EXHIBIT H.2
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 31st day of December, 2003, by and
between Columbus Funds, Inc., a Maryland corporation (the "Corporation"), and
UMB Fund Services, Inc., a Wisconsin corporation (the "Administrator").
WHEREAS, the Corporation 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 Corporation 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 Corporation as are
listed on Schedule A hereto and any additional investment portfolios the
Corporation 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 Corporation 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 Corporation's Board of
Directors and utilizing information provided by the Corporation and its current
agents and service providers, 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 Corporation shall direct its officers, directors, investment
adviser, legal counsel, independent accountants, transfer agent, custodian and
other service providers and agents for the Funds to cooperate with the
Administrator and to provide the Administrator upon request with such
information, documents and advice relating to the Funds and the Corporation as
necessary and/or appropriate or 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 upon any
and all instructions, advice, information or documents provided to the
Administrator by an officer or representative of the Funds, the Funds'
investment adviser, legal counsel, independent accountants, transfer agent or
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custodian without investigation or verification, and to reasonably rely upon the
same from any other service provider. 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. Fees charged by such persons shall be
an expense of the Corporation. The Administrator shall not be held to have
notice of any change of authority of any officer, agent, representative or
employee of the Corporation, investment adviser or service provider until
receipt of written notice thereof from the Corporation. The Administrator shall
cooperate with the Corporation and its legal counsel, independent accountants,
custodian and transfer agent upon reasonable request in order to enable the
Corporation's other service providers to perform their respective duties with
respect to the Funds.
(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
Corporation pursuant to its duties hereunder are the property of the Corporation
and further agrees to surrender promptly to the Corporation any of such records
upon the Corporation's request free of any liens or charges. 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
Corporation.
(d) It is understood that in determining security valuations, the
Administrator employs one or more pricing services, as directed by the
Corporation, to determine valuations of portfolio securities for purposes of
calculating net asset values of the Corporation. The Corporation shall identify
to the Administrator the pricing service(s) to be utilized on behalf of the
Corporation. The Administrator shall price the securities and other holdings of
the Corporation for which market quotations or prices are available by the use
of such services. For those securities where prices are not provided by the
pricing service(s) utilized by the Administrator, the Corporation shall approve,
in good faith, the method for determining the fair value of the securities in
accordance with the Corporation's current pricing procedures. The Corporation's
investment adviser shall determine or obtain the valuation of the securities in
accordance with those procedures and shall deliver to the Administrator the
resulting prices for use in its calculation of net asset values. The
Administrator is authorized to rely on the prices provided by such service(s) or
by the Corporation's investment adviser(s) or other authorized representative of
the Corporation without investigation or verification other than that set forth
on Schedule B.
(e) The Corporation's Board of Directors 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, the Xxxxxxxx-Xxxxx Act of 2002, the
USA PATRIOT Act of 2002 and the policies and limitations of each Fund relating
to the portfolio investments as set forth in the Prospectus and Statement of
Additional Information. The Administrator will perform the compliance functions
set forth in Schedule B and shall advise the Corporation of any significant
problems of which it becomes aware through the performance of such functions.
The Administrator's monitoring and other functions hereunder shall not relieve
the Corporation and the investment adviser of their responsibilities for
assuring such compliance and the Board of the Corporation's oversight
responsibility with respect thereto.
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(f) The Administrator shall perform its duties hereunder in compliance
with all applicable laws and regulations and agrees to provide back-up
certificates to the Corporation with respect to certain obligations of the
Corporation under the Xxxxxxxx-Xxxxx Act of 2002 or as otherwise reasonably
requested in connection with the performance of its duties hereunder, in a form
agreed to by the parties.
3. FEES; DELEGATION; EXPENSES
(a) In consideration of the services rendered pursuant to this Agreement,
the Corporation will pay the Administrator a fee, computed daily and payable
monthly, plus out-of-pocket expenses, each as provided in Schedule C hereto.
Fees shall be earned and paid monthly in an amount equal to at least 1/12th of
the applicable annual fee for each Fund. Basis point fees and minimum annual
fees apply separately to each Fund, and average net assets are not aggregated in
calculating the applicable basis point fee per Fund or the applicable minimum.
Fees shall be adjusted in accordance with Schedule C or as otherwise agreed to
by the parties from time to time. The parties may amend this Agreement to
include fees for any additional services requested by the Corporation,
enhancements to current services, or to add Funds for which the Administrator
has been retained. The Corporation agrees to pay the Administrator for
additional services provided, or for enhancements to existing services currently
provided, after the execution of this Agreement, at the rate negotiated by the
parties.
(b) For the purpose of determining fees payable to the Administrator, net
asset value shall be computed in accordance with the Corporation's Prospectuses
and resolutions of the Corporation's Board of Directors. 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. 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 Corporation
be liquidated, merged with or acquired by another fund or investment company,
any accrued fees shall be immediately payable. Such fee as is attributable to
each Fund shall be a separate charge to each Fund and shall be the several (and
not joint or joint and several) obligation of each such Fund.
(c) The Administrator will bear all expenses incurred by it in connection
with the performance of its services under this Agreement, 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 Directors; 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
corporate 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,
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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 Directors; 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 Corporation,
will be borne by the Funds' investment adviser, except for such expenses
permitted to be paid by the Corporation under a distribution plan adopted in
accordance with applicable laws. The Administrator shall not be required to pay
any Blue Sky fees or take any related Blue Sky actions unless and until it has
received the amount of such fees from the Corporation.
(d) Except as otherwise specified, fees payable hereunder shall be
calculated in arrears and billed on a monthly basis. The Corporation agrees to
pay all fees within thirty days of receipt of each invoice. The Administrator
retains the right to charge interest in the amount of 1 percent per month on any
amounts that remain unpaid beyond such thirty day period.
4. PROPRIETARY AND CONFIDENTIAL INFORMATION
The Administrator agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Corporation all records and
other information relative to the Funds' prior, present and future shareholders,
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 Corporation, 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 or court process, when subject to
governmental or regulatory audit or investigation, or when so requested by the
Corporation. In case of any requests or demands for inspection of the records of
the Funds, the Administrator will use its best efforts to notify the Corporation
promptly and to secure instructions from a representative of the Corporation as
to such inspection. 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.
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 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 (i)
any action taken or omitted to be taken in accordance with or in reliance upon
written or oral instructions, advice, data, documents or information received by
the Administrator from an officer or representative of the Corporation, or from
the Fund's investment adviser, legal counsel, independent accountants, transfer
agent or custodian without investigation or verification or in reasonable
reliance on the same from any other service provider, (ii) its reliance on the
security valuations without investigation or verification (other than that set
forth on Schedule B) provided by pricing service(s), the Corporation's
investment adviser(s) or representatives of the Corporation, or (iii) any action
taken or omission by a Fund, the Corporation, investment adviser(s) or any
current service provider.
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(b) The Administrator assumes no responsibility hereunder, and shall not
be liable, for any default, damage, loss of data or documents, 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) The Corporation agrees to indemnify and hold harmless the
Administrator, its employees, agents, officers, directors, affiliates and
nominees (collectively, the "Indemnified Parties") from and against any and all
claims, demands, actions and suits, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
expenses of every nature and character which may be asserted against or incurred
by any Indemnified Party or for which any Indemnified Party may be held liable
(a "Claim") arising out of or in any way relating to (i) the Administrator's
actions or omissions except to the extent a Claim resulted from the
Administrator's willful misfeasance, bad faith, or negligence in the performance
of its duties hereunder or from reckless disregard by it of its obligations and
duties hereunder; (ii) the Administrator's reliance on, implementation of or use
of advice, instructions, requests, directions, information, data, records and
documents received by the Administrator from the Fund's investment adviser,
legal counsel, independent accountants, transfer agent or custodian without
investigation or verification or reasonable reliance on the same from any other
service provider; or (iii) any action taken by or omission of the Corporation,
investment adviser(s) or any current service provider.
(d) The Administrator agrees to indemnify and hold harmless the
Corporation, its employees, officers and directors (collectively, the
"Indemnified Parties") from and against any and all Claims arising out of or in
any way relating to the Administrator's willful misfeasance, bad faith or
negligence in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement.
(e) In no event and under no circumstances shall either party, 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. The indemnity and defense provisions set forth in this
Section 5 shall indefinitely survive the termination and/or assignment of this
Agreement.
6. TERM
(a) This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date this Agreement is executed 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 terminated as provided
herein. Either party may terminate this Agreement at any time by giving the
other party a written notice not less than sixty (60) days prior to the date the
termination is to be effective.
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(b) 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 Corporation.
(c) Notwithstanding anything herein to the contrary, upon the termination
of this Agreement or the liquidation of a Fund or the Corporation, the
Administrator shall deliver the records of the Fund(s) and/or Corporation as the
case may be, in the form maintained by the Administrator (to the extent
permitted by applicable license agreements) to the Corporation or person(s)
designated by the Corporation at the Corporation's cost and expense, and
thereafter the Corporation or its designee shall be solely responsible for
preserving the records for the periods required by all applicable laws, rules
and regulations. The Corporation shall be responsible for all expenses
associated with the movement (or duplication) of records and materials and
conversion thereof to a successor fund accounting and administrative services
agent, including all reasonable trailing expenses incurred by the Administrator.
In addition, in the event of termination of this Agreement, or the proposed
liquidation or merger of the Corporation or a Fund(s), and the Corporation
requests the Administrator to provide additional 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 Corporation are not
deemed to be exclusive. The Administrator may render such services and any other
services to others, including other investment companies. The Corporation
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.
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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 UMB Fund Services, Inc.,
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx X, Xxxxxxxxx, XX, 00000, Attention: Xxxxx X.
Xxxxxxx, with a copy to General Counsel, and notice to the Corporation shall be
sent to Columbus Funds, Inc., 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, XX, 00000-0000,
Attention: Xxxxx X. XxXxxxxx.
10. ENTIRE AGREEMENT
This Agreement, together with the Schedules attached hereto, constitutes
the entire Agreement of the parties hereto.
11. MISCELLANEOUS
(a) 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. The facsimile signature of
any party to this Agreement shall constitute the valid and binding execution
hereof by such party.
(b) The Corporation hereby grants to the Administrator the limited power
of attorney on behalf of the Funds to sign Blue Sky forms and related documents
in connection with the performance of its obligations under this Agreement.
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.
COLUMBUS FUNDS, INC.
(the "Corporation")
By: /s/ Xxxxxxx X. Xxx
------------------------------------
UMB FUND SERVICES, INC.
("Administrator")
By: /s/ Xxxxx Xxxxxxx
------------------------------------
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SCHEDULE A
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
COLUMBUS FUNDS, INC.
AND
UMB FUND SERVICES, INC.
NAME OF FUNDS
Columbus Low Duration Fund
Columbus Intermediate Fund
Columbus Core Fund
Columbus Core Plus Fund
Columbus High Yield Fund
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SCHEDULE B
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
COLUMBUS FUNDS, INC.
AND
UMB FUND SERVICES, INC.
SERVICES
Subject to the direction and control of the Corporation's Board of Directors and
utilizing information provided by the Corporation 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 prepare and review the financial statement for the Funds' Annual and
Semi-Annual Reports included in Form N-CSR as required under the
Xxxxxxxx-Xxxxx Act and provide back-up certificates regarding such
financial statements and reports in a form mutually acceptable to the
parties; assist in compiling exhibits and disclosures for Form N-CSR as
requested by the Funds' investment adviser;
o assist in the preparation for execution by the Corporation 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 Corporation's custodian or transfer
agent, subject to the review and approval of the Corporation and the
Corporation'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, subject to the
review and approval of the Corporation and the Corporation's independent
accountants;
o provide financial and Fund performance information for inclusion in the
Registration Statement for the Corporation (on Form N-1A or any
replacement therefor) and any amendments thereto, subject to the review of
Corporation counsel;
o determine and periodically monitor each Fund's income and expense accruals
and cause all appropriate expenses to be paid from Corporation assets on
proper authorization from the Corporation;
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o calculate income factors and daily net asset values of each Fund (i) in
accordance with the Corporation's operating documents as provided to the
Administrator, and (ii) based on security valuations provided by the
Corporation, the Corporation's investment adviser, and pricing service(s),
as provided herein;
o inquire into daily pricing discrepancies for prices received from pricing
services which exceed pre-set variance limitations established by the
Corporation;
o maintain all general ledger accounts and related subledgers;
o assist in the acquisition of the Corporation 's fidelity bond required by
the 1940 Act, monitor the amount of the bond and make the necessary
Commission filings related thereto;
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 Corporation's
investment adviser of its responsibilities 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 qualification/notice compliance
filings, with the advice of the Corporation's legal counsel, upon and in
accordance with instructions from the Corporation, 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 Corporation an agenda
for each board meeting and, if requested by the Directors, attend board
meetings and prepare minutes;
o prepare Form 1099s for Directors and other fund vendors;
o calculate dividend and capital gains distributions subject to review and
approval by the Corporation and its independent accountants; and
o generally assist in the Corporation '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
COLUMBUS FUNDS, INC.
AND
UMB FUND SERVICES, INC.
FEES
ASSET BASED FEES
--------------------------------------------------------------------------------
AVERAGE NET ASSETS BASIS POINTS
--------------------------------------------------------------------------------
Up to $250 million 10.0 basis points
--------------------------------------------------------------------------------
Next $250 million 7.5 basis points
--------------------------------------------------------------------------------
Next $250 million 5.0 basis points
--------------------------------------------------------------------------------
Over $750 million 3.0 basis points
--------------------------------------------------------------------------------
MINIMUM ANNUAL FEE: The asset based fees are subject to a minimum annual fee in
the amount of $75,000 per Fund. The minimum annual fee is subject to an annual
escalation equal to the increase in the Consumer Price Index - Urban Wage
Earners (CPI), which escalation shall be effective commencing one year from the
date of this Agreement (the "Anniversary Date") and on the corresponding
Anniversary Date each year thereafter. No amendment of this Schedule C shall be
required with each escalation. CPI shall be determined by reference to the
Consumer Price Index News Release issued by the Bureau of Labor Statistics, U.S.
Department of Labor. Additional fees shall apply when adding any additional
Funds and/or classes, including 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.
MULTI-CLASS FEE: In addition to the asset based fee, there shall be an annual
multi-class fee in the amount of $18,000 per class.
FEE DISCOUNTS: The Administrator shall provide discount on the minimum annual
fee in the amount of 50% for Funds with average net assets under $25,000,000 and
25% for Funds with average net assets between $25,000,000 and $50,000,000.
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SPECIAL SERVICES
To the extent the Administrator corrects, verifies or addresses any prior
actions or inactions by any Fund or by any prior service provider, the
Corporation shall pay the Administrator compensation at the rate of $100 per
hour, plus programming fees, if necessary, together with out-of-pocket expenses.
Except to the extent the Administrator may require prepayment based on an
estimate of the time to be expended, payment shall be due promptly after receipt
of an invoice for such fees.
OUT-OF-POCKET AND OTHER RELATED EXPENSES
The Corporation 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 to or from Board meetings
and otherwise on behalf of the Funds, 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 of
research services including Lexis/Nexis, Morningstar and Lipper, NASDAQ and
other service interface fees, long distance telephone charges, and photocopying,
faxes, postage and overnight delivery expenses. Other expenses include pricing
of securities.
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