the Fund's average daily net asset value. The
fee shall be paid monthly, within fifteen (15) calendar days after the
end of the preceding month.
3. Arbitration of Disputes. Any dispute or disagreement arising
between A.G.A. and the Fund in conjunction with any provision of this
Agreement, or the compliance or non-compliance therewith, or the
validity or enforceability thereof which is not settled within thirty
(30) days (or such other period as may be mutually agreed upon) from
the date that either party informs the other in writing that such
dispute or disagreement exists, shall be settled by arbitration in
accordance with rules set by a three member panel. One member each
shall be selected by A.G.A. and the Fund and the third shall be an
attorney selected by mutual agreement of A.G.A. and the Fund. If
A.G.A. and the Fund are unable to agree on the selection of the third
member of the panel within fifteen (15) days, the two panel members
shall agree upon a neutral attorney as the third panel member. All
reasonable expenses submitted by the third panel member shall be
shared equally by A.G.A. and the Fund. The member representing the
Fund shall be selected by a majority of the directors of the Fund who
are not "interested persons" of the Fund within the meaning of the
Investment Company Act of 1940 ("the Act"). A decision shall be
rendered by the panel within thirty (3) days of a meeting held in such
place or places as may be agreed upon by the panel, and A.G.A. and the
Fund shall comply with such decision. The decision of the panel shall
be final and not subject to judicial review, and the judgment may be
entered thereon in accordance with applicable law in any court having
jurisdiction thereof.
4. Liability of A.G.A.; Limitation of Damages. Absent willful
misfeasance, bas faith, gross negligence or reckless disregard of
duties, A.G.A. shall not be liable to the Fund for any special,
incidental, or consequential damages for losses arising out of or
relating to the performance of its obligations under this Agreement,
whether or not such damages or losses were caused by the acts of
omissions of A.G.A. or its employees. The parties agree, for example,
that an error in A.G.A.'s calculation of the Index shall not create
any liability on the part of A.G.A.
5. Independent Contractor. A.G.A. shall be considered an
independent contractor in its relationship with the Fund and in all
matters under this contract. A.G.A. is not an agent of the Fund.
6. Force Majeure. Neither A.G.A. nor the Fund shall be considered
to be in default in the performance of their respective obligations
hereunder to the extent that the performance of any such obligation or
obligations is prevented or delayed by an Act of God or any cause
beyond the control of A.G.A. or the Fund.
7. Modifications. A.G.A. and the Fund may amend, modify or
supplement this Agreement only by a written instrument executed by
both A.G.A. and the Fund. If any such amendment, modification or
supplement causes an increase in the price of the services performed,
such increase must be approved by a majority of the Fund's
shareholders as defined by the Act.
8. Approval and Termination. This contract shall continue in effect
until the first meeting of the Shareholders of the Fund (but in no
event longer than two years from the date hereof), and if approved at
such shareholders' meeting, until two years from the date hereof, and
thereafter only so long as such continuance is approved at least
annually by a vote of a majority of the Fund's Board of Directors,
including the votes of a majority of the directors who are not parties
to such contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting such approval.
Provided, however that (a) this Contract may at any time be terminated
without payment of any penalty wither by vote of the Board of
Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Fund, on sixty days prior written notice to
the Manager, (b) this Contract shall automatically terminate in the
event of its assignment (within the meaning of the Investment Company
Act of 1940), and (c) this Contract may be terminated by the
Administrator on sixty days prior written notice to the Fund. Any
notice under this contract shall be given in writing, addressed and
delivered or mailed post paid, to the other party at any office of
such party. Upon any termination in accordance herewith, the Fund
shall pay A.G.A. all amounts due hereunder for all periods up to and
including the date of termination (such amounts to be determined in
accordance with Paragraph 2 of this Agreement) and A.G.A. shall take
such steps as reasonably may be requested by the Fund to effect an
orderly termination.
As used in this Section 8, the terms "interested persons" and
"vote of a majority of the outstanding securities" shall have the
respective meanings set forth in Section 2(a)(19) and Section
2(a)(42) of the Investment Company Act of 1940.
9. Notice. All notices, demand and other communications required or
permitted to be given hereunder shall be made in writing and shall be
deemed to be duly given if personally delivered or if deposited in the
United States registered or certified mail, with postage prepaid, and
addressed to the appropriate party at the address set forth below, or
at such other address as the parties may designate in writing
delivered in accordance with the provisions of this Paragraph 9.
If to A.G.A.:
American Gas Association
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn:________________________
If to the Fund:
American Gas Index Fund, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
10. Waiver and Related Matters. This Agreement is intended by the
parties as a full expression of their agreement with respect to the
subject matter hereof and a complete and exclusive statement of the
terms thereof. No course of prior dealings between the parties and no
usage of trade shall be relevant or admissible to supplement, explain,
or vary any of the terms of this Agreement. Acceptance of, or
acquiescence in, a course of performance rendered under this Agreement
shall not be relevant or admissible to vary the terms and the meaning
of this Agreement, even though the accepting or acquiescing party has
knowledge of the nature of the performance and the opportunity to make
objection. No representations, understandings or agreements have been
made or relied upon in the making of this Agreement other than those
specifically set forth herein.
11. Controlling Law and Successor Interests. This Agreement shall be
governed by construed in accordance with the laws of the State of
Virginia and shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
12. Multiple Originals. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one counterpart has been
signed by each party and delivered to the other party hereto.
13. Assignment. Subject to the provisions of Section 8, this
Agreement shall not be assigned by either the Fund or A.G.A. without
the prior written consent of the other party hereto.
14. Heading. The headings in this Agreement are included solely as a
matter of convenient reference and shall not limit or control the
meaning of any provision of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the date first above written.
AMERICAN GAS ASSOCIATION
By: /s/ Xxxxxx Xxxxxx
AMERICAN GAS INDEX FUND, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Exhibit A
CALCULATING AND MAINTAINING THE
AMAERICAN GAS ASSOCIATION (A.G.A.) STOCK INDEX
The Administrator shall calculate and maintain the American Gas
Association ("A.G.A.") Stock Index ("Index" herein) as follows:
A. Collection of Company Data:
1. The following information shall be collected quarterly or at such
other mutually agreed upon times ("the period" herein):
a. Number of shares of publicly traded common stock outstanding
(exclusive of treasury stock) for natural gas distribution and
transmission company members of A.G.A. which are headquartered in
the United States.
b. Share price at the end of the period.
2. The following information shall be collected annually or at such
other mutually agreed upon times:
a. Total assets of the publicly traded company.
b. Assets devoted to natural gas distribution and transmission.
B. Calculation of the Index - The Index shall be calculated as
follows, using the data in section A above:
1. The number of shares of common stock outstanding, times the
closing share price1 at the end of the period equals the "market
capitalization value." The "market capitalization value" times the
percentage of assets devoted to natural gas distribution and
transmission will equal the "gas market capitalization value."
2. The sum of each company's "gas market capitalization value" shall
equal the "industry gas market capitalization value."
3. Each company's stock percentage within the Index shall be
calculated by dividing its "gas market capitalization value" by the
"industry gas market capitalization value."
4. No individual company's stock shall exceed five percent of the
total Index value. The Index shall be recalculated as necessary, to
apportion "gas market capitalization values" in excess of five percent
to all other gas market capitalization values" comprising the Index.
5. The Index shall be calculated at least quarterly.
C. Maintenance of the Index - The Index shall be maintained as
follows:
1. If there is a change which impacts a company's eligibility to be
included in the Index, as defined in section A.1.a. above, such change
shall be reflected in the first quarterly calculation of the Index
following A.G.A.'s receipt of the necessary data.
2. If any stock price in section A moves twenty-five (25) percent or
more over any consecutive ten-day (10) trading period, the Fund shall
advise A.G.A., which then shall recalculate the Index under section
A.1. within five (5) business days. Such calculation shall not be
made unless the company's "gas market capitalization value" is at
least one (1.00) percent as shown in the last Index provided to the
Fund.
3. At the request of the Fund, A.G.A. shall provide a recalculated
Index.
1 Listed securities shall be valued at the last sales price at the New
York Stock Exchange and other major exchanges. Over-the-counter
securities shall be valued at the last sales price.
