FORM OF COMPLIANCE SERVICES AGREEMENT
Exhibit
23H (2)
FORM
OF COMPLIANCE SERVICES AGREEMENT
This
Compliance Services Agreement (the “Agreement”) is dated as of [date] (the
“Effective Date”), between The Blue Fund Group (the “Company”), a Massachusetts
Business Trust, and BISYS Fund Services Ohio, Inc. (“BISYS”), an Ohio
corporation.
WHEREAS,
the Company is a registered investment company, and will become subject to
the
requirements of Rule 38a-1 under the 1940 Act, which requires each registered
investment company to adopt policies and procedures that are reasonably designed
to prevent it from violating the federal securities laws;
WHEREAS,
BISYS performs certain management and administration services for the Company
pursuant to that certain Master Services Agreement between BISYS and the Company
dated [date] (the “Primary Agreement”);
WHEREAS,
BISYS offers compliance services through its ComplianceEDGE program;
WHEREAS,
the Company desires that BISYS provide its ComplianceEDGE program services
in
connection with the institution of a more comprehensive compliance program
for
the Company;
WHEREAS,
BISYS is willing to perform the services enumerated in this Agreement on the
terms and conditions set forth in this Agreement; and
WHEREAS,
BISYS and the Company wish to enter into this Agreement in order to set forth
the terms under which BISYS will perform the services enumerated herein on
behalf of the Company, and to supplement and clarify certain provisions of
the
Primary Agreement.
NOW,
THEREFORE, in consideration of the covenants herein contained, the Company
and
BISYS hereby agree as follows:
1. Compliance
Services.
(a) The
parties mutually agree to coordinate and cooperate in connection with the
creation, implementation and ongoing maintenance of written compliance polices
and procedures which, in the aggregate, shall be deemed by the Board of Trustees
of the Company (the “Board”) to be reasonably designed to prevent the Company
from violating the provisions of the Federal securities laws applicable to
the
Company (the “Applicable Securities Laws”), as required under Rule 38a-1 under
the 1940 Act (the “Fund Compliance Program”).
(b) The
Company agrees to provide BISYS with copies of its current compliance policies
and procedures and furnish (and cause its investment advisers and other service
providers to furnish) all such additional information as may reasonably relate
to the Fund Compliance Program. Such additional information shall include
compliance and related
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information
pertaining to the investment adviser and any other service providers to the
Company other than BISYS. BISYS shall review and evaluate all such existing
information and coordinate the oversight of the compliance programs of the
service providers to the Company as provided in Rule 38a-1 (“Service
Providers”).
(c) BISYS
will provide the following services in relation to the Fund Compliance Program
during the term of this Agreement: (i) make an individual acceptable to the
Board available to serve as the Company’s Chief Compliance Officer, to the
extent provided in Section 2(a) below; (ii) through the Chief Compliance
Officer, develop, implement and administer the written policies and procedures
comprising the Fund Compliance Program, as contemplated above and as may be
necessary in connection with amendments from time to time; (iii) through the
Chief Compliance Officer, prepare and evaluate the results of annual reviews
of
the compliance policies and procedures of Service Providers; (iv) provide
support services to the Chief Compliance Officer of the Company, including
support for conducting an annual review of the Fund Compliance Program; (v)
through the Chief Compliance Officer and otherwise in support of the Fund
Compliance Program, develop standards for reports to the Board by BISYS and
other Service Providers; (vi) through the Chief Compliance Officer, develop
standards for reports to the Board by the Chief Compliance Officer; and (vii)
through the Chief Compliance Officer and otherwise in support of the Fund
Compliance Program, prepare or provide documentation for the Board to make
findings and conduct reviews pertaining to the Fund Compliance Program and
compliance programs and related policies and procedures of Service
Providers.
In
connection with the services set forth above in clauses (ii), (iii), (v), (vi)
and (vii) of this Section 1(c), in the event that the Board retains a Chief
Compliance Officer that is not provided by BISYS, the services in relation
to
the Chief Compliance Officer shall consist of providing the appropriate level
of
support to the Chief Compliance Officer to reasonably enable him or her to
fulfill the duties set forth therein.
2. Provision
of Chief Compliance Officer
(a) At
the
election of the Company, in connection with the compliance services to be
rendered by BISYS pursuant to Section 1 above, and subject to the provisions
of
this Section 2(a) and to Section 2(b) below, BISYS agrees to make available
to
the Company a person to serve as the Company’s chief compliance officer
responsible for administering the Fund Compliance Program as provided in
paragraph (a)(4) of Rule 38a-1 (the “Chief Compliance Officer”). BISYS’
obligation in this regard shall be met by providing an appropriately qualified
employee or agent of BISYS (or its affiliates) who, in the exercise of his
or
her duties to the Company, shall act in good faith and in a manner reasonably
believed by him or her to be in the best interests of the Company. In the event
that the employment relationship or independent contractor agency relationship
between BISYS and any person made available by BISYS to serve as Chief
Compliance Officer terminates for any reason, BISYS shall have no further
responsibility to provide the services of that particular person, and shall
have
no responsibility whatsoever for the services to the Company or other activities
of such person provided or occurring after
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such
termination regardless of whether or not the Board terminates such person as
Chief Compliance Officer. In such event, upon the request of the Company, BISYS
will employ reasonable good faith efforts to make another person available
to
serve as the Chief Compliance Officer.
In
connection with BISYS’ commitment to make an appropriately qualified person
available to serve as Chief Compliance Officer, BISYS shall pay a level of
total
compensation to such person as is consistent with BISYS’ compensation of
employees having similar duties, similar seniority, and working at the same
or
similar geographical location. BISYS shall not be obligated to pay any
compensation to a Chief Compliance Officer which exceeds that set forth in
the
previous sentence.
The
Company will provide copies of the Fund Compliance Program, related policies
and
procedures, and all other books and records of the Company as the Chief
Compliance Officer deems necessary or desirable in order to carry out his or
her
duties hereunder on behalf of the Company. The Company shall cooperate with
the
Chief Compliance Officer and ensure the cooperation of the investment adviser,
the custodian and any other Service Providers to the Company, as well as Company
counsel, independent Trustee counsel and the Company’s independent accountants
(collectively, the “Other Providers”), and assist the Chief Compliance Officer
and BISYS in preparing, implementing and carrying out the duties of the Chief
Compliance Officer under the Fund Compliance Program and Rule 38a-1. In
addition, the Company shall provide the Chief Compliance Officer with
appropriate access to the executive officers and Trustees of the Company, and
to
representatives of and to any records, files and other documentation prepared
by, Service Providers and Other Providers, which are or may be related to the
Fund Compliance Program.
Each
party agrees to provide promptly to the other party (and to the Chief Compliance
Officer), upon request, copies of other records and documentation relating
to
the compliance by such party with Applicable Securities Laws (as related to
the
Fund Compliance Program of the Company), and each party also agrees otherwise
to
assist the other party (and the Chief Compliance Officer) in complying with
the
requirements of the Fund Compliance Program and Applicable Securities
Laws.
BISYS
agrees to provide the services set forth in Section 1 pertaining to the Fund
Compliance Program, whether or not the person serving as Chief Compliance
Officer is an employee or agent of BISYS. In the event that the employment
relationship or independent contractor agency relationship between BISYS and
a
person made available by BISYS serving as Chief Compliance Officer terminates
for any reason, BISYS shall have no further responsibility to make that
particular person available, and shall have no responsibility concerning such
person’s services after the date the Company is notified of such termination. In
such event, upon the request of the Company, BISYS will employ reasonable good
faith efforts to make another person available to serve as the Chief Compliance
Officer.
(b) It
is
mutually agreed and acknowledged by the parties that the Chief Compliance
Officer will be an executive officer of the Company. The provisions of
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Section
2(a) are subject to the internal policies of BISYS concerning the activities
of
its employees and their service as officers of funds (the “BISYS Policies”), a
copy of which shall be provided to the Company upon request.
The
Company’s governing documents (including its Agreement and Declaration of Trust
and By-Laws) and/or resolutions of its Board shall contain mandatory
indemnification provisions that are applicable to the Chief Compliance Officer,
that are designed and intended to have the effect of fully indemnifying him
or
her and holding him or her harmless with respect to any claims, liabilities
and
costs arising out of or relating to his or her service 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 or her office.
The
Company shall provide coverage to the Chief Compliance Officer under its
directors and officers liability policy that is appropriate to the Chief
Compliance Officer’s role and title, and consistent with coverage applicable to
the other officers holding positions of executive management.
In
appropriate circumstances, the Chief Compliance Officer shall have the
discretion 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) an ongoing pattern of conduct involving
the continuous or repeated violation of Applicable Securities Laws, or (c)
a
material deviation by the Company from the terms of this Agreement governing
the
services of such Chief Compliance Officer that is not caused by such Chief
Compliance Officer or BISYS. In addition, the Chief Compliance Officer shall
have reasonable discretion to resign from his or her position in the event
that
he or she determines that he or she has not received sufficient cooperation
from
the Company or its Other Providers to make an informed determination regarding
any of the matters listed above.
Each
Executive 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 Company, one or more Company shareholder(s) or any third party which
involves an allegation that any Executive Officer failed to exercise his or
her
obligations to the Company in a manner consistent with applicable laws.
Notwithstanding
any provision of the Primary Agreement or any other agreement or instrument
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
Applicable Securities Laws, and (b) whenever an employee or agent of BISYS
serves as Chief Compliance Officer of the Company, as long as such Chief
Compliance Officer 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 the Chief Compliance Officer and BISYS and hold
the
Chief Compliance Officer and BISYS harmless from any loss, liability, expenses
(including reasonable attorneys fees) and damages incurred
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by
them
arising out of or related to the service of such employee or agent of BISYS
as
Chief Compliance Officer of the Company.
3. Fees
and Expenses
(a)
BISYS
shall be entitled to receive from the Company the amounts set forth on Schedule
A hereto, reflecting the amounts charged by BISYS for the performance of
services under this Agreement. The fees hereunder shall be in addition to all
fees and expenses charged by BISYS under the Primary Agreement.
(b)
In
addition to paying BISYS the fees set forth in Schedule A, the Company agrees
to
reimburse BISYS for all of its actual out-of-pocket expenses reasonably incurred
in providing services under this Agreement, including but not limited to the
following:
(i)
All
out of pocket costs incurred in connection with BISYS’ provision of Executive
Officers to the Company in connection with compliance services, including travel
costs for attending Board meetings, conducting due diligence of Service
Providers, and attending training conferences and seminars (plus the costs
of
training);
(ii)
If
applicable initially or from time to time hereafter, upon the approval of the
Company, costs to recruit a Chief Compliance Officer; and
(iii)
The
costs incurred by BISYS in connection with the Fund Compliance Program,
including those incurred by or with respect to Other Providers, in providing
reports to the Chief Compliance Officer under the Fund Compliance
Program.
(c)
In
addition, in the event that BISYS is requested or authorized by the Company
or
is required by governmental regulation, summons, subpoena, investigation,
examination or other legal or regulatory process to produce documents or
personnel with respect to services provided by BISYS to the Company or any
Fund,
the Company will, so long as BISYS is not the subject of the investigation
or
proceeding in which the information is sought, pay BISYS for its professional
time (at its standard billing rates) and reimburse BISYS for its out-of-pocket
expenses (including reasonable attorneys fees) incurred in responding to such
requests or requirements.
(d)
All
rights of compensation under this Agreement for services performed and for
expense reimbursement shall survive the termination of this
Agreement.
4. Information
to be Furnished by the Company
(a) The
Company has furnished or shall promptly furnish to BISYS copies of the
following, as amended and current as of the date of this Agreement:
| (i) |
The
Fund Compliance Program or the various policies and procedures of
the
Company that have been adopted through the date hereof which pertain
to
compliance matters that are required to be covered by the Fund Compliance
Program, including the compliance programs of Service Providers other
than
BISYS, as necessary under Rule 38a-1 for inclusion in the Fund Compliance
Program; and
|
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(b) The
Company shall furnish BISYS written copies of any amendments to, or changes
in,
any of the items referred to in Section 4(a) hereof, forthwith upon such
amendments or changes becoming effective. In addition, the Company agrees that
no amendments will be made to the Fund Compliance 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.
(c) BISYS
may
rely on all documents furnished to it by the Company and its agents in
connection with the services to be provided under this Agreement, including
any
amendments to or changes in any of the items to be provided by the Company
pursuant to Section 4(a), and shall be entitled to indemnification in accordance
with the Primary Agreement with regard to such reliance.
The
Company represents and warrants that (i) the provision of certain officers
of
the Company by BISYS, as provided in Section 2 of this Agreement, has been
approved by the Board, and (ii) the individual nominated by BISYS as the
Company’s Chief Compliance Officer has been approved and appointed as an officer
of the Company by the Board.
5. Term
and Termination
(a) The
compliance services to be rendered by BISYS under this Agreement (the
“Compliance Services”) shall commence upon the date of this Agreement and shall
continue in effect for one from the Effective Date, unless earlier terminated
pursuant to the terms of this Agreement. During such one year term, the
Compliance Services may be terminated upon 30 days notice in the event there
is
“cause,” as defined in the Primary Agreement. Following the one year anniversary
of the Effective Date, the Compliance Services may be terminated by either
party
for “cause,” as provided above, or by providing the other party with at least 90
days prior written notice of termination.
(b) Notwithstanding
anything in this Agreement to the contrary, this Agreement and all of the
obligations of BISYS under this Agreement shall terminate automatically upon
any
termination of the Primary Agreement.
6. Notice
Any
notice provided hereunder shall be sufficiently given when sent by registered
or
certified mail, or by nationally recognized courier service, to the party
required to be
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served
with such notice at the following address, or at such other address as such
party may from time to time specify in writing to the other party pursuant
to
this Section:
if
to the
Company:
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
President
If
to
BISYS:
BISYS
Fund Services Ohio, Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
President
With
a
copy to:
The
BISYS
Group, Inc.
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
General Counsel
7. Governing
Law and Matters Relating to the Company
This
Agreement shall be construed in accordance with the laws of the State of New
York and the applicable provisions of the 1940 Act. To the extent that the
applicable laws of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act of 1940,
as amended, 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 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 them personally, but shall bind
only
the property of the Company as provided in the Company’s Declaration of
Trust.
8. Representations
and Warranties
Each
party represents and warrants to the other that this Agreement has been duly
authorized and, when executed and delivered by it, will constitute a legal,
valid and binding obligation of it, enforceable against it in accordance with
its terms, subject to
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bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
9. Miscellaneous
(a) Except
as
expressly provided in this Agreement, the terms of the Primary Agreement shall
apply to the services rendered under this Agreement and the general provisions
thereof shall be used on a residual basis to construe any issues arising under
this Agreement that are not addressed by the express terms of this Agreement.
Except as provided in this Agreement, the provisions of the Primary Agreement
remain in full force and effect (including, without limitation, the term of
the
Agreement).
(b) The
provisions set forth in this Agreement supersede all prior negotiations,
understandings and agreements bearing upon the subject matter covered herein,
including any conflicting provisions of the Primary Agreement.
(c)
No
amendment or modification to this Agreement shall be valid unless made in
writing and executed by both parties hereto.
(d) Paragraph
headings in this Agreement are included for convenience only and are not to
be
used to construe or interpret this Agreement.
(e) 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.
* * * * *
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
THE
BLUE FUND GROUP
By:
______________________________
Name:
Title:
BISYS
FUND SERVICES OHIO, INC.
By:
______________________________
Name:
▇▇▇▇ ▇▇▇▇▇▇▇
Title:
President
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SCHEDULE
A
Fees
BISYS
shall be paid the following annual fees in equal monthly installments for the
services provided under this Agreement:
Year
1 $65,000
Year
2 $75,000
Year
3 $85,000
After
year 3 as
mutually agreed
Annual
Fee Adjustment
Commencing
on the one-year anniversary of the Effective Date, BISYS may annually increase
the fixed fees and other fees expressed as stated dollar amounts in this
Agreement by up to an amount equal to the greater of: (a) the most recent annual
percentage increase in consumer prices for services as measured by the United
States Consumer Price Index entitled “All Services Less Rent of Shelter” or a
similar index should such index no longer be published, and (b)
10%.
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