Execution Copy
MASTER SERVICES AGREEMENT
AGREEMENT made this 1st day of April, 2003, between BISYS FUND SERVICES
OHIO, INC. ("BISYS"), a Delaware corporation having its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and each entity that has
executed this Agreement, as listed on the signature page hereto (each, the
"Company"), each of which has its principal place of business at the address set
forth below its signature. This Agreement shall be considered a separate
agreement between BISYS and each Company, and references to "the Company", etc.,
shall refer to each Company separately. No Company shall be liable for the
obligations of, nor entitled to the benefits of, any other Company under this
Agreement.
WHEREAS, BISYS and certain Companies entered into various agreements (the
"Prior Agreements"), whereby BISYS agreed to perform transfer agency, fund
accounting and administration services for such Companies, which has continued
in effect through the date hereof;
WHEREAS, the Company desires that BISYS perform, or continue to perform,
transfer agency, fund accounting and administration services for the Company and
each investment portfolio of the Company, as now in existence and listed on
Schedule A hereto, or as hereafter may be established from time to time
(individually referred to herein as the "Fund" and collectively as the "Funds");
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement; and
WHEREAS, BISYS and Company wish to enter into a new Agreement in order to
set forth the terms under which BISYS will perform the various services set
forth herein for the Company;
NOW, THEREFORE, in consideration of the covenants hereinafter contained,
the Company and BISYS hereby agree as follows:
1. Retention of BISYS
The Company hereby retains BISYS to act as transfer agent, fund accountant
and administrator of the Company and each of the Funds and to furnish the
Company and each of the Funds with the transfer agency, fund accounting and
administration services set forth in Section 2(a) through (c) below. BISYS and
the Company hereby agree that BISYS will perform the services upon the terms set
forth in this Agreement.
BISYS shall, for all purposes herein, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Company or the Funds in any way, and shall
not be deemed an agent of the Company or the Funds.
1
Execution Copy
2. Services
(a) Transfer Agency Services. BISYS shall perform for the Company the
various services set forth in Schedule B hereto. BISYS also agrees to perform
for the Company such special services incidental to the performance of the
services enumerated herein as agreed to by the parties from time to time. BISYS
shall perform such additional services as the parties mutually agree, for which
the Company will pay BISYS the amounts agreed upon between them.
(b) Fund Accounting Services. BISYS shall perform for the Company the fund
accounting services described in Schedule C hereto. BISYS shall also perform
such special accounting services, and furnish such reports, for the Company and
the Funds to the extent agreed upon by the parties from time to time, for which
the Company will pay BISYS the amounts agreed upon between them.
(c) Administration Services. BISYS shall perform or, subject to Section
2(e) hereof, supervise the performance by others of administration services in
connection with the operations of the Company and Funds, and, on behalf of the
Company, shall investigate, assist in the selection of and conduct relations
with custodians, depositories, accountants, legal counsel, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Company's and Funds'
operations. BISYS shall provide the Board with such reports regarding investment
performance as it may reasonably request but shall have no responsibility for
supervising the performance by any investment adviser or sub-adviser of its
responsibilities.
BISYS shall provide the Company with all necessary office space, equipment,
personnel, compensation and facilities (including facilities for shareholders'
and Board meetings) for handling the affairs of the Company and Funds and such
other services as BISYS shall, from time to time, determine to be necessary to
perform its obligations under this Agreement. In addition, at the request of the
Board, BISYS shall make reports to the Board concerning the performance of its
obligations hereunder.
Without limiting the generality of the forgoing, BISYS shall perform the
administration services described in Schedule D hereto in connection with the
operations of the Company and each of the Funds. BISYS shall perform such other
administration services for the Company and each of the Funds that are mutually
agreed upon by the parties from time to time, for which the Company will pay
BISYS the amounts agreed upon between them.
(d) Additional Services. Except as explicitly set forth herein, BISYS shall
only perform additional services as are provided on an amendment to the relevant
Schedule, in consideration of such fees as the parties hereto agree.
(e) Sub-Agents. BISYS may, with prior notice to the Company, appoint in
writing other parties qualified to perform specific services reasonably
acceptable to the Company (individually, a "Sub-Agent") to carry out some or all
of its responsibilities
2
Execution Copy
under this Agreement with respect to a Fund; provided, however, that the
Sub-Agent shall be the agent of BISYS and not the agent of the Company or such
Fund, and that BISYS shall be fully responsible for the acts of such Sub-Agent
and shall not be relieved of any of its responsibilities hereunder by the
appointment of such Sub-Agent. The Company acknowledges that BISYS has delegated
BISYS Fund Services Limited Partnership ("BISYS LP") as a Sub-Agent to perform
fund accounting and administration services for the Company and the Funds.
3. Allocation of Charges and Expenses.
(a) The Administrator. BISYS shall furnish at its own expense the
executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. BISYS shall also provide the items which it is
obligated to provide under this Agreement, and shall pay all compensation, if
any, of officers of the Company and Trustees of the Company who are affiliated
persons of BISYS or any affiliated corporation of BISYS; provided, however, that
unless otherwise specifically provided, BISYS shall not be obligated to pay the
compensation of any employee of the Company retained by the Board to perform
services on behalf of the Company.
(b) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including, without
limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports,
prospectuses, statements of additional information, proxy solicitation material
and notices to existing Shareholders, all expenses incurred in connection with
issuing and redeeming Shares, the costs of custodial services, the cost of
initial and ongoing registration of the Shares under Federal and state
securities laws, fees and out-of-pocket expenses of Trustees who are not
affiliated persons of BISYS or any affiliated corporation of BISYS (fees for
other "interested Trustees" may be paid by parties other than the Company),
insurance, interest, brokerage costs, litigation and other extraordinary or
nonrecurring expenses, and all fees and charges of investment advisers.
4. Fees and Expenses
The Company shall pay BISYS (and/or at the direction of BISYS, BISYS LP or
other Sub-Agent) for the services to be provided by BISYS under this Agreement
in accordance with, and in the manner set forth in, the Omnibus Fee Agreement
attached hereto as Schedule E. Fees for any additional services to be provided
by BISYS pursuant to an amendment to any of Schedules B, C or D shall be subject
to mutual agreement at the time such amendment is proposed. The Company shall
also reimburse BISYS (and/or at the direction of BISYS, BISYS LP or other
Sub-Agent) for its reasonable out-of-pocket expenses as set forth in the Omnibus
Fee Agreement. All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of this
Agreement.
3
Execution Copy
5. Effective Date
This Agreement shall become effective as of the date first written above
(the "Effective Date").
6. Term
This Agreement shall continue in effect until March 31, 2006 (the "Initial
Term"). Thereafter, unless otherwise terminated as provided herein, this
Agreement shall continue in effect unless and until it is terminated as set
forth in this paragraph. This Agreement may be terminated without penalty (i) by
provision of advance written notice of nonrenewal to the other party at least 60
days prior to the end of the Initial Term, (ii) by mutual agreement of the
parties, (iii) for "cause," as defined below, upon the provision of 60 days'
advance written notice by the party alleging cause, or (iv) by provision of 60
days' advance written notice to the other party following the Initial Term.
For purposes of this Agreement, "cause" shall mean (a) a material breach of
this Agreement that has not been remedied for thirty (30) days following written
notice of such breach from the non-breaching party; (b) a final, unappealable
judicial, regulatory or administration ruling or order in which the party to be
terminated has been found guilty of criminal or unethical behavior in the
conduct of its business; (c) financial difficulties on the part of the party to
be terminated which are evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to
time in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors or (d) a decision by the
Board to terminate the Fund because it is not economically feasible. BISYS shall
not terminate this Agreement pursuant to clause (a) above based solely upon the
Company's failure to pay an amount to BISYS which is the subject of a good faith
dispute, if (i) the Company is attempting in good faith to resolve such dispute
with as much expediency as may be possible under the circumstances, and (ii) the
Company continues to perform its obligations hereunder in all other material
respects (including paying all fees and expenses not subject to reasonable
dispute hereunder).
Notwithstanding the foregoing, following any such termination, in the event
that BISYS in fact continues to perform any one or more of the services
contemplated by this Agreement (or any Schedule or exhibit hereto) with the
consent of the Company, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Fees and out-of-pocket expenses incurred by BISYS but unpaid
by the Company upon such termination shall be immediately due and payable upon
and notwithstanding such termination. BISYS shall be entitled to collect from
the Company, in addition to the fees and expenses provided in the Omnibus Fee
Agreement, the amount of all of BISYS's reasonable cash disbursements in
connection with BISYS's activities in effecting such termination, including
without limitation, the delivery to the Company and/or its distributor or
4
Execution Copy
investment adviser and/or other parties of the Company's property, records,
instruments and documents.
If, during the Initial Term, for any reason other than (i) mutual agreement
of the parties or (ii) "cause" for termination of BISYS hereunder, BISYS's
services are terminated hereunder, BISYS is replaced as transfer agent, fund
accountant and/or administrator, or if a third party is added to perform all or
a part of the services provided by BISYS under this Agreement (excluding any
Sub-Agent appointed as provided in Section 1(e) hereof), then the Company shall
make a one-time cash payment, in consideration of the fee structure and services
to be provided under this Agreement, and not as a penalty, to BISYS equal to the
balance that would be due BISYS hereunder for the terminated services during the
lesser of (x) the next six (6) months or (y) the number of months remaining in
the then-current term of this Agreement, assuming for purposes of the
calculation of the one-time payment that the fees that would be earned by BISYS
for each month shall be based upon the average assets, number of shareholder
accounts and fees payable to BISYS monthly during the twelve (12) months prior
to the date that services terminate, BISYS is replaced or a third party is
added.
In the event the Company or any Fund is merged into another legal entity in
part or in whole pursuant to any form of business reorganization or is
liquidated in part or in whole (other than as permitted above) prior to the
expiration of the Initial Term of this Agreement, the parties acknowledge and
agree that the liquidated damages provision set forth above shall be applicable
in those instances in which BISYS is not retained to provide services consistent
with this Agreement, including the number of funds, classes, accounts and net
assets subject to such services. The one-time cash payment referenced above
shall be due and payable on the day prior to the first day in which services are
terminated, BISYS is replaced or a third party is added.
The parties further acknowledge and agree that, in the event services are
terminated, BISYS is replaced, or a third party is added, as set forth above,
(i) a determination of actual damages incurred by BISYS would be extremely
difficult, and (ii) the liquidated damages provision contained herein is
intended to adequately compensate BISYS for damages incurred and is not intended
to constitute any form of penalty.
7. Standard of Care; Uncontrollable Events; Limitation of Liability
BISYS shall use reasonable professional diligence to ensure the accuracy of
all services performed under this Agreement, but shall not be liable to the
Company for any action taken or omitted by BISYS in the absence of bad faith,
willful misfeasance, negligence or reckless disregard by it of its obligations
and duties. The duties of BISYS shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against BISYS
hereunder.
BISYS shall maintain adequate and reliable computer and other equipment
necessary or appropriate to carry out its obligations under this Agreement. Upon
the Company's reasonable request, BISYS shall provide supplemental information
5
Execution Copy
concerning the aspects of its disaster recovery and business continuity plan
that are relevant to the services provided hereunder. Notwithstanding the
foregoing or any other provision of this Agreement, BISYS assumes no
responsibility hereunder, and shall not be liable for, any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control. Events beyond BISYS's reasonable control include, without limitation,
force majeure events. Force majeure events include natural disasters, actions or
decrees of governmental bodies, and communication lines failures that are not
the fault of either party. In the event of force majeure, computer or other
equipment failures or other events beyond its reasonable control, BISYS shall
follow applicable procedures in its disaster recovery and business continuity
plan and use all commercially reasonable efforts to minimize any service
interruption.
BISYS shall provide the Company, at such times as the Company may
reasonably require, copies of reports rendered by independent public accountants
on the internal controls and procedures of BISYS relating to the services
provided by BISYS under this Agreement.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL BISYS, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR EXEMPLARY, PUNITIVE, SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS, EACH OF WHICH IS
HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER SUCH DAMAGES
WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
8. Legal Advice
BISYS may apply to the Company at any time for instructions and may consult
with counsel for the Company and with accountants and other experts with respect
to any matter arising in connection with BISYS's duties, and BISYS shall not be
liable nor accountable for any action taken or omitted by it in good faith in
accordance with such instruction or with the opinion of such counsel,
accountants or other experts. BISYS shall notify the Company at any time BISYS
believes that it is in need of the advice of counsel (other than counsel in the
regular employ of BISYS or any affiliated companies) with regard to BISYS's
responsibilities and duties pursuant to this Agreement. After so notifying the
Company, BISYS, at its discretion, shall be entitled to seek, receive and act
upon advice of legal counsel of its choosing, such advice to be at the expense
of the Company unless relating to a matter involving BISYS's willful
misfeasance, bad faith, gross negligence or reckless disregard of BISYS's
responsibilities and duties hereunder, and BISYS shall in no event be liable to
the Company or any Fund or any shareholder or beneficial owner of the Company
for any action reasonably taken pursuant to such advice.
6
Execution Copy
9. Instructions / Certain Procedures, etc.
BISYS shall be protected in acting upon any document that it reasonably
believes to be genuine and to have been signed or presented by the proper person
or persons. BISYS will not be held to have notice of any change of authority of
any officers, employees or agents of the Company until receipt of written notice
thereof from the Company.
Whenever BISYS is requested or authorized to take action hereunder pursuant
to instructions from a shareholder, or a properly authorized agent of a
shareholder ("shareholder's agent"), concerning an account in a Fund, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication (including electronic mail), reasonably believed by BISYS to be
genuine and to have been properly made, signed or authorized by an officer or
other authorized agent of the Company or by the shareholder or shareholder's
agent, as the case may be, and shall be entitled to receive as conclusive proof
of any fact or matter required to be ascertained by it hereunder a certificate
signed by an officer of the Company or any other person authorized by the
Company's Board of Trustees (hereafter referred to as the "Board") or by the
shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, BISYS may rely conclusively
upon the terms of the prospectuses and statements of additional information of
the Company relating to the relevant Funds to the extent that such services are
described therein unless BISYS receives written instructions to the contrary in
a timely manner from the Company.
The parties hereto may amend any procedures adopted, approved or set forth
herein by written agreement as may be appropriate or practical under the
circumstances, and BISYS may conclusively assume that any special procedure
which has been approved by an executive officer of the Company (other than an
officer or employee of BISYS) does not conflict with or violate any requirements
of the Company's Declaration of Trust, by-laws or then-current prospectuses, or
any rule, regulation or requirement of any regulatory body.
The Company acknowledges receipt of a copy of BISYS's policy related to the
acceptance of trades for prior day processing (the "BISYS As-of Trading
Policy"). BISYS may amend the BISYS As-of Trading Policy from time to time in
its sole discretion. A copy of any such amendments shall be delivered to the
Company upon request. BISYS may apply the BISYS As-of Trading Policy whenever
applicable, unless BISYS agrees in writing to process trades according to such
other as-of trading policy as may be adopted by the Company and furnished to
BISYS by the Company.
The Company acknowledges and agrees that deviations from BISYS's written
transfer agent compliance procedures may involve a substantial risk of loss. In
the event an authorized representative of the Company requests that an exception
be made from any written compliance or transfer agency procedures adopted by
BISYS, or any requirements of the written anti-money laundering program adopted
by the Company (the
7
Execution Copy
"AML Program"), BISYS may in its sole discretion determine whether to permit
such exception. In the event BISYS determines to permit such exception, the same
shall become effective when set forth in a written instrument executed by an
authorized representative of the Company (other than an employee of BISYS) and
delivered to BISYS (an "Exception"); provided that an Exception concerning the
requirements of the Company's AML Program shall be authorized by the Company's
AML Compliance Officer (as defined in Section 16(g) hereof). An Exception shall
be deemed to remain effective until the relevant instrument expires according to
its terms (or if no expiration date is stated, until BISYS receives written
notice from the Company that such instrument has been terminated and the
Exception is no longer in effect). Notwithstanding any provision in this
Agreement that expressly or by implication provides to the contrary, as long as
BISYS acts in good faith, BISYS shall have no liability for any loss, liability,
expenses or damages to the Company resulting from the Exception, and the Company
shall indemnify BISYS and hold BISYS harmless from any loss, liability, expenses
(including reasonable attorneys fees) and damages resulting to BISYS therefrom.
10. Indemnification
The Company agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses (including reasonable investigation
expenses) of every nature and character (collectively, "Losses") arising out of
or in any way relating to BISYS's actions taken or omissions with respect to the
performance of services under this Agreement or based, if applicable, upon
reasonable reliance on information, records, instructions or requests given or
made to BISYS by the Company, the investment adviser, or custodian thereof;
provided that this indemnification shall not apply to actions or omissions of
BISYS in cases of its own bad faith, willful misfeasance, negligence or reckless
disregard by it of its obligations and duties.
BISYS shall indemnify, defend, and hold the Company, its employees, agents,
directors, officers and nominees harmless from and against any and all Losses
arising out of or in any way relating to BISYS's willful misfeasance, bad faith
or negligence in the performance of its duties or by reason of reckless
disregard of its obligations and duties hereunder.
The indemnification rights hereunder shall include the right to reasonable
advances of defense expenses in the event of any pending or threatened
litigation with respect to which indemnification hereunder may ultimately be
merited. In order that the indemnification provisions contained herein shall
apply, however, it is understood that if in any case a party may be asked to
indemnify or hold the other party harmless, the indemnifying party shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnified party will use all
reasonable care to identify and notify the indemnifying party promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the indemnifying party,
but failure to do so in good faith shall not
8
Execution Copy
affect the rights hereunder except to the extent the indemnifying party is
materially prejudiced thereby. As to any matter eligible for indemnification, an
indemnified party shall act reasonably and in accordance with good faith
business judgment and shall not effect any settlement or confess judgment
without the consent of the indemnifying party, which consent shall not be
withheld or delayed unreasonably.
The indemnifying party shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If the indemnifying party elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by it and reasonably satisfactory to the indemnified party. In the event
that the indemnifying party elects to assume the defense of any suit and retain
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. The indemnifying party shall not effect any
settlement without the consent of the indemnified party unless such settlement
imposes no liability, responsibility or other obligation upon the indemnified
party and relieves the indemnified party of all fault. If the indemnifying party
does not elect to assume the defense of suit, it will reimburse the indemnified
party for the reasonable fees and expenses of any counsel retained by the
indemnified party. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
11. Record Retention and Confidentiality
BISYS shall keep and maintain on behalf of the Company all books and
records that are customary or that the Company or BISYS is, or may be, required
to keep and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"), relating to the maintenance of books
and records in connection with the services to be provided hereunder. BISYS
further agrees that all such books and records shall be the property of the
Company and to make such books and records available for inspection by the
Company or by the Securities and Exchange Commission (the "Commission") at
reasonable times.
BISYS shall otherwise keep confidential all books and records relating to
the Company and its shareholders, except when (i) disclosure is required by law,
(ii) BISYS is advised by counsel that it may incur liability for failure to make
a disclosure, (iii) BISYS is requested to divulge such information by
duly-constituted authorities or court process, or (iv) BISYS is requested to
make a disclosure by a shareholder or shareholder's agent with respect to
information concerning an account as to which such shareholder has either a
legal or beneficial interest or when requested by the Company or the dealer of
record as to such account. BISYS shall provide the Company with reasonable
advance notice of disclosure pursuant to items (i) - (iii) of the previous
sentence, to the extent reasonably practicable, so that the Company may seek a
protective order or other appropriate remedy. The provisions of this Section 11
are subject to the provisions of Section 23.
9
Execution Copy
12. Reports
BISYS shall furnish to the Company and to its properly-authorized auditors,
investment advisers, examiners, distributors, dealers, underwriters, salesmen,
insurance companies and others designated by the Company in writing, such
reports at such times as are prescribed pursuant to this Agreement, or as
subsequently agreed upon by the parties pursuant to an amendment to this
Agreement. The Company agrees to examine each such report or copy promptly and
will report or cause to be reported any errors or discrepancies therein. In the
event that errors or discrepancies, except such errors and discrepancies as may
not reasonably be expected to be discovered by the recipient after a diligent
examination, are not so reported promptly, a report will for all purposes be
accepted by and binding upon the Company and any other recipient, and BISYS
shall have no liability for errors or discrepancies therein and shall have no
further responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Company.
13. Rights of Ownership
All computer programs and procedures employed or developed by or on behalf
of BISYS to perform services required to be provided by BISYS under this
Agreement are the property of BISYS. All records and other data except such
computer programs and procedures are the exclusive property of the Company and
all such other records and data shall be furnished to the Company in appropriate
form as soon as practicable after termination of this Agreement for any reason.
14. Return of Records
BISYS may at its option at any time, and shall promptly upon the Company's
demand, turn over to the Company and cease to retain BISYS's files, records and
documents created and maintained by BISYS pursuant to this Agreement which are
no longer needed by BISYS in the performance of its services or for its legal
protection. If not so turned over to the Company, such documents and records
shall be retained by BISYS for six years from the year of creation. At the end
of such six-year period, such records and documents shall be turned over to the
Company unless the Company authorizes in writing the destruction of such records
and documents.
15. Bank Accounts
BISYS is hereby granted such power and authority as may be necessary to
establish one or more bank accounts for the Company with such bank or banks as
are selected or approved by the Company, as may be necessary or appropriate from
time to time in connection with the services required to be performed hereunder.
The Company shall be deemed to be the customer of such Bank or Banks for all
purposes in connection with such accounts. To the extent that the performance of
such services hereunder shall require BISYS to disburse amounts from such
accounts in payment of dividends, redemption proceeds or for other purposes
hereunder, the Company shall provide such
10
Execution Copy
bank or banks with all instructions and authorizations necessary for BISYS to
effect such disbursements.
16. Representations and Warranties of the Company
(a) The Company represents and warrants to BISYS that:
(i) It is duly organized and validly existing under the laws of the
jurisdiction of its formation, and has full capacity and authority to
enter into this agreement and to carry out its obligations hereunder;
(ii) It has all necessary authorizations, licenses and permits to carry out
its business as currently conducted;
(iii) It has been in, and shall continue to be in compliance in all
material respects with all laws and regulations applicable to its
business and operations;
(iv) this Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, will constitute a legal, valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the right and remedies of creditors and secured parties;
(v) as of the close of business on the Effective Date, each Fund that is
in existence as of the Effective Date has authorized unlimited shares;
and
(vi) shares of each Fund which are redeemed by the Company may be sold by
the Company from its treasury.
(b) The Company also represents and warrants that (i) the Company has
adopted the written AML Program that has been submitted to BISYS pursuant to
Section 19, and has appointed an officer of the Company as the Company's
anti-money laundering compliance officer ("AML Compliance Officer"), (ii) the
AML Program and the designation of the AML Officer have been approved by the
Board, (iii) the delegation of certain services thereunder to BISYS, as provided
in Section 23, has been approved by the Board, and (d) the Company will submit
any material amendments to the AML Program to BISYS for BISYS's review and
consent, in accordance with Section 21, prior to its adoption.
17. Representations and Warranties of BISYS
(a) BISYS represents and warrants to the Company that:
(i) It is a company duly incorporated and validly existing under the laws
of the jurisdiction of its formation, and has full capacity and
authority to enter into this agreement and to carry out its
obligations hereunder;
11
Execution Copy
(ii) It has all necessary authorizations, licenses and permits to carry out
its business as currently conducted;
(iii) It has been in, and shall continue to be in compliance in all
material respects with all provisions of law, including Section 17A(c)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), required in connection with the performance of its duties under
this Agreement;
(iv) The various procedures and systems which it has implemented with
regard to safekeeping from loss or damage attributable to fire, theft
or any other cause of the blank checks, records, and other data of the
Company and BISYS's records, data, equipment, facilities and other
property used in the performance of its obligations hereunder
(including its disaster recovery and business continuity plan) are
adequate and that it will make such changes therein from time to time
as are reasonably required for the secure performance of its
obligations hereunder; and
(v) This Agreement has been duly authorized by BISYS and, when executed
and delivered by BISYS, will constitute a legal, valid and binding
obligation of BISYS, enforceable against BISYS in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the right and remedies
of creditors and secured parties.
(b) EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL REPRESENTATIONS AND
WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY,
SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE
(IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) CONCERNING THE
SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO THE SERVICES PROVIDED UNDER THIS
AGREEMENT BY BISYS ARE COMPLETELY DISCLAIMED.
18. Insurance
BISYS shall maintain a fidelity bond covering larceny and embezzlement and
an insurance policy with respect to directors and officers errors and omissions
coverage in amounts that are appropriate in light of its duties and
responsibilities hereunder. Upon the request of the Company, BISYS shall provide
evidence that coverage is in place. BISYS shall notify the Company should its
insurance coverage with respect to professional liability or errors and
omissions coverage be canceled. Such notification shall include the date of
cancellation and the reasons therefore. BISYS shall notify the Company of any
material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Company should the total outstanding claims made by BISYS under its insurance
coverage materially impair, or threaten to materially impair, the adequacy of
its coverage.
12
Execution Copy
19. Information to be Furnished by the Company and Funds
The Company has furnished to BISYS the following, as amended and current as
of the Effective Date:
(a) A copy of the Declaration of Trust of the Company and of any amendments
thereto, certified by the proper official of the state in which such document
has been filed.
(b) Copies of:
(i) The Company's by-laws and any amendments thereto;
(ii) resolutions of the Board regarding (A) approval of this Agreement and
authorization of officers of the Company to execute and deliver this
Agreement and authorization for specified officers of the Company to
instruct BISYS hereunder; and (B) authorization of BISYS to act for
the Company in the capacities designated herein.
(c) A list of all officers of the Company, with the Company's AML
Compliance Officer included among the officers therein, and any other persons
(who may be associated with the Company or its investment advisor), together
with specimen signatures of those officers and other persons who (except as
otherwise provided herein to the contrary) shall be authorized to instruct BISYS
in all matters.
(d) Two copies of the following (if such documents are employed by the
Company):
(i) Prospectuses and statements of additional information;
(ii) Distribution agreement; and
(iii) All other forms commonly used by the Company or its Distributor with
regard to their relationships and transactions with shareholders of
the Funds.
(e) A copy of the Company's written AML Program, including related Policies
and Procedures.
20. Information Furnished by BISYS
BISYS has furnished to the Company evidence of the following:
(a) Approval of this Agreement by BISYS, and authorization of a specified
officer of BISYS to execute and deliver this Agreement;
(b) Authorization of BISYS to act for the Company in the capacities
designated herein.
13
Execution Copy
(c) The current BISYS "As-of" Trading Policy.
21. Amendments to Documents
The Company shall furnish BISYS written copies of any amendments to, or
changes in, any of the items referred to in Section 19 hereof forthwith upon
such amendments or changes becoming effective. In addition, the Company agrees
that no amendments will be made to the prospectuses or statement of additional
information of the Company, or the AML Program, which might have the effect of
changing the procedures employed by BISYS in providing the services agreed to
hereunder or which amendment might affect the duties of BISYS hereunder unless
the Company first obtains BISYS's approval of such amendments or changes, which
approval shall not be withheld unreasonably.
22. Reliance on Amendments
BISYS may rely on any amendments to or changes in any of the documents and
other items to be provided by the Company pursuant to Sections 19 and 21 of this
Agreement and, subject to the provisions of Section 7 hereof, the Company hereby
indemnifies and holds harmless BISYS from and against any and all Losses which
may result from actions or omissions on the part of BISYS in reasonable reliance
upon such amendments and/or changes. Although BISYS is authorized to rely on the
above-mentioned amendments to and changes in the documents and other items to be
provided pursuant to Sections 19 and 21 hereof, in the event the same relate to
services provided by BISYS hereunder, BISYS shall have no liability for failure
to comply with or take any action in conformity with such amendments or changes
unless the Company first obtains BISYS's written approval of such amendments or
changes.
23. Compliance with Laws
Except for the obligations of BISYS set forth in Section 11 hereof, the
Company assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), the 1940 Act, and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligation to take
cognizance of any laws relating to the sale of the Company's shares in
performing its obligations under this Agreement, provided that nothing herein is
intended to limit the obligations of BISYS or its applicable affiliate under any
Distribution Agreement between BISYS or such affiliate and the Company. The
Company represents and warrants that all shares of the Company that are offered
to the public are covered by an effective registration statement under the 1933
Act and the 1940 Act.
The Company acknowledges that it is a financial institution subject to the
law entitled United and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism ("U.S.A. Patriot") Act of 2001 and
the Bank Secrecy Act (collectively, the "AML Acts") and shall comply with the
AML Acts and applicable
14
Execution Copy
regulations adopted thereunder (collectively, the "Applicable AML Laws") in all
relevant respects, subject to the delegation of certain responsibilities to
BISYS, as provided in the next paragraph below.
The Company hereby delegates to BISYS the performance, on behalf of the
Company, of the anti-money laundering services set forth under Item 6 of
Schedule B (the "AML Services") as concerns the shareholder accounts maintained
by BISYS pursuant to this Agreement (including direct accounts; accounts
maintained through FUND/SERV and Networking, to the extent provided below, and
omnibus accounts, to the extent provided below). BISYS agrees to the foregoing
delegation and agrees to perform such services in accordance with the Company's
AML Program. In connection therewith, BISYS agrees to maintain policies and
procedures, and related internal controls, that are consistent with the
Company's AML Program and the requirement that the Company employ procedures
reasonably designed to achieve compliance with the Applicable AML Laws,
including the requirement to have policies and procedures that can be reasonably
expected to detect and cause the reporting of transactions under Section 5318 of
the Bank Secrecy Act. BISYS's obligations under this delegation shall be subject
to Sections 19 and 21, which require that the AML Program and any material
amendments thereto be submitted to BISYS for its review and consent.
The Company agrees and acknowledges that, notwithstanding the delegation
provided for in the foregoing paragraph, the Company maintains full
responsibility for ensuring that its AML Program is, and shall continue to be,
reasonably designed to ensure compliance with the Applicable AML Laws, in light
of the particular business of the Company, taking into account factors such as
its size, location, activities and risks or vulnerabilities to money laundering.
In connection with the foregoing delegation, the Company also acknowledges
that the performance of the AML Services involves the exercise of discretion
which in some circumstances may result in consequences to the Company and its
shareholders (such as in the case of the reporting of suspicious activities and
the freezing of shareholder accounts). In this regard, (i) under circumstances
in which the AML Program authorizes the taking of certain actions, BISYS is
granted the discretion to take any such action as may be authorized under the
AML Program, and consultation with Company shall not be required in connection
therewith unless specifically required under the AML Program, and (ii) the
Company instructs BISYS that it may avail the Company of any safe harbor from
civil liability that may be available under Applicable AML Laws for making a
disclosure or filing a report thereunder.
As concerns Networking Level III accounts and omnibus accounts, the AML
Services performed by BISYS are subject to a more limited scope, as contemplated
under the interim final rule of the Department of the Treasury, 31 CFR 103.130,
effective April 24, 2002 (the "Interim Final Rule") and the performance by the
Company of the risk-based evaluation of entities holding such accounts, as
contemplated under the Interim Final Rule. The foregoing reference to the
Interim Final Rule shall be deemed to include laws and regulations adopted
subsequent to the Interim Final Rule, if and to the extent consistent therewith.
15
Execution Copy
24. Notices
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Company, to it c/o HSBC Asset Management
(Americas) Inc., ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; with a copy to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Attn: President; and if to BISYS, to it at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇; Attn: President, or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
25. Assignment
This Agreement and the rights and duties hereunder shall not be assignable
by either of the parties hereto except by the specific written consent of the
other party. This Section 25 shall not limit or in any way affect BISYS's right
to appoint a Sub-Agent pursuant to Section 2(e) hereof. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
26. Governing Law and Matters Relating to the Company.
This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control. It is expressly agreed that the obligations
of the Company hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Company personally,
but shall bind only the trust property of the Company. The execution and
delivery of this Agreement have been authorized by the Board, and this Agreement
has been signed and delivered by an authorized officer of the Company, acting as
such, and neither such authorization by the Board nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Company as provided in the Company's
Declaration of Trust.
27. Activities of BISYS
The services of BISYS rendered to the Company hereunder are not to be
deemed to be exclusive. BISYS is free to render such services to others and to
have other businesses and interests. It is understood that Trustees, officers,
employees and Shareholders of the Company are or may be or become interested in
BISYS, as officers, employees or otherwise and that partners, officers and
employees of BISYS and its counsel are or may be or become similarly interested
in the Company, and that BISYS may be or become interested in the Company as a
Shareholder or otherwise
16
Execution Copy
28. Privacy
Nonpublic personal financial information relating to consumers or customers
of the Company provided by, or at the direction of the Company to BISYS, or
collected or retained by BISYS in the course of performing its duties, shall be
considered confidential information. BISYS shall not give, sell or in any way
transfer such confidential information to any person or entity, other than
affiliates of BISYS except at the direction of the Company or as required or
permitted by law (including Applicable AML Laws). BISYS represents, warrants and
agrees that it has in place and will maintain physical, electronic and
procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access to or use
of records and information relating to consumers or customers of the Company.
The Company represents to BISYS that it has adopted a Statement of its privacy
policies and practices as required by the Commission's Regulation S-P and agrees
to provide BISYS with a copy of that statement annually.
29. Miscellaneous
(a) Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(b) This Agreement constitutes the complete agreement of the parties hereto
as to the subject matter covered by this Agreement, and supercedes all prior
negotiations, understandings and agreements bearing upon the subject matter
covered herein, including, without limitation, the Prior Agreements.
(c) This Agreement may be executed in counterparts, each of which shall be
an original but all of which, taken together, shall constitute one and the same
agreement.
(d) No amendment to this Agreement shall be valid unless made in writing
and executed by both parties hereto.
* * * * *
17
Execution Copy
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
HSBC INVESTOR FUNDS TRUST HSBC ADVISOR FUNDS TRUST
By: By:
----------------------------------- ----------------------------------
Name: Name:
Title: Title:
Principal business address: Principal business address:
HSBC INVESTOR PORTFOLIOS BISYS FUND SERVICES OHIO, INC.
By: By:
----------------------------------- ----------------------------------
Name: Name:
Title: Title:
Principal business address: Principal business address:
18
Execution Copy
SCHEDULE A
TO THE MASTER SERVICES AGREEMENT
Dated as of April 1, 2003
Funds
HSBC Investor Portfolios
o HSBC Investor International Equity Portfolio
o HSBC Investor Fixed Income Portfolio
o HSBC Investor Small Cap Equity Portfolio
o HSBC Investor Limited Maturity Portfolio
HSBC Advisor Funds Trust
o HSBC Investor International Equity Fund
o HSBC Investor Fixed Income Fund
o HSBC Investor Small Cap Equity Fund
HSBC Investor Funds Trust
o HSBC Investor Overseas Equity Fund
o HSBC Investor Bond Fund
o HSBC Investor Opportunity Fund
o HSBC Investor Limited Maturity Fund
o HSBC Investor Money Market Fund
o HSBC Investor U.S. Government Money Market Fund
o HSBC Investor New York Tax-Free Money Market Fund
o HSBC Investor New York Tax-Free Bond Fund
o HSBC Investor Equity Fund
o HSBC Investor Mid-Cap Fund
o HSBC Investor Balanced Fund
o HSBC Investor U.S. Treasury Money Market Fund
o HSBC Investor Growth and Income Fund
o HSBC Investor California Tax-Free Money Market Fund
19
Execution Copy
SCHEDULE B
TO THE MASTER SERVICES AGREEMENT
Dated as of April 1, 2003
Transfer Agency Services
1. Shareholder Transactions
(a) Process shareholder purchase and redemption orders.
(b) Set up account information, including address, dividend option,
taxpayer identification numbers and wire instructions.
(c) Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
(d) Issue periodic statements for shareholders.
(e) Process transfers and exchanges.
(f) Process dividend payments, including the purchase of new shares,
through dividend reimbursement.
(g) Calculate and deduct applicable redemption fees from redemption
payments.
2. Shareholder Information Services
(a) Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
(b) Produce detailed history of transactions through duplicate or
special order statements upon request.
(c) Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to current
shareholders.
3. Compliance Reporting
(a) Provide reports to the Securities and Exchange Commission, the
National Association of Securities Dealers, Inc. and the States
in which the Fund is registered.
(b) Prepare and distribute appropriate Internal Revenue Service forms
for corresponding Fund and shareholder income and capital gains.
(c) Issue tax withholding reports to the Internal Revenue Service.
20
Execution Copy
4. Dealer/Load Processing (if applicable)
(a) Provide reports for tracking rights of accumulation and purchases
made under a Letter of Intent.
(b) Account for separation of shareholder investments from
transaction sale charges for purchase of Fund shares.
(c) Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
(d) Track sales and commission statistics by dealer and provide for
payment of commissions on direct shareholder purchases in a load
Fund.
5. Shareholder Account Maintenance
(a) Maintain all shareholder records for each account in the Company.
(b) Issue customer statements on scheduled cycle, providing duplicate
second and third party copies if required.
(c) Record shareholder account information changes.
(d) Maintain account documentation files for each shareholder.
6. Anti-Money Laundering Services
(a) Verify shareholder identity upon opening new accounts.
(b) Monitor, identify and report shareholder transactions and
identify and report suspicious activities that are required to be
so identified and reported, and provide other required reports to
the Securities and Exchange Commission, the U.S. Treasury
Department, the Internal Revenue Service or each agency's
designated agent, in each case consistent with the Company's AML
Program.
(c) Place holds on transactions in shareholder accounts or freeze
assets in shareholder accounts, as provided in the Company's AML
Program.
(d) Create documentation to provide a basis for law enforcement
authorities to trace illicit funds.
(e) Maintain all records or other documentation related to
shareholder accounts and transactions therein that are required
to be prepared and maintained pursuant to the Company's AML
Program, and make the same available for inspection by (i) the
Company's AML Compliance Officer, (ii) any auditor of the
Company's AML Program or related procedures, policies or controls
that has been designated by the Company in writing, or (iii)
regulatory or law enforcement authorities, and otherwise make
said
21
Execution Copy
records or other documents available at the direction of the
Company's AML Compliance Officer.
Transfer Agency Reports
7. Daily Shareholder Activity Journal
8. Daily Fund Activity Summary Report
(a) Beginning Balance
(b) Transactions
(c) Shareholder Transactions
(d) Reinvested Dividends
(e) Exchanges
(f) Adjustments
(g) Ending Balance
9. Daily Wire and Check Registers
10. Monthly Dealer Processing Reports
11. Monthly Dividend Reports
12. Sales Data Reports for Blue Sky Registration
13. A copy of the most recent report by independent public accountants
describing control structure policies and procedures relating to transfer
agency operations pursuant to AICPA Statement on Auditing Standards Number
70.
14. Such special reports and additional information that the parties may agree
upon, from time to time.
15. In addition to the forgoing, following each quarterly period, BISYS will
provide a report to the following effect pertaining to the AML Services
rendered by BISYS hereunder during such quarterly period:
(a) performed good order review for all new and reregistered
accounts;
(b) performed acceptance review for all monetary instruments
received;
(c) administered signature guarantee policy in accordance with
prospectus requirements;
22
Execution Copy
(d) administered escrow hold policy in accordance with prospectus
requirements;
(e) verified customer address changes;
(f) verified customer identification for all new accounts and all
name changes on existing accounts;
(g) monitored all purchase transactions made with cash equivalents
totaling in excess of $10,000 resulting in the filing of [x] Form
8300 reports during the period. The Fund does not accept cash or
currency;
(h) monitored all accounts for suspicious activity resulting in the
filing of [x] Form SAR reports during the period;
(i) reviewed shareholder names against lists of suspected terrorist
and terrorist organizations supplied by various governmental
organizations, such as the Office of Foreign Asset Control
resulting in the freezing and reporting of [x] accounts during
the period;
(j) created the documentation necessary to provide a basis for law
enforcement authorities to trace illicit funds; and
(k) maintained all records and other documentation related to
shareholder accounts and transactions required to e prepared and
maintained pursuant to the Fund's anti-money laundering program
for all BISYS transfer agent services.
(l) *performed the required due diligence to help prevent the opening
of any accounts for foreign shell banks during the period either
directly or through correspondent accounts; and
(m) *performed required due diligence on any new correspondent
accounts opened during the period.
* The last two items will be provided in such report if the Company falls under
the related USA PATRIOT Act provisions.
23
Execution Copy
SCHEDULE C
TO THE MASTER SERVICES AGREEMENT
Dated as of April 1, 2003
Fund Accounting Services
BISYS will keep and maintain the following books and records of each Fund
pursuant to Rule 31a-1 (the "Rule") under the Investment Company Act of 1940, as
amended (the 1940 Act"):
(a) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements
of cash and all other debits and credits, as required by
subsection (b)(1) of the Rule;
(b) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including interest
accrued and interest received, as required by subsection
(b)(2)(i) of the Rule;
(c) Separate ledger accounts required by subsection (b)(2)(ii) and
(iii) of the Rule; and
(d) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the
Rule.
In addition to the maintenance of the books and records specified above, BISYS
shall perform the following accounting services daily for each Fund:
(a) Calculate the net asset value per share utilizing prices obtained
from the sources described in item (b) below;
(b) Obtain security prices from independent pricing services, or if
such quotes are unavailable, then obtain such prices from each
Fund's investment adviser or its designee, as approved by the
Company's Board;
(c) Monitor security prices in accordance with the Company's fair
value policies and notify the Company of any deviations, and
reasonably assist the Company in obtaining alternate fair value
prices as requested;
(d) Verify and reconcile security positions with the Funds'
custodian;
(e) Compute, as appropriate, each Fund's net income and capital
gains, dividend payables, dividend factors, 7-day yields, 7-day
effective yields, 30-day yields, and weighted average portfolio
maturity;
24
Execution Copy
(f) Review daily the net asset value calculation and dividend factor
(if any) for each Fund prior to release to shareholders, check
and confirm the net asset values and dividend factors for
reasonableness and deviations, and distribute net asset values
and yields to NASDAQ;
(g) Report to the Board, or otherwise at the Company's request, the
daily market pricing of securities in any money market Funds,
with the comparison to the amortized cost basis;
(h) Determine unrealized appreciation and depreciation on securities
held in variable net asset value Funds;
(i) Amortize premiums and accrete discounts on securities purchased
at a price other than face value, if requested by the Company;
(j) Update fund accounting system to reflect rate changes, as
received from a Fund's investment adviser or authorized pricing
service, on variable interest rate instruments;
(k) Post Fund transactions to appropriate categories;
(l) Accrue expenses of each Fund according to instructions received
from the Company's Administrator;
(m) Determine the outstanding receivables and payables for all (1)
security trades, (2) Fund share transactions and (3) income and
expense accounts;
(n) Provide accounting reports in connection with the Company's
regular annual audit and other audits and examinations by
regulatory agencies;
(o) Provide such periodic reports as the parties shall agree upon, as
set forth in a separate schedule; and
(p) Prepare semi-annual and annual financial statements for each Fund
for review by the Company's independent auditors.
BISYS shall also perform the following additional accounting services for each
Fund:
(a) Provide monthly a hard copy of the unaudited financial statements
described below, upon request of the Company. The unaudited
financial statements will include the following items:
o Unaudited Statement of Assets and Liabilities,
o Unaudited Statement of Operations,
o Unaudited Statement of Changes in Net Assets, and
o Unaudited Condensed Financial Information.
25
Execution Copy
(b) Provide accounting information for the following:
o federal and state income tax returns and federal excise tax
returns;
o the Company's semi-annual reports with the Securities and
Exchange Commission ("SEC") on Form N-SAR and the N-CSR;
o the Company's annual and semi-annual shareholder reports and
quarterly Board meetings;
o registration statements on Form N-1A and other filings
relating to the registration of shares, including required
performance information;
o the Administrator's monitoring of the Company's status as a
regulated investment Company under Subchapter M of the
Internal Revenue Code, as amended;
o annual audit by the Company's auditors; and
o examinations performed by the SEC.
26
Execution Copy
SCHEDULE D
TO THE MASTER SERVICES AGREEMENT
Dated as of April 1 2003
Administration Services
1. Calculate contractual Company expenses and control all disbursements for
the Company, including administration of trustee compensation on behalf of
each Company;
2. Prepare an annual projection of the Company's non-asset based expense
accruals prior to the beginning of each fiscal year of the Company and
monitor actual and accrued expenses;
3. As appropriate compute the Company's yields, total return, expense ratios,
portfolio turnover rate and, if required, portfolio average dollar-weighted
maturity;
4. Provide information and assistance to counsel to the Company in preparing
and assist with filing (i) the annual update to the Company's registration
statement on Form N-1A, (ii) other amendments to the Company's registration
statement and supplements to its prospectus and statements of additional
information, and (iii) notices of annual or special meetings of
shareholders of the Company and proxy materials relating thereto, and file
any of the foregoing with the Securities and Exchange Commission (the
"SEC") upon the request of the Company or counsel to the Company;
5. Prepare such reports, applications and documents (including reports
regarding the sale and redemption of shares of beneficial interest in the
Company as may be required in order to comply with Federal and state
securities laws) as may be necessary or desirable to register the shares of
beneficial interest in the Company ("Shares") with state securities
authorities, monitor the sale of Shares for compliance with state
securities laws, and file with the appropriate state securities authorities
the registration statements and reports for the Company and the Shares and
all amendments thereto, as may be necessary or convenient to register and
keep effective the registration of the Company and the Shares with state
securities authorities to enable the Company to make a continuous offering
of its Shares;
6. Coordinate and prepare, with the assistance of the Funds' investment
adviser and officers, communications to shareholders of record of the Funds
("Shareholders"), including the annual report to Shareholders; prepare and
file with the SEC the semi-annual report for the Funds on Form N-SAR and
N-CSR and all required notices pursuant to Rule 24f-2; coordinate and
oversee the printing and distribution of prospectuses, supplements, proxy
materials and reports to Shareholders; and coordinate the solicitation and
tabulation of proxies in connection with and attend and otherwise assist
with the conduct of the annual meeting of Shareholders each year, if one is
held;
27
Execution Copy
7. Administer contracts on behalf of the Company with, among others, the
Company's investment adviser, distributor, custodian, transfer agent and
fund accountant, including making revisions in accordance with the
Company's direction;
8. Supervise the Company's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
9. Calculate performance data of the Funds for dissemination to up to six (6)
information services covering the investment company industry;
10. Coordinate and supervise the preparation and filing of the Company's tax
returns;
11. Assist with the layout and printing of prospectuses and assist with and
coordinate layout and printing of the Funds' semi-annual and annual reports
to Shareholders;
12. Assist with the design, development, and operation of the Funds, including
new classes, investment objectives, policies and procedures, and structure;
13. Make available appropriate individuals to serve as officers of the Company,
upon designation as such by the Board, to serve in ministerial capacities
related to services provided by BISYS as determined by the Board, or to
serve in executive capacities subject to the provisions of ▇▇▇▇▇▇▇▇ ▇-▇
hereto and the BISYS policies referred to therein;
14. Obtain, maintain and file fidelity bonds and directors and officers/errors
and omissions insurance policies for the Company at the expense of the
Company and Funds in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the Investment Company Act of 1940, as amended (the "1940
Act"), to the extent such bonds and policies are approved by the Board;
15. Monitor and advise the Company and its Funds on their regulated investment
company status under the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, including with respect to the Company's
"publicly traded partnership" status;
16. Perform required additional administration services and functions of the
Company and each Fund to the extent administration services and functions
are not provided to the Company or such Fund pursuant to the Company's or
such Fund's investment advisory agreement, distribution agreement,
custodian agreement, transfer agent agreement or fund accounting agreement
as agreed between the parties;
17. Maintain corporate records on behalf of the Company, including, but not
limited to, minute books, Declaration of Trust or certificate of
incorporation and by-laws, and prepare, at the direction of the Company,
amendments to the Company's Declaration of Trust and by-laws and file as
necessary;
18. Assist in developing compliance procedures for each Fund to monitor
compliance with the 1940 Act, NASD rules and other relevant regulations,
and policies adopted
28
Execution Copy
by the Fund's Board, and provide compliance monitoring services
incorporating certain of those procedures, which will include, among other
matters, compliance with each Fund's investment objective, defined
investment policies, restrictions, and tax diversification, distribution
and income requirements, as are determinable based upon the Fund's
accounting records;
19. Monitor services provided under Shareholder Service Plans adopted by the
Board and financial institutions that serve, or propose to serve, as
shareholder services agents thereunder ("Shareholder Service Agents");
coordinate the services to be rendered by Shareholder Service Agents
pursuant to Shareholder Service Agreements under Shareholder Service Plans,
and review the qualifications of Shareholder Service Agents to serve as
such under the relevant Shareholder Service Plan; coordinate and assist in
the Company's execution and delivery of Shareholder Service Agreements;
report to the Board regarding amounts paid under Shareholder Service
Agreements and the nature of Services provided by the Shareholder Service
Agents thereunder; and maintain appropriate records in connection with the
foregoing;
20. Provide assistance and guidance to the Company with respect to matters
governed by or related to regulatory requirements and developments
including: monitoring regulatory and legislative developments which may
effect the Company, and assisting in strategic planning in response
thereto; assisting the Company in responding to and providing documents for
routine regulatory examinations or investigations; and working closely with
counsel to the Company in response to such routine or non-routine
regulatory matter;
21. Assist the Company in preparing for and conducting Board meetings by (i)
coordinating Board book production and distribution, (ii) subject to review
and approval by the Company and its counsel, preparing Board agendas and
minutes, (iii) preparing the relevant sections of the Board materials
pertaining to the responsibilities of BISYS, (iv) assisting and
coordinating special materials related to annual contract approvals and
approval of rule 12b-1 plans and related matters, (v) attending Board
meetings and recording the minutes, and (vi) performing such other Board
meeting functions as agreed by the parties; and
22. Furnish advice and recommendations with respect to other aspects of the
business and affairs of the Funds as the Company and BISYS shall determine
desirable.
29
Execution Copy
ADDENDUM D-1
BISYS's provision of one or more individuals to serve as executive officers
(including Chief Legal Officer) (any such person, a "BISYS EO") is subject to
and conditioned upon the provisions of this Addendum D-1.
BISYS has and will maintain policies applicable to the activities of any
BISYS employee serving as a BISYS EO ("BISYS Policies"). BISYS shall select, and
may replace, the specific employee that it makes available to serve in any BISYS
EO position in BISYS's reasonable discretion, taking into account such person's
responsibilities concerning, and familiarity with, the Company's operations.
In the event any BISYS EO serves as the Company's principal executive
and/or financial officer (each a "Certifying Officer"), the DCPs shall contain
(or the Company and BISYS shall otherwise establish) mutually agreeable
procedures governing the certification of any reports as required under the
Sarbanes Oxley Act of 2002 and Rule 30a-2 under the 1940 Act (collectively, the
"SO Laws"), and the parties shall comply with such procedures in all material
respects. Among other things, the DCPs shall provide as follows:
1. The Company shall establish a committee (the "DCP Committee") to evaluate
the Company's disclosure controls and procedures (the "DCPs") in accordance
with Rule 30a-3 under the 1940 Act. The DCP Committee shall include the
Company's principal executive and financial officers and Chief Legal
Officer, but shall not be made up entirely of BISYS personnel. The DCP
shall also contain such other individuals as may be reasonably necessary or
appropriate to enable the DCP Committee obtain the cooperation of, and to
oversee, each of the Company's agents that records, processes, summarizes,
or reports information contained in any Fund N-CSR report (or other
information from which such information is derived), including the
investment adviser and custodian (each such agent, a "Service Provider").
2. The Company shall require sub-certifications on internal controls
reasonably acceptable to the Certifying Officers be provided by Service
Providers and consistent with the SO Laws upon which the Certifying
Officers may rely in certifying a Fund's N-CSR report, and that such
sub-certifications are delivered to the DCP Committee and the Certifying
Officers sufficiently in advance of the DCP Committee meeting described in
Item 3 below.
3. The DCP Committee shall (i) establish a schedule to ensure that all
required disclosures in Form N-CSR, including the financial statements, for
the Fund are identified and prepared in a timeframe sufficient to allow
review, (ii) meet at least 10 days before the filing date of each Fund
N-CSR report to review the accuracy and completeness of the such report,
and (iii) record its considerations and conclusions in a written memorandum
sufficient to support conclusions pertaining to DCPs as required by Item 9
of Form N-CSR. In conducting its review and evaluations, the DCP Committee
shall:
30
Execution Copy
(a) review SAS 70 Reports pertaining to Service Providers, if applicable,
or in the absence of any such reports, consider the adequacy of a
sub-certification of the Service Provider. In cases where the SAS 70
report is dated more than 90 days prior to the issuance of the
relevant N-CSR report, the DCP Committee shall request a written
certification from the Service Provider regarding the continued
application and effectiveness of internal controls described in the
report, or descriptions of any changes in internal control structure,
as of the date of such certification;
(b) consider whether there are any significant deficiencies in the design
or operation of the DCPs that could adversely affect a Fund's ability
to record, process, summarize, and report financial data, and in the
event that any such deficiencies are identified, disclose them to the
Certifying Officers, the Fund's audit committee and its auditors;
(c) consider whether, to the knowledge of any member of the DCP Committee,
there has been or may have been any fraud, whether or not material,
and in the event that any such occurrence is identified, ensure that
this has been disclosed to the Certifying Officers and Chief Legal
Officer, so that the such officers may inform the Fund's audit
committee and its auditors; and
(d) determine whether there have been any significant changes in internal
controls or in other factors that could significantly affect internal
controls since the date of the most recent prior evaluation of
internal controls, including any whether corrective actions have been
taken with regard to previously identified deficiencies and
weaknesses, and take ensure that any such changes and corrective
actions are reflected in the N-CSR report.
Any BISYS EO that serves as a Certifying Officer shall have the full
discretion to decline to certify a particular N-CSR report that fails to meet
the standards set forth in the certification, to report matters involving fraud
or other failure to meet the standards of applicable law to the audit committee
of the Board, or in appropriate circumstances, and to resign from his or her
position, in the event that he or she reasonably determines that there has been
or is likely to be (a) a material deviation from the BISYS Policies, (b) a
violation of ▇▇▇▇▇▇▇▇-▇▇▇▇▇ or other applicable laws, or (c) a material
deviation by the Company from the terms of this Agreement governing the services
of such Certifying Officer that is not caused by such Certifying Officer or
BISYS. In the event a BISYS EO resigns as described in the immediately preceding
sentence, BISYS shall not be required to provide someone to fill such position
until such time as BISYS has received reasonable assurances and evidence from
the Company that the circumstance causing the BISYS EO to resign had been
remedied.
The Company's governing documents (such as its Declaration of Trust and
by-laws) and/or resolutions of its Board shall contain mandatory indemnification
provisions applicable to each BISYS EO and that are intended to have the effect
of fully indemnifying such person and holding such person harmless with respect
to any claims,
31
Execution Copy
liabilities and costs arising out of or relating to his or her service as an
officer of the Company in good faith in a manner reasonably believed to be in
the best interests of the Company, except to the extent he or she would
otherwise be liable to the Company by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office, within the meaning of Section 17(h) of the 1940 Act.
The Company shall provide coverage to each BISYS EO under its directors and
officers liability policy that is appropriate to the BISYS EO's role and title,
and that is consistent with coverage applicable to other executive
management-level officers.
Each BISYS EO that serves as a Certifying Officer may, and the Company
shall, promptly notify BISYS of any issue, matter or event that would be
reasonably likely to result in any claim by the Fund, the Fund's shareholders or
any third party which involves an allegation that any N-CSR report failed to
meet the standards of applicable laws or that any of the Company's Certifying
Officers failed to exercise their obligations to the Fund in a manner consistent
with the SO Laws and any other applicable laws.
Notwithstanding any provision of this Agreement that expressly or by
implication provides to the contrary, (a) it is expressly agreed and
acknowledged that BISYS cannot ensure that the Company complies with the SO
Laws, and (b) so long as any BISYS EO acts in good faith and in a manner
reasonably believed to be in the best interests of the Company (and would not
otherwise be liable to the Company by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office), the Company shall indemnify such BISYS EO and BISYS and hold
them both harmless from any loss, liability, expenses (including reasonable
attorneys fees) and damages incurred by them arising out of or resulting from
the service of such BISYS EO as a Certifying Officer or other executive officer
of the Company.
32
Execution Copy
SCHEDULE E
TO THE MASTER SERVICES AGREEMENT
Dated as of April 1, 2003
Omnibus Fee Agreement attached hereto
33