ETF Fund Servicing Agreement – March 2010 version
Exhibit
(h)(1)
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ETF
Fund Servicing Agreement – March 2010 version
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TABLE
OF CONTENTS
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1. Intention
of the Parties; Definitions
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3
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1.1
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Intention
of the Parties.
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3
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1.2
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Definitions;
Interpretation.
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3
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2.
What ▇.▇. ▇▇▇▇▇▇ is Required to
Do
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6
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2.1
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The
Services.
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6
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2.2
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No
Duty to Monitor Compliance.
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6
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2.3
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No
Responsibility for Tax Returns.
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7
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2.4
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Storage
of Records.
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7
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2.5
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Compliance
with Laws and Regulations.
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7
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2.6
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Change
Control.
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7
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3.
Instructions
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8
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3.1
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Acting
on Instructions; Unclear Instructions.
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8
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3.2
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Verification
and Security Procedures.
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8
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3.3
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Instructions
Contrary To Applicable Law/Market Practice.
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9
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3.4
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Cut-Off
Times.
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9
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3.5
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Electronic
Access.
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9
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4.
Fees and Expenses Owing to ▇.▇.
▇▇▇▇▇▇
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9
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4.1
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Fees
and Expenses.
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9
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5.
Additional Provisions Relating to the
Customer
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10
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5.1
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Representations
of the Customer and ▇.▇. ▇▇▇▇▇▇.
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10
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5.2
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The
Customer to Provide Certain Information to ▇.▇. ▇▇▇▇▇▇.
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10
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5.3
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Information
Used to Provide the Service.
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10
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6.
Where ▇.▇. ▇▇▇▇▇▇ is Liable to the Customer
or the Funds
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11
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6.1
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Standard
of Care; Liability.
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11
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6.2
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Force
Majeure.
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12
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6.3
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▇.▇.
▇▇▇▇▇▇ May Consult with Counsel.
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12
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6.4
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Limitations
of ▇.▇. ▇▇▇▇▇▇’▇ Liability.
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12
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7.
Term and Termination
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14
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7.1
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Term
and Termination.
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14
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7.2
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Other
Grounds for Termination.
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14
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7.3
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Consequences
of Termination.
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14
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7.4
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Transition
following Termination.
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15
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8.
Miscellaneous
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15
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8.1
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Notices.
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15
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8.2
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Successors
and Assigns.
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15
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8.3
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Entire
Agreement.
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15
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8.4
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Insurance.
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15
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8.5
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Governing
Law and Jurisdiction.
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16
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8.6
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Severability;
Waiver; and Survival.
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16
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8.7
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Confidentiality.
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16
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8.8
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Use
of ▇.▇. ▇▇▇▇▇▇’▇ Name.
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17
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March
2010 version
1
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8.9
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Delegation.
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17
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8.10
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Third
Party Rights.
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17
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8.11
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Counterparts.
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17
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SCHEDULE
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1
Accounting and NAV Calculation Services
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19
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SCHEDULE
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2
Fund Administration Services
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24
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SCHEDULE
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3
Remuneration
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28
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2
FUND
SERVICING AGREEMENT
This
agreement (“Agreement”),
dated [__________________],
2010, is between FOCUSSHARES TRUST, a Delaware
trust and a registered investment company under the Investment Company Act of
1940 (“1940 Act”) whose principal place of business is at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the “Customer”) and JPMORGAN CHASE BANK, N. A.
with a place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇. (“▇.▇.
▇▇▇▇▇▇”)
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1.
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Intention
of the Parties; Definitions
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1.1
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Intention
of the Parties.
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(a)
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▇.▇.
▇▇▇▇▇▇ is a national association formed under the laws of the United
States.
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(b)
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The
Customer is an open-end management investment company consisting of one or more Funds (defined below) with the purpose of
investment of the Funds’ assets in
certain types of securities and instruments, as more fully described in
the Funds’ Registration
Statement.
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(c)
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The
Customer has requested ▇.▇. ▇▇▇▇▇▇ to provide Accounting and NAV
Calculation Services and Fund Administration Services to the Funds, which
▇.▇. ▇▇▇▇▇▇ has agreed to do subject to the terms and conditions appearing
in this Agreement and the
Schedules.
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1.2
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Definitions;
Interpretation.
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(a)
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As used in this Agreement and the
Schedules and Appendices to this Agreement, the following terms have the
meaning hereinafter stated.
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“Accounting and NAV Calculation
Services” means the services described in Schedule 1.
“Advisers Act” means the
Investment Advisers Act of 1940, as amended.
“Affiliate” an entity
controlling, controlled by, or under common control with, ▇.▇.
▇▇▇▇▇▇.
“Agency
Agreement” means the Agency Services Agreement between ▇.▇.▇▇▇▇▇▇ and the
Customer dated
[ ].
3
“Applicable Law” means the
applicable laws in force in the United States, including the 1940 Act, the
Advisers Act, the Securities Act of 1933, as amended (“1933 Act”) and the Securities
Exchange Act of 1934, as amended, (“1934 Act”) as well as any
applicable statute, treaty, rule, regulation or common law and any applicable
decree, injunction, judgment, order, formal interpretation or ruling issued by a
court or governmental entity.
“Articles” means the deed of
trust of the Customer, as amended from time to time.
“Authorized Person” means any
person who has been designated by written notice from the Customer (or by any
agent designated by the Customer) to act on behalf of Customer or the Funds
under this Agreement. Such persons will continue to be Authorized Persons until
such time as ▇.▇. ▇▇▇▇▇▇ receives, and has had reasonable time to act upon,
Instructions from the Customer (or its agent) that any such person is no longer
an Authorized Person.
“Board” means the board of
trustees of the Customer.
“Change” has the meaning given
in Section 2.6.
“Change Control” means the
process set out in Section 2.6.
“Change Request” has the
meaning given in Section 2.6.
“Confidential Information”
means and includes all non-public information concerning the Customer and/or the
Funds which ▇.▇. ▇▇▇▇▇▇ receives in the course of providing services under this
Agreement. Nevertheless, the term Confidential Information shall not include
information which is or becomes available to the general public by means other
than ▇.▇. ▇▇▇▇▇▇’▇ breach of the terms of this Agreement or information which
▇.▇. ▇▇▇▇▇▇ obtains on a non-confidential basis from a person who is not known
to be subject to any obligation of confidence to any person with respect to that
information.
“Custody
Agreement” means the Domestic Custody Agreement between ▇.▇.▇▇▇▇▇▇ and the
Customer dated
[ ].
“Distributor” means any entity
or structure, the purpose of which is to make the shares of the Customer
available to the public (e.g., broker-dealers; fund of funds; wrap
accounts).
“Fees” means the payments
described in Article 4, to be made by the Customer to ▇.▇. ▇▇▇▇▇▇ for the
Services.
"Fund Administration Services"
means the services described in Schedule 2.
“Funds” means shares of beneficial
interest in the Customer that are divided into a separate series, with each
series of the Customer corresponding to a distinct part of the assets and
liabilities of the Customer, with such features as described in the Registration
Statement.
“Instruction” means an
instruction that has been verified in accordance with a Security Procedure or,
if no Security Procedure is applicable, which ▇.▇. ▇▇▇▇▇▇ believes in good faith
to have been given by an Authorized Person.
4
"Investment Adviser” means any
person or entity appointed as investment adviser or manager of any of the Funds,
as set forth in the Registration Statement..
“▇.▇. ▇▇▇▇▇▇ Indemnitees”
means ▇.▇. ▇▇▇▇▇▇ and its affiliates and nominees, and their respective
directors, officers, employees and agents.
“Liabilities” means any
liabilities, losses, claims, costs, damages, penalties, fines, obligations, or
expenses of any kind whatsoever (including, without limitation, reasonable
attorneys’, accountants’, consultants’ or experts’ fees and
disbursements).
“Prospectus” means the
prospectus of the applicable Fund as supplemented, updated or amended from time
to time.
“Registration Statement” means
the registration statement on Form N-1A of the Customer, filed under the 1933
Act (File No. 333-146327) and the 1940 Act (File No. 811-22128), as amended or
supplementedfrom time to time.
“Security Procedure” means any
security procedure to be followed by Customer upon the issuance of an
Instruction and/or by ▇.▇. ▇▇▇▇▇▇ upon the receipt of an Instruction, so as to
enable ▇.▇. ▇▇▇▇▇▇ to verify that such Instruction is authorized, as set forth
in operating procedures documentation in effect from time to time between the
parties with respect to the services set forth in this Agreement, or as
otherwise agreed in writing by the parties. A Security Procedure may,
without limitation, involve the use of algorithms, codes, passwords, encryption
or telephone call backs and may be updated by ▇.▇. ▇▇▇▇▇▇ from time to time upon
notice to the Customer. Customer acknowledges that Security Procedures are
designed to verify the authenticity of, and not detect errors in, Instructions.
For the avoidance of doubt, the parties agree that a SWIFT message issued in the
name of Customer through any third party utility agreed upon by the parties as
being a method for providing Instructions and authenticated in accordance with
that utility’s customary procedures, shall be deemed to be an authorized
Instruction..
“Services Commencement Date”
means the first date on which ▇.▇. ▇▇▇▇▇▇ is entitled to receive fees under this
Agreement.
"Services" means the Accounting
and NAV Calculation Services, and Fund Administration Services.
"Shares" means the shares
issued by the Customer under the Registration Statement.
"Shareholder" means a holder of
Shares.
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(b)
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Headings
are for reference and convenience only and are not intended to affect
interpretation.
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5
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(c)
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References
to Articles and Sections are to Articles and Sections of this Agreement
and references to sub-sections and paragraphs are to sub-sections of the
Sections and paragraphs of the sub-sections in which they
appear.
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(d)
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Unless
the context requires otherwise, references in this Agreement to "persons"
shall include legal as well as natural entities; references importing the
singular shall include the plural (and vice versa); use of the generic
masculine pronoun shall include the feminine; use of the term “including”
shall be deemed to mean “including but not limited to;” and references to
appendices and numbered sections shall be to such addenda and provisions
herein; all such addenda are hereby incorporated in this Agreement by
reference.
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2.
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What
▇.▇. ▇▇▇▇▇▇ is Required to Do
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2.1
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The
Services.
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(a)
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The
Customer hereby appoints ▇.▇. ▇▇▇▇▇▇ to act as administrator of and to
provide the Services with respect to each of the Funds; and ▇.▇. ▇▇▇▇▇▇
agrees to act as administrator of and to provide the Services with respect
to the Funds (subject to any limitations notified by the Customer to ▇.▇.
▇▇▇▇▇▇ in writing and subject to any requirements or restrictions imposed
on the performance of such functions by any statutory provisions for the
time being in force), until this Agreement is terminated as hereinafter
provided.
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(b)
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The
Customer shall not permit the Registration Statement to be amended in any
way inconsistent with the terms and conditions of the
Agreement.
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(c)
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▇.▇.
▇▇▇▇▇▇ shall act on behalf of the Customer and/or the Funds solely with
respect to the duties of ▇.▇. ▇▇▇▇▇▇ described in this
Agreement.
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(d)
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The
Customer acknowledges that ▇.▇. ▇▇▇▇▇▇ is not providing any legal, tax or
investment advice in providing the
Services.
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2.2
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No
Duty to Monitor Compliance.
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Each
party hereto acknowledges that the duty of ▇.▇. ▇▇▇▇▇▇ in its capacity as the
provider of any of the Services shall not constitute a duty to monitor the
compliance of any other party hereto or their delegates or any other person
whatsoever (other than ▇.▇. ▇▇▇▇▇▇ or any of its Affiliates or sub-contractor)
with any restriction or guideline imposed on any of the Funds or the Investment
Adviser by the Registration Statement and any other document, or by law or
regulation or otherwise with regard to any of the Funds or the Investment
Adviser, except as expressly set forth in this Agreement and further, that the
duties of ▇.▇. ▇▇▇▇▇▇ in its capacity as the provider of any of the Services,
shall not extend to enforcing compliance of any of the Funds, the Investment
Adviser, their respective delegates or any other person whatsoever (other than
▇.▇. ▇▇▇▇▇▇ or any of its Affiliates or sub-contractor) with any such
restrictions or guidelines.
March
2010 version
6
2.3 No
Responsibility for Tax Returns.
Notwithstanding
anything herein to the contrary, while ▇.▇. ▇▇▇▇▇▇ shall provide the Customer
with information regarding taxable events in the United States in relation to
the Customer and/or the Funds, ▇.▇. ▇▇▇▇▇▇ is not responsible for preparing or
filing any tax reports or returns on behalf of the Shareholders or the Funds
except as expressly set forth in this Agreement.
2.4 Storage
of Records.
▇.▇.
▇▇▇▇▇▇ is authorized to maintain all accounts, registers, corporate books and
other documents on magnetic tape or disc, or on any other mechanical or
electronic system; provided that they are capable of being reproduced in legible
form in accordance with Applicable Law. Where any Authorized Person, including
any Fund’s auditor, wishes to inspect such documents maintained by ▇.▇. ▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇▇ shall provide legible documents, for the discharge of the Fund’s and
its auditors’ legal and regulatory duties. The applicable Funds shall be
responsible for the payment of any research and copying costs associated with
any such request, in accordance with ▇.▇. ▇▇▇▇▇▇’▇ customary
practices.
2.5 Compliance
with Laws and Regulations.
▇.▇.
▇▇▇▇▇▇ will comply with Applicable Law in the United States with respect to the
provision of the Services. The Customer undertakes to comply (and to cause the
Funds to comply) with Applicable Law in the United States and in each state in
which the Customer conducts business, to the extent that compliance with such
Applicable Law is relevant to the provision or receipt of the Services or the
marketing of the Funds.
2.6 Change
Control.
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(a)
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If
either party wishes to propose any amendment or modification to, or
variation of, the Services (including the scope or details of the Services
(a “Change”) then it shall notify the other party of that fact by sending
a request (a “Change Request”) to the party, specifying in as much detail
as is reasonably practicable the nature of the Change. ▇.▇. ▇▇▇▇▇▇ shall
maintain a log of all Change
Requests.
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(b)
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Promptly
following the receipt of a Change Request the parties shall agree whether
to implement the Change Request, whether the Fees should be modified in
light of the change to the Services, and the basis upon which ▇.▇. ▇▇▇▇▇▇
will be compensated for implementing the Change
Request.
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(c)
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If
a change to Applicable Law requires a change to the provision of the
Services, the parties shall follow the Change Control processes set forth
in this Schedule. ▇.▇. ▇▇▇▇▇▇ shall bear its own costs with respect to
implementing such a Change Request except
that:
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(i)
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▇.▇.
▇▇▇▇▇▇ shall be entitled to charge the Customer for any changes to
software that has been developed or customized for the Customer;
and
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7
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(ii)
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▇.▇.
▇▇▇▇▇▇ shall be entitled to charge the Customer for any changes required
as a result of the change in Applicable Law affecting the Customer and/or
any of its Funds in a materially different way than it affects ▇.▇.
▇▇▇▇▇▇’▇ other customers, or which the Customer wishes ▇.▇. ▇▇▇▇▇▇ to
implement in a way different from what ▇.▇. ▇▇▇▇▇▇ reasonably intends to
implement for its other customers.
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If the
change in Applicable Law results in a change to the Services, or an increase in
▇.▇. ▇▇▇▇▇▇’▇ risk associated with provision of the Services, ▇.▇. ▇▇▇▇▇▇ shall
be entitled to make an appropriate increase in the Fees upon at least 90 days’ advance notice to Customer or as
otherwise agreed upon by Customer.
3. Instructions
3.1 Acting
on Instructions; Unclear Instructions.
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(a)
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The
Customer authorizes ▇.▇. ▇▇▇▇▇▇ to accept, rely upon and/or act upon any
Instructions received by it without inquiry. The Customer will
indemnify the ▇.▇. ▇▇▇▇▇▇ Indemnitees against, and hold each of them
harmless from, any Liabilities that may be imposed on, incurred by, or
asserted against the ▇.▇. ▇▇▇▇▇▇ Indemnitees as a result of any action or
omission taken in accordance with any Instruction unless the Liabilities
result from an act of negligence, fraud or willful misconduct on the part
of the ▇.▇. ▇▇▇▇▇▇ Indemnitees with respect to the manner in which such
Instructions are followed.
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(b)
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▇.▇.
▇▇▇▇▇▇ shall promptly notify an Authorized Person or Shareholder, as
applicable, if an Instruction does not contain all information reasonably
necessary for ▇.▇. ▇▇▇▇▇▇ to carry out the Instruction. ▇.▇. ▇▇▇▇▇▇ may
decline to act upon an Instruction if it does not receive clarification or
confirmation satisfactory to it. ▇.▇. ▇▇▇▇▇▇ will not be liable
for any loss arising from any reasonable delay in carrying out any such
Instruction while it seeks such missing information, clarification or
confirmation or in declining to act upon any Instruction for which it does
not receive clarification satisfactory to
it.
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3.2 Verification
and Security Procedures.
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(a)
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▇.▇.
▇▇▇▇▇▇ and the Customer shall comply with any applicable Security
Procedures with respect to the delivery or authentication of Instructions
and shall ensure that any codes, passwords or similar devices are
reasonably safeguarded.
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(b)
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▇.▇.
▇▇▇▇▇▇ may record any of its telephone
communications.
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8
3.3 Instructions
Contrary To Applicable Law/Market Practice.
▇.▇.
▇▇▇▇▇▇ need not act upon Instructions which it reasonably believes to be
contrary to Applicable Law or market practice but ▇.▇. ▇▇▇▇▇▇ will be under no
duty to investigate whether any Instructions comply with Applicable Law or
market practice. In the event ▇.▇. ▇▇▇▇▇▇
does not act upon such Instructions, ▇.▇. ▇▇▇▇▇▇ will notify Customer
promptly.
3.4 Cut-Off
Times.
▇.▇.
▇▇▇▇▇▇ has established cut-off times for receipt of certain Instructions, which
will be made available to the Customer. If ▇.▇. ▇▇▇▇▇▇ receives an Instruction
(other than Instructions relating to a Share transaction, which shall be
processed by ▇.▇. ▇▇▇▇▇▇ as set forth in the the Registration Statement) after
its established cut-off time, ▇.▇. ▇▇▇▇▇▇ will attempt to act upon the
Instruction on the day requested if ▇.▇. ▇▇▇▇▇▇ deems it practicable to do so or
otherwise as soon as practicable after that day.
3.5 Electronic
Access.
Access by
the Customer to certain applications or products of ▇.▇. ▇▇▇▇▇▇ via ▇.▇.
▇▇▇▇▇▇’▇ web site or otherwise shall be governed by this Agreement and the terms
and conditions set forth in Annex A.
4. Fees
and Expenses Owing to ▇.▇. ▇▇▇▇▇▇
4.1 Fees
and Expenses.
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(a)
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The
Customer will pay ▇.▇. ▇▇▇▇▇▇ for its services under this Agreement, as
agreed between the Customer and ▇.▇. ▇▇▇▇▇▇ from time to time and as
described in Schedule 3.
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(b)
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In
addition to the fees provided for above, the Customer shall be responsible
for the payment of all the reasonable fees and disbursements of ▇.▇.
▇▇▇▇▇▇ in connection with the establishment, and ongoing business of the
Customer and/or any Fund, all governmental or similar fees, charges,
taxes, duties and imposts levied in or by any relevant authority in the
United States on or in respect of the Customer and/or any Fund which are
incurred by ▇.▇. ▇▇▇▇▇▇, and any other customary or extraordinary
expenses. The Customer shall reimburse ▇.▇. ▇▇▇▇▇▇ for any of the
foregoing and for all reasonable out-of-pocket expenses including without
limitation telephone, postage and stationery and expenses of a similar
nature as ▇.▇. ▇▇▇▇▇▇ may incur in the execution of its duties under this
Agreement and including the costs and expenses, by the Customer’s request
or with the Customer’s agreement, incurred by ▇.▇. ▇▇▇▇▇▇ and its agents
in determining the value of assets in connection with its duty as the
calculator of the Net Asset Value of the Funds or any Shares and in
connection with the performance of its duties pursuant to this
Agreement.
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9
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(c)
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Invoices
will be payable within thirty (30) days of the date of the invoice. If the
Customer disputes an invoice, it shall nevertheless pay on or before the
date that payment is due such portion of the invoice as is not subject to
a bona fide
dispute. Without prejudice to ▇.▇. ▇▇▇▇▇▇’▇ other rights, ▇.▇. ▇▇▇▇▇▇
reserves the right to charge interest on overdue amounts (not subject to a
bona fide
dispute) from the due date until actual payment at such rate as ▇.▇.
▇▇▇▇▇▇ customarily charges for similar overdue
amounts.
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5. Additional
Provisions Relating to the Customer
5.1 Representations
of the Customer and ▇.▇. ▇▇▇▇▇▇.
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(a)
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The
Customer represents and warrants that (i) assuming execution and delivery
of this Agreement by ▇.▇. ▇▇▇▇▇▇, this Agreement is the Customer’s legal,
valid and binding obligation, enforceable against Customer in accordance
with its terms, (ii) it has full power and authority to enter into and has
taken all necessary corporate action to authorize the execution of this
Agreement, and (iii) it has not relied on any oral or written
representation made by ▇.▇. ▇▇▇▇▇▇ or any person on its behalf, and
acknowledges that this Agreement sets out to the fullest extent the duties
of ▇.▇. ▇▇▇▇▇▇.
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(b)
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▇.▇.
▇▇▇▇▇▇ represents and warrants that (i) assuming execution and delivery of
this Agreement by the Customer, this Agreement is ▇.▇. ▇▇▇▇▇▇’▇ legal,
valid and binding obligation, enforceable against ▇.▇. ▇▇▇▇▇▇ in
accordance with its terms and (ii) it has full power and authority to
enter into and has taken all necessary corporate action to authorize the
execution of this Agreement.
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5.2 The
Customer to Provide Certain Information to ▇.▇. ▇▇▇▇▇▇.
Upon
request, the Customer will promptly provide to ▇.▇. ▇▇▇▇▇▇ such information
about itself and its financial status as ▇.▇. ▇▇▇▇▇▇ may reasonably request,
including the Articles and its current audited and unaudited financial
statements, its Registration Statement and any contracts, regulatory documents
or opinions from a lawyer or accountant that relate to the Services described in
this Agreement.
5.3 Information
Used to Provide the Service.
The
Customer agrees with ▇.▇. ▇▇▇▇▇▇ that any information the Customer or the
Investment Adviser provides to ▇.▇. ▇▇▇▇▇▇ pursuant to this Agreement shall be
complete and accurate to enable ▇.▇. ▇▇▇▇▇▇ to perform its responsibilities
pursuant to this Agreement.
ETF Fund
Servicing Agreement –
March
2010 version
10
5.4 Limitation of Liability Among Series
and Classes of the Trust
|
(a)
|
THIS
AGREEMENT HAS BEEN ENTERED INTO BY THE TRUST AND WAS EXECUTED AND
DELIVERED BY AN OFFICER THEREOF, WHICH OFFICER WAS ACTING SOLELY IN HIS
CAPACITY AS AN OFFICER OF THE TRUST AND NOT IN HIS INDIVIDUAL
CAPACITY. THE OBLIGATIONS OF THIS AGREEMENT ARE BINDING NEITHER
ON SUCH OFFICER NOR ON ANY SHAREHOLDER OF THE SERIES OR CLASSES OF THE
TRUST INDIVIDUALLY, BUT ARE BINDING ONLY UPON THE ASSETS AND PROPERTY OF
THE TRUST OR BELONGING OR ATTRIBUTABLE TO AN SERIES OR CLASS
THEREOF. THE PARTIES ACKNOWLEDGE AND AGREE THAT THE ASSETS AND
LIABILITIES OF EACH SERIES OR CLASS OF THE TRUST ARE SEGREGATED PURSUANT
TO THE DELAWARE STATUTORY TRUST ACT AND THE 3RD AMENDED AND RESTATED TRUST
AGREEMENT OF THE TRUST AND THAT EACH SERIES OR CLASS IS NOT RESPONSIBLE
FOR THE OBLIGATIONS OF EACH OTHER SERIES OR CLASS. ANY PARTY
EXTENDING CREDIT TO, CONTRACTING WITH OR HAVING ANY CLAIM AGAINST ANY
SERIES OR CLASS OF THE TRUST MAY LOOK ONLY TO THE ASSETS OF SUCH SERIES TO
SATISFY OR ENFORCE ANY DEBT WITH RESPECT TO THAT
SERIES.
|
|
(b)
|
In
accordance with Section 5.4(a) above, upon request of the ▇.▇. ▇▇▇▇▇▇, the
Trust shall promptly inform ▇.▇. ▇▇▇▇▇▇ of the proper attribution amongst
the Series of any outstanding obligations due hereunder. ▇.▇.
▇▇▇▇▇▇ may rely on such allocation stipulated by the Trust without further
inquiry or liability.
|
6. Where
▇.▇. ▇▇▇▇▇▇ is Liable to the Customer or the Funds
6.1 Standard
of Care; Liability.
|
|
(a)
|
▇.▇.
▇▇▇▇▇▇ will use reasonable care in performing its obligations under this
Agreement. ▇.▇. ▇▇▇▇▇▇ will not be responsible for any loss or damage
suffered by the Customer or the Funds with respect to any matter as to
which ▇.▇. ▇▇▇▇▇▇ has satisfied its obligation of reasonable care unless
the same results from an act of
negligence, fraud or willful misconduct on the part of ▇.▇.
▇▇▇▇▇▇.
|
ETF Fund
Servicing Agreement –
March
2010 version
11
|
|
(b)
|
▇.▇.
▇▇▇▇▇▇ will be liable for the Customer’s and/or any Fund’s direct damages
to the extent they result from ▇.▇. ▇▇▇▇▇▇’▇ fraud, negligence,
or willful misconduct in performing its duties as set out in this
Agreement. Nevertheless, under no circumstances will ▇.▇. ▇▇▇▇▇▇ be liable
for any indirect, incidental, consequential or special damages (including,
without limitation, lost profits or business) of any form incurred by any
person or entity, whether or not foreseeable and regardless of the type of
action in which such a claim may be brought, ▇.▇. ▇▇▇▇▇▇’▇ performance
under this Agreement, or ▇.▇. ▇▇▇▇▇▇’▇ role as a service provider to the
Customer.
|
|
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(c)
|
The
Customer will indemnify the ▇.▇. ▇▇▇▇▇▇ Indemnitees against, and hold them
harmless from, any Liabilities that may be imposed on, incurred by or
asserted against any of the ▇.▇. ▇▇▇▇▇▇ Indemnitees in connection with or
arising out of ▇.▇. ▇▇▇▇▇▇’▇ performance under this Agreement, provided
the ▇.▇. ▇▇▇▇▇▇ Indemnitees have not acted with negligence or engaged in
fraud or willful misconduct in connection with the Liabilities in
question.
|
6.2 Force
Majeure.
▇.▇.
▇▇▇▇▇▇ will maintain and update from time to time business continuation and
disaster recovery procedures with respect to its global business that it
determines from time to time meet reasonable commercial standards. To the extent
permitted by Applicable Law, ▇.▇. ▇▇▇▇▇▇ will have no liability, however, for
any damage, loss, expense or liability of any nature that the Customer or any of
the Funds may suffer or incur, caused by an act of God, fire, flood, civil or
labor disturbance, war, terrorism, act of any governmental authority or other
act or threat of any authority (de jure or de facto), legal constraint, fraud or
forgery (other than on the part of ▇.▇. ▇▇▇▇▇▇ or its employees), malfunction of
equipment or software (except where such malfunction is primarily and directly
attributable to ▇.▇. ▇▇▇▇▇▇’▇ failure to adequately maintain the equipment or
software), failure of or the effect of rules or operations of any external funds
transfer system, inability to obtain or interruption of external communications
facilities, or any cause beyond the reasonable control of ▇.▇.
▇▇▇▇▇▇.
6.3 ▇.▇.
▇▇▇▇▇▇ May Consult with Counsel.
▇.▇.
▇▇▇▇▇▇ will be entitled to rely on, and may act upon the advice of legal counsel in relation to matters
of law, regulation or market practice (which may be the legal counsel of the Customer or the Funds), and
shall not be liable to Customer under this Agreement for any action taken or
omitted pursuant to such advice provided that ▇.▇. ▇▇▇▇▇▇ has acted with
reasonable care.
6.4 Limitations
of ▇.▇. ▇▇▇▇▇▇’▇ Liability.
|
|
(a)
|
▇.▇.
▇▇▇▇▇▇ may rely on information provided to it by or on behalf of the
Funds, or which was prepared or maintained by the Customer or any third
party on behalf of the Funds, in the course of discharging its duties
under this Agreement. ▇.▇. ▇▇▇▇▇▇ shall not be liable to any person for
any Liabilities suffered by any person as a result of ▇.▇. ▇▇▇▇▇▇: (i)
having relied upon the authority, accuracy, truth or completeness of
information including, without limitation, information supplied to ▇.▇.
▇▇▇▇▇▇ by the Customer or by the Investment Adviser or any third party
which is not a subcontractor of ▇.▇. ▇▇▇▇▇▇, including but not limited to,
information in relation to trades in respect of the Funds or expenses of
the Funds; (ii) having relied upon the authority, accuracy, truth and
completeness of information furnished to ▇.▇. ▇▇▇▇▇▇ by any pricing
services, data services, or provider of other market information or
information concerning securities held by the
Funds.
|
ETF Fund
Servicing Agreement –
March
2010 version
12
|
|
(b)
|
▇.▇.
▇▇▇▇▇▇ shall not be liable for any error in data that is transitioned to
▇.▇. ▇▇▇▇▇▇ at the time it begins to provide the Services with respect to
the Funds provided however that ▇.▇.
▇▇▇▇▇▇:
|
|
|
(i)
|
shall
use reasonable efforts to mitigate any Losses arising as a result of any
such error of which it is aware;
and
|
|
|
(ii)
|
shall
notify the Customer as soon as practicable after becoming aware of the
error.
|
▇.▇.
▇▇▇▇▇▇ shall be entitled to reasonable compensation, at its customary hourly
rates, for the remediation efforts needed to correct any such error in
data.
|
|
(c)
|
▇.▇.
▇▇▇▇▇▇ shall not be liable for any Losses resulting from a failure by any
person (other than an Affiliate or subcontractor of ▇.▇. ▇▇▇▇▇▇) to
provide ▇.▇. ▇▇▇▇▇▇ with any information or notice that is reasonably
necessary for the provision of the Services provided however that the
Losses do not result from an act of negligence, fraud or willful
misconduct on the part of the ▇.▇. ▇▇▇▇▇▇ Indemnitees. ▇.▇. ▇▇▇▇▇▇ shall
use reasonable efforts to find alternative sources of information in the
event of any such failure. In the event of any such failure that may
affect the performance of the Services, ▇.▇. ▇▇▇▇▇▇ shall promptly notify
the Customer.
|
|
|
(d)
|
▇.▇.
▇▇▇▇▇▇ shall not be liable for any Liabilities whatsoever incurred or
suffered by any party hereto, whether on their own account or for the
account of the Funds, as a result of the failure of the Customer or its
agents, officers or employees to comply with the laws or regulations of
any jurisdiction in which Shares are offered. (e)
▇.▇. ▇▇▇▇▇▇’▇ responsibilities with respect to the
correction of an error in calculating the net asset value of any Fund
shall be subject to the NAV correction policy and procedures attached to
this Agreement as Appendix A to Schedule 1 of this
Agreement.
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|
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(f)
|
The
Customer agrees that the accounting reports provided by ▇.▇. ▇▇▇▇▇▇, as
well as any share class or other similar reports, are to enable the
Customer to fulfill its statutory reporting and investor
subscription/redemption obligations, and are not for investment, treasury
or hedging purposes.
|
ETF Fund
Servicing Agreement –
March
2010 version
13
7. Term
and Termination
7.1 Term and
Termination.
This
Agreement shall be in effect for an initial term of three (3) years from the
Services Commencement Date (the “Initial Term”). The Agreement will
automatically renew for additional one year periods effective from the first
anniversary of the date of the end of the Initial Term of this Agreement, unless
and until a valid termination notice is given by the Customer or ▇.▇. ▇▇▇▇▇▇ at
least ninety (90) days prior to the end of the
applicable term.
7.2 Other
Grounds for Termination.
|
|
(a)
|
In
the event of the termination of the Custody Agreement or the Agency
Agreement, ▇.▇. ▇▇▇▇▇▇ may terminate this Agreement in whole or in part
and cease to provide the Services simultaneously with the transition of
the assets of the respective Funds to a successor custodian. In
the event that any such termination occurs prior to the end of the Initial
Term, the Customer shall pay ▇.▇. ▇▇▇▇▇▇ an early termination fee in an
amount equal to the product of X times a fraction, the numerator of which
is the number of full or partial months remaining in the Initial Term at
the time termination becomes effective and the denominator is [36] (the
“Early Termination Fee”), unless the Customer’s termination of the custody
agreement was for material breach.
|
|
|
(b)
|
Either
party may terminate this Agreement immediately upon written notice to the
other party following the occurrence of any of the
following:
|
(i) the other
party being declared bankrupt, entering into a composition with creditors,
obtaining a suspension of payment, being put under court controlled management
or being the subject of a similar measure;
(ii) the
relevant federal or state authority withdrawing its authorization of either
party; or
(iii) the other
party committing any material breach of this Agreement and failing to remedy
such breach (if capable of remedy) within 90 days of being given written notice
of the material breach, unless the parties agree to extend the period to remedy
the breach.
7.3 Consequences
of Termination.
Termination
of this Agreement under the provisions of this Article 7 will be without
prejudice to the performance of any party's obligations under this Agreement
with respect to all outstanding transactions at the date of
termination.
ETF Fund
Servicing Agreement –
March
2010 version
14
7.4 Transition
following Termination.
As soon
as reasonably practicable following its resignation or termination of
appointment becoming effective and subject to payment of any amount owing to
▇.▇. ▇▇▇▇▇▇ under this Agreement, ▇.▇. ▇▇▇▇▇▇ agrees to transfer such records
and related supporting documentation as are held by it under this Agreement, to
any replacement provider of the Services or to such other person as the Customer
may direct. Except as otherwise provided in Section 7.3, ▇.▇. ▇▇▇▇▇▇ will
provide the Services until a replacement administrator is in place subject to
the terms and conditions of this Agreement (including Article
4). ▇.▇. ▇▇▇▇▇▇ will also provide reasonable assistance to its
successor, for such transfer, subject to the payment of such reasonable expenses
and charges as ▇.▇. ▇▇▇▇▇▇ customarily charges for such assistance. The Customer
undertakes to use its best efforts to appoint a new administrative service
provider as soon as possible.
8. Miscellaneous
8.1 Notices.
Notices
required under this Agreement shall be sent or served by registered mail,
overnight delivery services, such as Federal Express (FedEx) or United Parcel
Service (UPS), etc., courier services or hand delivery to the address of the
respective parties as set out on the first page of this Agreement, unless notice
of a new address is given to the other party in writing. Notice will not be
deemed to be given unless it has been received.
8.2 Successors
and Assigns.
This
Agreement will be binding on each of the parties hereto and their respective
successors and permitted assigns, but the parties agree that neither party can
assign its rights and obligations under this Agreement without the prior written
consent of the other party, which consent will not be unreasonably withheld or
delayed; except ▇.▇. ▇▇▇▇▇▇ may assign this Agreement without Customer’s consent
to (a) any Affiliate or subsidiary of ▇.▇. ▇▇▇▇▇▇ or (b) in connection with a
merger, reorganization, stock sale or sale of all or substantially all of ▇.▇.
▇▇▇▇▇▇’▇ fund servicing business.
8.3 Entire
Agreement.
This
Agreement, including the Schedules and Appendices, sets out the entire Agreement
between the parties in connection with the subject matter, and this Agreement
supersedes any other agreement, statement, or representation relating to the
Services under this Agreement, whether oral or written. Amendments must be in
writing and signed by both parties.
8.4 Insurance.
The
Customer acknowledges that ▇.▇. ▇▇▇▇▇▇ will not be required to maintain any
insurance coverage specifically for the benefit of the Customer or the Funds.
▇.▇. ▇▇▇▇▇▇ will, however, provide summary information of its own general
insurance coverage, to the Customer upon written request.
ETF Fund
Servicing Agreement –
March
2010 version
15
8.5 Governing
Law and Jurisdiction.
This
Agreement will be construed, regulated and administered under the laws of the
United States or State of New York, as applicable, without regard to New York’s
principles regarding conflict of laws, except that the foregoing shall not
reduce any statutory right to choose New York law or forum. The
United States District Court for the Southern District of New York will have the
sole and exclusive jurisdiction over any lawsuit or other judicial proceeding
relating to or arising from this Agreement. If that court lacks
federal subject matter jurisdiction, the Supreme Court of the State of New York,
New York County will have sole and exclusive jurisdiction. Either of
these courts will have the proper venue for any such lawsuit or judicial
proceeding, and the parties waive any objection to venue or their convenience as
a forum. The parties agree to submit to the jurisdiction of any of
the courts specified and to accept service of process to vest personal
jurisdiction over them in any of these courts. The parties further
hereby knowingly, voluntarily and intentionally waive, to the fullest extent
permitted by Applicable Law, any right to a trial by jury with respect to any
such lawsuit or judicial proceeding arising or relating to this Agreement or the
transactions contemplated hereby.
8.6 Severability;
Waiver; and Survival.
(a) If one or
more provisions of this Agreement are held invalid, illegal or unenforceable in
any respect on the basis of any particular circumstances or in any jurisdiction,
the validity, legality and enforceability of such provision or provisions under
other circumstances or in other jurisdictions and of the remaining provisions
will not in any way be affected or impaired.
(b) Except as
otherwise provided herein, no failure or delay on the part of either party in
exercising any power or right under this Agreement operates as a waiver, nor
does any single or partial exercise of any power or right preclude any other or
further exercise, or the exercise of any other power or right. No waiver by a
party of any provision of this Agreement, or waiver of any breach or default, is
effective unless it is in writing and signed by the party against whom the
waiver is to be enforced.
(c) The
parties’ rights, protections, and remedies under this Agreement shall survive
its termination.
8.7 Confidentiality.
(a) Subject
to Section 8.7(b), ▇.▇. ▇▇▇▇▇▇ will hold all Confidential Information in
confidence and will not disclose any Confidential Information except as may be
required by Applicable Law, a regulator with jurisdiction over ▇.▇. ▇▇▇▇▇▇’▇ or
Funds business, or with the consent of the Customer.
(b) The
Customer authorizes ▇.▇. ▇▇▇▇▇▇ to disclose Confidential Information
to:
ETF Fund
Servicing Agreement –
March
2010 version
16
|
|
(i)
|
any
service providers and/or vendors to the Funds that ▇.▇. ▇▇▇▇▇▇ believes is
reasonably required by such person to provide the relevant
services;
|
|
|
(ii)
|
its
professional advisers, auditors or public
accountants;
|
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(iii)
|
its
Affiliates; and
|
|
|
(iv)
|
any
revenue authority or any governmental
entity.
|
|
|
(c)
|
Except
as otherwise required by Applicable Law or as needed to enforce the terms
of this Agreement, the parties shall hold the terms and conditions of this
Agreement, including, without limitation, any commercial terms, in
confidence.
|
8.8 Use
of ▇.▇. ▇▇▇▇▇▇’▇ Name.
The
Customer agrees not to use (or permit the use of) ▇.▇. ▇▇▇▇▇▇'▇ name in any
document, publication or publicity material relating to the Customer or the
Funds, including but not limited to notices, sales literature, stationery,
advertisements, etc., without the prior consent of ▇.▇. ▇▇▇▇▇▇ (which consent
shall not be unreasonably withheld), provided that no prior consent is needed if
the document in which ▇.▇. ▇▇▇▇▇▇’▇ name is used merely states that ▇.▇. ▇▇▇▇▇▇
is acting as administrator to the Funds.
8.9 Delegation.
▇.▇.
▇▇▇▇▇▇ may delegate to a reputable agent any of its functions herein. However,
▇.▇. ▇▇▇▇▇▇ will remain responsible to the Funds for any such delegation. To the
extent reasonably practicable, ▇.▇. ▇▇▇▇▇▇ will consult with the Customer before
it implements the delegation of a material portion of the Services.
8.10 Third
Party Rights.
A person
who is not a party to this Agreement shall have no right to enforce any term of
this Agreement.
8.11 Counterparts.
This
Agreement may be executed in several counterparts each of which will be deemed
to be an original and together will constitute one and the same
agreement.
ETF Fund
Servicing Agreement –
March
2010 version
17
AS
WITNESS the hand of the duly authorized officers of the parties
hereto:
|
FOCUSSHARES TRUST
|
▇.▇.
▇▇▇▇▇▇ INVESTOR SERVICES CO.
|
|||
|
By:
|
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By:
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Name:
|
Name:
|
|||
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Title:
|
Title:
|
|||
|
Date:
|
Date:
|
|||
ETF Fund
Servicing Agreement –
March
2010 version
18
SCHEDULE 1
Accounting
and NAV Calculation Services
|
A.
|
Definitions
|
|
1.
|
Definitions.
|
As used
in this Agreement and the Schedules and Appendices to this Agreement, the
following terms have the meaning hereinafter stated:
“Accounting Records” means the
official books and records which are maintained by or in respect of the Funds in
accordance with Applicable Law.
“Basket” means the in-kind
deposit of a designated portfolio of equity or debt securities required to be
delivered for a Creation Unit.
“Business Day” means a day on
which the New York Stock Exchange is open for Business.
“Cash Component” means the
balancing cash due with each issue or redemption of a Creation Unit,
i.e., the difference between the aggregate value of the securities in a Basket
and the total value of the Creation Unit.
“Creation Unit” means a bundle of shares
issued or redeemed on a continuous basis in a large, specified number at net
asset value that makes up one unit of the Fund. A Creation Unit is
the minimum number of shares that may be created or redeemed at one time, the
size of which is particular to each Fund.
“Custodian” means the entity
appointed as the custodian of the Funds, as notified by the Customer to ▇.▇.
▇▇▇▇▇▇ in writing.
“Daily” means, in relation to
an activity, that it is repeated on each Business Day.
“NAV” means, in relation to any
of the Funds, the net asset value per Share for that Fund.
“NAV Error” has the meaning
given to it in Appendix A to this Schedule 1.
“Order Taker” means the entity
appointed as order taker of the Funds, as notified by the Customer to ▇.▇.
▇▇▇▇▇▇ in writing.
“Portfolio Composition File” (or
“PCF”) means the names, identifiers and number of shares of each equity
security, the percentage of the Fund represented by each security, the types of
financial instruments and their characteristics, money market instruments, and
such other information as may be agreed with the Customer.
“Transfer Agent” means ▇.▇.
▇▇▇▇▇▇ acting in the capacity as transfer agent for the Customer.
“Valuation Procedures” means
the procedures to be followed by ▇.▇. ▇▇▇▇▇▇ with respect to valuation of the
Funds’ securities, as agreed by the parties.
19
|
|
2.
|
Interpretation.
|
Capitalized
terms which are defined in the main body of this Agreement shall be defined as
provided in the main body unless otherwise defined in this
Schedule.
|
B.
|
Fund
Accounting
|
1.
Maintenance of Accounting
Records.
|
|
(a)
|
▇.▇.
▇▇▇▇▇▇ shall maintain the following Accounting Records in accordance with
U.S. generally accepted accounting
principles:
|
|
|
(i)
|
journals
containing an itemized Daily record of all purchases and sales of
securities, all receipts and disbursements of cash and all other debits
and credits;
|
|
|
(ii)
|
general
and auxiliary ledgers reflecting all asset, liability, reserve, capital,
income and expense accounts, including interest accrued and interest
received;
|
|
|
(iii)
|
separate
ledger accounts; and
|
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(iv)
|
a
monthly trial balance of all ledger accounts (except shareholder
accounts).
|
|
|
(b)
|
▇.▇.
▇▇▇▇▇▇ shall update the Accounting Records to reflect completed Share
transactions as notified to it by the Order Taker on a total aggregate
basis.
|
|
|
(c)
|
▇.▇.
▇▇▇▇▇▇ is not required to calculate performance fees, or performance fee
waivers, expense caps or collars, except as may be agreed with the
Customer.
|
2.
Distributions.
|
|
(a)
|
Daily Distributing
Funds: ▇.▇. ▇▇▇▇▇▇ will compute each Fund’s net income and capital
gains, dividend payables, dividend factors and agreed upon rates and
yields.
|
|
|
(b)
|
Non-Daily Dividend
Funds: ▇.▇. ▇▇▇▇▇▇ will record Fund distributions as notified to it
by the Funds’ Administrator.
|
3. Assistance
to Auditors.
▇.▇.
▇▇▇▇▇▇ shall provide reasonable cooperation and assistance to the auditors of
the Funds, including without limitation by providing copies of extracts of the
Accounting Records and other documentation which is maintained by ▇.▇. ▇▇▇▇▇▇ on
behalf of the Funds as reasonably required by such auditors to carry out their
functions. The Customer and/or the Investment Adviser shall coordinate all
requests for assistance by auditors.
20
|
C.
|
Fund
Valuations
|
1.
NAV Calculation and
Reporting.
|
(a)
|
▇.▇.
▇▇▇▇▇▇ shall perform NAV calculations in accordance
with:
|
|
|
(i)
|
the
Prospectus;
|
|
|
(ii)
|
the
1940 Act;
|
|
|
(iii)
|
Valuation
Procedures; and
|
|
|
(iv)
|
Instructions
which are consistent with ▇.▇. ▇▇▇▇▇▇’▇ operating model, provided that, in
the cases of (iii) and (iv), they are consistent with (i) and
(ii).
|
|
|
(b)
|
▇.▇.
▇▇▇▇▇▇ shall perform the following NAV calculation functions Daily, unless
otherwise agreed with the Customer:
|
|
|
(i)
|
recording
all security transactions including appropriate gains and losses from the
sale of Fund securities;
|
|
|
(ii)
|
recording
each Fund’s (or class’) capital share activities based upon Share
Transactions received by the Order
Taker;
|
|
|
(iii)
|
recording
interest income, amortization/accretion income and dividend
income;
|
|
|
(iv)
|
accruing
Fund (or class) expenses according to instructions received from the
Funds’ Administrator;
|
|
|
(v)
|
recording
all corporate actions affecting securities held by each
Fund;
|
|
|
(vi)
|
determining
the outstanding receivables and payables for all (1) security trades, (2)
Share transactions; and (3) income and expense accounts;
and
|
|
|
(vii)
|
obtaining
security prices from independent pricing services, or if such quotes are
unavailable, obtaining such prices from the Funds’ Investment Adviser or
its designee, as approved by the
Board.
|
|
|
(viii)
|
Sending
to the daily PCF to the Customer as
directed.
|
|
|
(ix)
|
Calculating
the Cash Component of the PCF and transmitting it as directed by the
Customer.
|
|
(c)
|
▇.▇.
▇▇▇▇▇▇ shall report confirmed NAV calculations
to
|
|
|
(i)
|
the
Investment Adviser;
|
|
|
(ii)
|
the
Order Taker; and
|
|
|
(iii)
|
such
third parties as agreed with the
Customer.
|
2. NAV
Errors.
Subject
to Applicable Law and notwithstanding additional duties of ▇.▇. ▇▇▇▇▇▇ as
furthermore described in Appendix A to this Schedule:
|
|
(a)
|
▇.▇.
▇▇▇▇▇▇ shall report all NAV Errors to the Customer promptly upon
discovery.
|
21
|
|
(b)
|
The
Customer shall ensure that all errors in NAV calculations identified by
it, or by the Investment Adviser, are reported to ▇.▇. ▇▇▇▇▇▇ as soon as
reasonably practicable following
discovery.
|
|
|
(c)
|
▇.▇.
▇▇▇▇▇▇ shall correct NAV Errors as and when required by Appendix A to this
Schedule.
|
|
D.
|
Reconciliations
of Securities Positions and Cash and/or Currency
Balances
|
|
|
1.
|
▇.▇.
▇▇▇▇▇▇ shall reconcile its records of securities positions and cash and/or
currency balances of the relevant Fund to the records of the relevant
Custodian, and shall perform similar reconciliations to the relevant
source with respect to other material investment assets or liabilities.
Such reconciliations shall be conducted at the frequency as agreed with
the Customer in the case of cash and/or currency holdings, securities and
other investment assets or
liabilities.
|
|
|
2.
|
In
cases where an Affiliate of ▇.▇. ▇▇▇▇▇▇ is not the appointed Custodian for
a Fund, the Customer shall ensure that the Custodian shall provide ▇.▇.
▇▇▇▇▇▇ with timely, accurate and complete records of securities position
and cash and/or currency balances to ▇.▇. ▇▇▇▇▇▇ for each Fund. The
Customer also shall ensure that the relevant source shall provide ▇.▇.
▇▇▇▇▇▇ with timely, accurate and complete records of any other material
investment assets or liabilities for each
Fund.
|
|
E.
|
Standard
Reporting
|
▇.▇.
▇▇▇▇▇▇ shall make available a standard set of reports as agreed with the
Customer.
|
F.
|
Services
Requiring Separate Arrangements
|
1.
Non-Standard Services and
Reports.
Additional
services and special reports are available by arrangement between the Customer
and ▇.▇. ▇▇▇▇▇▇ under the terms and conditions of this Agreement (other than
adjustments in compensation as may be agreed). The non-standard services and
special reports will be subject to the Change Control processes set forth in
Section 2.6.
2.
Messaging/Communication.
Unless
otherwise agreed in accordance with the Change Control process set forth in
Section 2.6, all information delivered to ▇.▇. ▇▇▇▇▇▇ (including but not limited
to trade flows and reconciliation reports) shall be via ▇.▇. ▇▇▇▇▇▇’▇ standard
means of electronic communication.
22
APPENDIX
A
Net Asset Value Error Correction
Policy and Procedures
|
1.
|
As
used in this Agreement and the Schedules and Appendices to this Agreement,
the following terms have the meaning hereinafter
stated:
|
“NAV Error” is defined as one
or more errors in the computation of net asset value which, when considered
cumulatively, result in a difference between the originally computed NAV
calculation and the corrected NAV calculation of at least $0.010 per
share. This computation is based upon the actual difference and is
not based upon the rounding of the NAV calculation to the nearest cent per
share.
The
term “responsible person”
means a person who, by virtue of negligence, fraud, or willful
misconduct, caused or contributed to an NAV Error.
|
2.
|
(a)
In
the event that a NAV Error results in a computation error greater than
$0.01, then any party receiving an overpayment as a result of the NAV
Error shall be responsible to reimburse the payee for such excess amounts.
The Customer will be responsible for obtaining any reimbursements due in
accordance with this Agreement from the responsible person or persons.
▇.▇. ▇▇▇▇▇▇ agrees to promptly pay to the
Funds any amounts owed by ▇.▇. ▇▇▇▇▇▇ to the extent that ▇.▇. ▇▇▇▇▇▇ is
the responsible
person.
|
|
|
(b)
|
In
cases where ▇.▇. ▇▇▇▇▇▇ is not the responsible person with regard to an
NAV Error, ▇.▇. ▇▇▇▇▇▇ shall be entitled to reasonable compensation for
the work it performs with respect to the remediation of the NAV
Error.
|
|
|
(c)
|
In
cases where a NAV Error has occurred, the Customer, upon JPMorgan’s
request, will instruct the Transfer Agent to reprocess each Authorized
Participant's Creation and/or Redemption transactions occurring during the
NAV Error period by adjusting only the corresponding dollar amounts
associated with the transactions, at the expense of the responsible person
or persons. If the Transfer Agent does not agree to reprocess
transactions resulting from a NAV Error for which JPMorgan is a
responsible person, JPMorgan’s liability will be limited to the dollar
amount it would have been liable for had the reprocessing
occurred.
|
23
SCHEDULE 2
Fund
Administration Services
|
A.
|
Portfolio
Compliance Service.
|
|
|
1.
|
Subject
to the timely availability of accurate data, ▇.▇. ▇▇▇▇▇▇ will perform
testing of the Fund’s portfolio
compliance:
|
(i) on a
daily basis with respect to such investment restrictions and other regulatory
requirements as are agreed in writing by the Customer and ▇.▇.
▇▇▇▇▇▇.
(ii) on a
quarterly basis with respect to the requirements of Section 851 of the Internal
Revenue Code and applicable Treasury Regulations for qualification as a
regulated investment company; and
will
report its findings to the Customer from time to time as agreed between the
parties (the “Portfolio
Compliance Service”).
|
|
2.
|
▇.▇.
▇▇▇▇▇▇ is providing the Portfolio Compliance Service as a reporting
service to the Customer to assist it in the oversight of the Funds and is
not acting in a fiduciary capacity for the Funds. Accordingly,
▇.▇. ▇▇▇▇▇▇ shall have no liability for any Liabilities (including
investment losses) incurred by the Customer or any Fund resulting from the
reliance by the Customer (or any other person) on the accuracy or
completeness of the Portfolio Compliance Service, except to the extent that ▇.▇. ▇▇▇▇▇▇ failed to
comply with the standards of care set forth in Section 6.1 of the
Agreement in providing the Portfolio Compliance Service.
|
|
B.
|
Financial
Reporting Services.
|
▇.▇.
▇▇▇▇▇▇ will prepare the reports and filings below for the review and approval by
the Customer’s officers and will file such documents with the SEC upon receipt
of approval from the Customer’s officers.
|
|
1.
|
Semi-Annual and Annual
Reports.
|
▇.▇.
▇▇▇▇▇▇ will prepare financial information for the Funds’ semi-annual reports,
annual reports and financial statements for routine prospectus
updates.
|
|
2.
|
24f-2
Notices.
|
▇.▇.
▇▇▇▇▇▇ will prepare the annual Rule 24f-2 Notice.
3.
Form N-Q.
▇.▇.
▇▇▇▇▇▇ will prepare Form N-Q on a quarterly basis.
4.
Form N-SAR.
▇.▇.
▇▇▇▇▇▇ will prepare Form N-SAR on a semi-annual basis.
24
|
|
5.
|
Form
N-CSR.
|
▇.▇.
▇▇▇▇▇▇ will compile information for Form N-CSR on a semi-annual
basis.
|
C.
|
Tax
Services
|
▇.▇.
▇▇▇▇▇▇ will provide the following tax services, subject to the review and
approval of the Customer, the Investment Adviser and/or the Funds’
auditors.
|
|
1.
|
Preparation of Certain
Documents:
|
▇.▇.
▇▇▇▇▇▇ shall prepare the following for review and approval by the
Customer:
|
|
(i)
|
Fiscal
and excise tax provisions in accordance with the Internal Revenue Code and
applicable rules and regulations;
|
|
|
(ii)
|
Federal
(Form 1120-RIC), state income tax return for state of incorporation (or
additional states as agreed, subject to additional fees) and excise tax
returns (Form 8613) (including filings by extended due dates) and
file;
|
|
|
(ii)
|
Year
end re-characterizations, such as return of capital, foreign tax credit,
qualified dividend income and tax exempt percentages for Form 1099-
DIV;
|
|
|
(iv)
|
All
applicable data required for year end shareholder reporting requirements,
such as income by state, income by country, treasury
income;
|
|
|
(v)
|
Calculation
of income/capital gain distributions (in compliance with income/excise tax
distribution requirements) in accordance with the Internal Revenue Code
and any applicable rules and
regulations;
|
|
|
(vi)
|
All
items regarding liquidations or mergers, including completion of the final
tax provisions, returns and calculations of all tax
attributes.
|
|
|
2.
|
Financial Statement
Support:
|
▇.▇.
▇▇▇▇▇▇ will support the Funds’ financial statement process by preparing and
reviewing the following:
(i)
Return
of Capital Statement of Position (ROC SOP) disclosure.
(ii)
Tax Footnote disclosure that involves tax
cost of investments, ROC SOP reclassification, tax character of distributions
(comparative table – prior year and current year), distributable earnings,
capital loss carry forward (and if applicable, post October loss.
(iii) 60
day notice information required by the Tax Code for foreign tax credit,
long-term capital gain designation, tax exempt income, dividend received
deduction, qualified dividend income, qualified interest income, and qualified
short-term gain.
25
|
|
3.
|
Additional
Services.
|
The
following services are available by arrangement between the Customer and ▇.▇.
▇▇▇▇▇▇ (and subject to additional fees): REMIC OID calculations, accelerated
fiscal or excise tax reporting, additional wash sales processing and analysis
(to be performed by GainsKeeper), Passive Foreign Investment Company (“PFIC”)
identification services (to be performed by Ernst & Young LLP’s PFIC
analyzer product, pursuant to a contractual engagement by Customer with Ernst
& Young LLP), mutually agreed upon-tax consulting, assistance with Internal
Revenue audits or audits conducted by state taxing authorities, assist and test
for ownership charges (based upon mutually agreed upon procedures) and determine
personal holding company status, as deemed necessary.
|
D.
|
Regulatory
Services
|
▇.▇.
▇▇▇▇▇▇ will perform the following services subject to the review and approval of
the Customer.
|
|
1.
|
Prospectus/Statement of
Additional Information
Updates.
|
▇.▇.
▇▇▇▇▇▇ will prepare for review by the Customer post-effective amendments to the
Registration Statement for annual update purposes and file with the SEC; prepare
draft response to SEC comments and file response letter when a post-effective
amendment includes material changes; prepare and file prospectus and statement
of additional information stickers as required and coordinate printing and
distribution thereof.
2.
Other Regulatory
Filings.
|
|
(a)
|
Fidelity
Bond: ▇.▇. ▇▇▇▇▇▇ shall obtain a copy of the Customer’s
fidelity bond from the Customer’s insurance broker, and prepare and file
with the SEC annually.
|
|
|
(b)
|
Form
N-PX: ▇.▇. ▇▇▇▇▇▇ shall obtain the Funds’ proxy voting
record information from the vendor designated by the Customer, prepare a
draft Form N-PX for review by the Customer and act as liaison with the
Customer’s financial printer with respect to its
filing.
|
|
|
3.
|
Board
Materials.
|
▇.▇.
▇▇▇▇▇▇ shall prepare for review by the Customer and its legal counsel a
production schedule, notice, agenda and all routine Board materials, including
Board memoranda and resolutions for regular quarterly Board meetings and
distribute the materials to all necessary parties. An officer of ▇.▇.
▇▇▇▇▇▇ will attend the Board meetings and draft the minutes thereof for review
by the Customer and its legal counsel. ▇.▇. ▇▇▇▇▇▇ shall maintain the
minutes of all meetings in the corporate records of the Funds.
|
|
4.
|
Calendars.
|
▇.▇.
▇▇▇▇▇▇ shall maintain an annual calendar of Board and Committee meetings and all
required SEC filings.
|
|
5.
|
Compliance
Manuals
|
▇.▇.
▇▇▇▇▇▇ shall prepare a draft compliance manual for Customer’s review and
approval and prepare and update drafts of Fund compliance procedures for
Customer’s review and approval and shall maintain lists
of authorized signers, affiliated brokers and prohibited securities
lists.
26
E. General
Administration Services
|
|
1.
|
Board Materials and Board
minutes.
|
|
|
▇.▇.
▇▇▇▇▇▇ will prepare or compile Fund performance and expense information,
financial reports, and compliance data and information for inclusion in
the regular quarterly Board meeting materials. In addition,
▇.▇. ▇▇▇▇▇▇ will provide an employee to serve as Assistant Secretary of
Customer to take minutes of each regular and special meeting of the Board
of Trustees. ▇.▇. ▇▇▇▇▇▇ will provide draft minutes to Customer
no less than six weeks after the date of each such
meeting.
|
|
|
2.
|
Dividend
Distributions.
|
|
|
▇.▇.
▇▇▇▇▇▇ will calculate dividend distributions in accordance with the Funds’
distribution policies and assist the Investment Adviser in making final
determinations of distribution
amounts.
|
|
|
3.
|
Expense
Accruals.
|
|
|
▇.▇.
▇▇▇▇▇▇ will prepare Fund or class expense projections, establish accruals
and review on a periodic basis, including expenses based on a percentage
of average daily net assets (e.g., management, advisory and administrative
fees) and expenses based on actual charges annualized and accrued daily
(e.g. audit fees, registration fees, directors’
fees).
|
|
|
4.
|
Expense
Payments.
|
|
|
Upon
Instruction by the Customer’s officer, ▇.▇. ▇▇▇▇▇▇ will arrange for the
payment of each Fund’s (or class’)
expenses.
|
|
|
5.
|
Reports.
|
|
|
▇.▇.
▇▇▇▇▇▇ will report Fund performance to outside statistical service
providers as instructed by the Investment
Adviser.
|
|
|
6.
|
Chief Compliance Officer
Support.
|
▇.▇.
▇▇▇▇▇▇ will provide annual representation letters in connection with Customer’s
obligations under Rule 38a-1 under the 1940 Act and liaise with the Funds’ Chief
Compliance Officer as necessary.
|
|
7.
|
SEC
Examinations.
|
|
|
▇.▇.
▇▇▇▇▇▇ will provide support and coordinate communications and data
collection of records and documents held by ▇.▇. ▇▇▇▇▇▇ on the Funds’
behalf, with respect to routine SEC regulatory examinations of the
Funds.
|
|
|
8.
|
Non-Executive
Officers.
|
|
|
▇.▇.
▇▇▇▇▇▇ will furnish appropriate non-executive officers for the Customer,
such as assistant treasurers and
secretaries.
|
27
SCHEDULE 3
Remuneration
[To be
agreed by the parties]
28
ANNEX
A
Electronic
Access
|
1.
|
▇.▇.
▇▇▇▇▇▇ shall permit the Customer and its Authorized Persons to access
electronically the applications and products listed on Exhibit 1 to this
Agreement (the “Products”). ▇.▇. ▇▇▇▇▇▇ reserves the right to
modify this Annex A and, subject to the terms and conditions of the
Agreement, the products and services available through the Products, upon
notice to the Customer. ▇.▇. ▇▇▇▇▇▇ shall use reasonable efforts to give
the Customer reasonable notice of its termination or suspension of access
hereunder to any Product, but may do so immediately upon written notice to
the Customer if ▇.▇. ▇▇▇▇▇▇ determines, in its sole discretion, that
providing access to such Product would violate Applicable Law or that the
security or integrity of such Product is at
risk.
|
|
2.
|
In
consideration of the fees paid by the Customer to ▇.▇. ▇▇▇▇▇▇ and subject
to any applicable software license addendum in relation to Bank owned or
sublicensed software provided for a particular application, ▇.▇. ▇▇▇▇▇▇
grants to the Customer, and, where applicable, its Authorized Persons, on
the terms of this Annex A a non-exclusive license to use the Products and
the information and data made available to the Customer through the
Products (the “Data”) for the sole use of the Customer. The
Customer may download the Data and print out hard copies for its
reference, provided that it does not remove any copyright or other notices
contained therein or any hyperlink or other reference to any such
notice.
|
|
3.
|
The
rights and obligations of the parties with respect to the provision of
certain cash products and services via the Products shall also be
governed, to the extent not governed by this Agreement, by ▇.▇. ▇▇▇▇▇▇’▇
terms and conditions relating to such products and services, as the same
may be amended from time to time (the “Product Terms”). If and
to the extent that there is a conflict between the Product Terms and this
Annex A, the provisions of this Annex A shall
prevail.
|
|
4.
|
The
Customer acknowledges that there are certain security, corruption,
transaction error and access availability risks associated with using open
networks such as the Internet, and the Customer hereby expressly assumes
such risks. The Customer shall make its own independent
assessment of the adequacy of the Internet and of the security procedures
made available by ▇.▇. ▇▇▇▇▇▇. The Customer acknowledges and
agrees that the selection and use by it of third party security and
communications software and third party service providers is the sole
responsibility of the Customer, and ▇.▇. ▇▇▇▇▇▇ disclaims all risks
related thereto, notwithstanding that ▇.▇. ▇▇▇▇▇▇ may recommend certain
security and/or communication software packages. All such
software must be interoperable with ▇.▇. ▇▇▇▇▇▇’▇
software. Each of the Customer and ▇.▇. ▇▇▇▇▇▇ shall be
responsible for the proper functioning, maintenance and security of its
own systems, services, software and other
equipment.
|
|
5.
|
In
cases where ▇.▇. ▇▇▇▇▇▇’▇ web site is unexpectedly down or otherwise
unavailable, ▇.▇. ▇▇▇▇▇▇ shall provide other appropriate means for the
Customer or its Authorized Persons to instruct ▇.▇. ▇▇▇▇▇▇ or obtain
reports from ▇.▇. ▇▇▇▇▇▇. Provided that ▇.▇. ▇▇▇▇▇▇ reasonably
provides such other means, shall not be liable for any Liabilities arising
out of inability to instruct or communicate using ▇.▇. ▇▇▇▇▇▇’▇ web site
in the absence of ▇.▇. ▇▇▇▇▇▇’▇ ▇▇▇▇▇ negligence or willful
misconduct.
|
29
|
6.
|
Customer
shall use (and cause its Affiliates, Authorized Persons, and other agents
to use) appropriate and up to date products that are commercially
available to protect their respective systems and associated files and
Data from the threat of computer viruses and other similar destructive
software elements ("Viruses") and to minimize the risk of transmission of
Viruses between the parties..
|
|
7.
|
The
Customer shall promptly and accurately designate in writing to ▇.▇. ▇▇▇▇▇▇
the geographic location of its users from time to time. The
Customer further represents and warrants to ▇.▇. ▇▇▇▇▇▇ that the Customer
shall not access the service from any jurisdiction which ▇.▇. ▇▇▇▇▇▇
informs the Customer or where the Customer has actual knowledge that the
service is not authorized for use due to local regulations or
laws. Prior to submitting any document which designates the
persons authorized to act on the Customer’s behalf, the Customer shall
obtain from each individual referred to in such document all necessary
consents to enable ▇.▇. ▇▇▇▇▇▇ to process the Data set out therein for the
purposes of providing the Products.
|
|
8.
|
The
Customer shall be responsible for the compliance of its Authorized Persons
with the terms of this Annex A.
|
30
EXHIBIT 1
Products
[To be
Inserted]
31