Exhibit 22(h)(2)
ADMINISTRATION AGREEMENT
AGREEMENT made this 1st day of October, 2003, between First Focus Funds,
Inc. (the "Company"), a registered open-end management investment company
organized as a Nebraska corporation (the"Company") having its principal place of
business at 0000 Xxxxx Xxxxxx, Xxxxx, XX 00000, and BISYS Fund Services Ohio,
Inc. ("BISYS" or the "Administrator"), an Ohio corporation having its principal
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Company desires that BISYS perform administration services
for the Company and each investment portfolio of the Company, as now in
existence 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 the Company wish to enter into this Agreement in order
to set forth the terms under which BISYS will perform the administration
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 the administrator of the
Company and to furnish the Company and Funds with the management and
administrative services as set forth in Section 2 below. BISYS hereby accepts
such appointment to perform the duties set forth below.
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 in any way and shall not be deemed
an agent of the Company.
2. Administration Services
BISYS shall perform or supervise the performance by others of
administrative 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 of Directors
of the Company (hereafter referred to as the "Board") with such reports
regarding investment performance as it may reasonably request but shall have no
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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 foregoing, BISYS shall in a timely
manner:
(a) calculate contractual Company expenses and control all disbursements
for the Company, and as appropriate, compute the Company's yields,
total return, expense ratios, portfolio turnover rate and, if
required, portfolio average dollar-weighted maturity;
(b) prepare (i) the annual update to the Company's registration
statement on Form N-1A and (ii) other amendments to the Company's
registration statement and supplements to its Prospectus and
Statement of Additional Information, and (iii) submit the same for
review by the Company and its counsel, and file any of the foregoing
with the Securities and Exchange Commission (the "SEC" or
"Commission");
(c) 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;
(d) 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 Forms N-SAR and N-CSR and all required notices
pursuant to Rule 24f-2; coordinate the printing and distribution of
prospectuses, supplements, proxy materials and reports to
Shareholders; and coordinate the solicitation and tabulation of
proxies in connection with the annual meeting of Shareholders each
year, if one is held;
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(e) administer contracts on behalf of the Company with, among others,
the Company's investment adviser, distributor, custodian, transfer
agent and fund accountant;
(f) supervise the Company's transfer agent with respect to the payment
of dividends and other distributions to Shareholders;
(g) calculate performance data of the Funds for dissemination to up to
six (6) information services covering the investment company
industry;
(h) coordinate and supervise the preparation and filing of the Company's
tax returns;
(i) examine and review the operations and performance of the various
organizations providing services to the Company or any Fund,
including, without limitation, the investment adviser, distributor,
custodian, fund accountant, transfer agent, outside legal counsel
and independent public accountants, and at the request of the Board,
report to the Board on the performance of such organizations;
(j) 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;
(k) assist with the design, development, and operation of the Funds,
including new classes, investment objectives, policies and
structure;
(l) 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 Schedule D;
(m) advise the Company and the Board on matters concerning the Company,
the Funds and their affairs;
(n) 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;
(o) monitor and advise the Company and its Funds on their regulated
investment company status under the Internal Revenue Code of 1986,
as amended;
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(p) perform required administrative services and functions of the
Company and each Fund to the extent administrative 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;
(q) maintain corporate records on behalf of the Company, including, but
not limited to, minute books, Articles of Incorporation and By-Laws;
provide appropriate personnel to attend Board meetings and record
the minutes of such meetings, and produce and distribute materials
for Board meetings, including relevant sections of the Board
materials pertaining to the responsibilities of BISYS;
(r) 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;
(s) assist in developing compliance procedures for each Fund, 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;
(t) monitor services provide 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;
(u) 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
matters;
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(v) assist the Company in preparing for Board meetings by (i)
coordinating Board book preparation, 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) overseeing and coordinating payment of Director
compensation, and (vi) performing such other Board meeting functions
as agreed by the parties; and
(w) provide proxy support services by (i) coordinating proxy solutions
and (ii) attending shareholder meetings and recording the minutes.
(x) make a BISYS employee available to the Company to serve, upon
designation as such by the Board, as its Anti-Money Laundering
Compliance Officer (or under such other title to perform similar
functions).
BISYS shall perform such other administration services for the Company
that are mutually agreed upon by the parties from time to time. Such services
may include performing internal audit examinations; mailing the annual reports
of the Funds; preparing an annual list of Shareholders; and mailing notices of
Shareholders' meetings, proxies and proxy statements, for all of which the
Company will pay such fees as may be mutually agreed upon, including BISYS's
out-of-pocket expenses.
2A Anti-Money Laundering Compliance.
The Company acknowledges that it is a financial institution subject to the
law entitled Uniting 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 must comply with the
AML Acts and applicable regulations adopted thereunder (collectively, the
"Applicable AML Laws") in all relevant respects. Except to the extent expressly
provided herein, BISYS shall not be responsible for ensuring that the Company
complies with its obligations under the Applicable AML Laws. Without prejudice
to the foregoing, BISYS will provide an appropriate person to serve as the
Company's anti-money laundering compliance officer ("AML Compliance Officer"),
and, subject to the Company's compliance with practices and procedures agreed
between the parties from time to time (collectively, the "Procedures"), BISYS
agrees to cooperate with and assist the Company in complying with its
obligations by causing the AML Compliance Officer to render the anti-money
laundering services described on Schedule B hereto.
The Company will maintain full responsibility for ensuring that its
anti-money laundering program (the "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.
Neither BISYS nor the AML
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Compliance Officer shall be responsible or liable for failure to undertake any
responsibilities or provide any services resulting from an amendment to the AML
Program unless BISYS has consented in writing thereto.
In connection with the appointment of the AML Compliance Officer, the
Company also acknowledges that the duties of the AML Compliance Officer may
involve 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, the AML Compliance Officer is granted the discretion
to take any such action as may be authorized under the AML Program, and
consultation with the Company shall not be required in connection therewith
unless specifically required under the AML Program, and (ii) the Company
instructs the AML Compliance Officer 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. To the extent prudent or
necessary in order to comply with the Company's AML Program or Applicable AML
Laws, the AML Compliance Officer shall be entitled, to refuse, in good faith, to
permit particular transactions to be consummated.
The Fund agrees to provide the AML Compliance Officer with all access to,
and upon request such copies of, the records and other documentation reasonably
designated by him or her as being relevant to the identity and transaction
records of Fund investors, to otherwise assist him or her in complying with any
obligations under the Applicable AML Laws.
The Company agrees to retain a copy of all materials related to compliance
with the AML Program and Applicable AML Laws (including those used for
identification purposes and, in the case of transactions, the original documents
or copies admissible in legal proceedings) for a period of at least 5 years
after either the relationship with the investor has ended or the execution of
the transaction. Notwithstanding the foregoing, the Company shall retain records
for any other period specified in the AML Program or under Applicable AML Laws.
The Company represents and warrants that (a) its Board of Directors (the
"Board") has approved and adopted the AML Program (a copy of which has been
delivered to BISYS), (b) the individual nominated by BISYS as the Company's AML
Compliance Officer has been approved and appointed as an officer of the Company
by the Board, and (c) the delegation of certain services hereunder to BISYS, as
provided in above, has been duly approved by the Board.
Notwithstanding any provision of the Agreement that expressly or by
implication provides to the contrary, BISYS shall not be liable for any loss,
damage, cost, expense or liability incurred or sustained by the Company or any
claim brought against any Company as a result of the Company's failure to comply
with its obligations under Applicable AML Laws except to the extent such failure
is a direct and proximate result of a material breach of this Agreement by
BISYS, and neither BISYS nor any individual
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serving from time to time as the Company's AML Compliance Officer shall have any
liability to the Company or any of its directors, officers, employees, interest
holders or service providers for any actions taken or omissions by such
individual in the course of acting as AML Compliance Officer unless such act or
failure to act constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard of such individual's duties hereunder as AML Compliance
Officer.
2B. Service Standards.
From time to time, the Company may propose certain service standards,
deliverables, and deadlines applicable to the provision of the services under
this Agreement or certain aspects of the services. Upon acceptance in writing by
the parties, such terms shall be deemed to be incorporated into this Agreement
as Schedule C. The same may be amended from time to time following review and
written consent of the parties.
3. Services as Fund Accountant.
(a) Maintenance of Books and Records. BISYS will keep and maintain the
following books and records of each Fund pursuant to Rule 31a - 1
(the "Rule") under the 1940 Act:
(i) 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;
(ii) 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;
(iii) Separate ledger accounts required by subsection (b)(2)(ii) and
(iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the
Rule.
(b) Performance of Daily Accounting Services. In addition to the
maintenance of the books and records specified above, BISYS shall
perform the following accounting services daily for each Fund:
(i) Calculate the net asset value per share utilizing prices
obtained from the sources described in subsection 3(b)(ii)
below;
(ii) 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 ;
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(iii) Verify and reconcile with the Funds' custodian all daily
trade activity;
(iv) 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;
(v) 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;
(vi) Report to the Company the daily market pricing of securities
in any money market Funds, with the comparison to the
amortized cost basis;
(vii) Determine unrealized appreciation and depreciation on
securities held in variable net asset value Funds;
(viii) Amortize premiums and accrete discounts on securities
purchased at a price other than face value, if requested by
the Company;
(ix) Update fund accounting system to reflect rate changes, as
received from a Fund's investment adviser, on variable
interest rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to the budget prepared
by BISYS;
(xii) Determine the outstanding receivables and payables for all
(1) security trades, (2) Fund share transactions and (3)
income and expense accounts;
(xiii) Provide accounting reports in connection with the Company's
regular annual audit and other audits and examinations by
regulatory agencies; and
(xiv) Provide such periodic reports as the parties shall agree
upon, as set forth in a separate schedule.
(c) Special Reports and Services.
(i) BISYS may provide additional special reports upon the request
of the Company or a Fund's investment adviser, which may
result in an additional charge, the amount of which shall be
agreed upon between the parties.
(ii) BISYS may provide such other similar services with respect to
a Fund as may be reasonably requested by the Company, which
may
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result in an additional charge, the amount of which shall be
agreed upon between the parties.
(d) Additional Accounting Services. BISYS shall also perform the
following additional accounting services for each Fund, without
additional compensation:
(i) 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:
A) Unaudited Statement of Assets and Liabilities,
B) Unaudited Statement of Operations,
C) Unaudited Statement of Changes in Net Assets, and
D) Unaudited Condensed Financial Information;
(ii) Provide accounting information for the following:
A) Federal and state income tax returns and federal excise
tax returns;
B) The Company's semi-annual reports with SEC on Form N-SAR
and N-CSR;
C) The Company's annual, semi-annual and quarterly (if any)
shareholder reports;
D) Registration statements on Form N-1A and other filings
relating to the registration of shares;
E) The Administrator's monitoring of the Company's status
as a regulated investment Company under Subchapter M of
the Internal Revenue Code, as amended;
F) Annual audit by the Company's auditors; and
G) Examinations performed by the SEC.
4. Allocation of Charges and Expenses
(a) BISYS. 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 Directors
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.
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(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 Directors who are not affiliated persons of BISYS or any
affiliated corporation of BISYS (fees for other "interested
Directors" 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.
5. Compensation
(a) The Company shall pay BISYS compensation for the services to be
provided by BISYS under this Agreement in accordance with, and in
the manner set forth in Schedule A attached hereto.
(b) If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, BISYS's
compensation for that part of the month in which this Agreement is
in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. Payment of BISYS's
compensation for the preceding month shall be made promptly.
(c) Survival of Compensation Rights. All rights of compensation under
this Agreement for services performed as of the termination date
shall survive the termination of this Agreement
6. Reimbursement of Expenses and Miscellaneous Service Fees
(a) in addition to paying BISYS the fees provided in Section 5 and
Schedule A, the Company agrees to reimburse BISYS for its reasonable
out-of-pocket expenses in providing services hereunder, including
without limitation the following:
(i) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Company;
(ii) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Company, the Company's investment
adviser or custodian, dealers or others as required for BISYS
to perform the services to be provided hereunder;
(iii) The cost of microfilm or microfiche of records or other
materials;
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(iv) All systems-related expenses associated with the provision of
special reports and services pursuant to Section 3(c) herein;
(v) Any expenses BISYS shall incur at the written direction of an
officer of the Company (other than an employee of BISYS)
thereunto duly authorized; and
(vi) Any additional expenses reasonably incurred by BISYS in the
performance of its duties and obligations under this Agreement
(but not including any amounts related to pricing information,
other than as provided in paragraph 6(b)(iii), below).
(b) In addition, BISYS shall be entitled to receive the following
amounts:
(i) Systems development fees billed at an hourly rate of $150 per
hour, as approved by the Company;
(ii) Ad hoc reporting fees billed at an agreed upon rate; and
(iii) Charges for the pricing information obtained from third party
vendors for use in pricing the securities of each Fund's
portfolio pursuant to Section 3(b)(ii) of this Agreement,
which shall not exceed the amounts that would be incurred if
the Fund were to obtain the information directly from the
relevant vendor or vendors.
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 (or at regular intervals, as mutually agreed),
BISYS shall provide supplemental information 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' 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
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business continuity plan and use all commercially reasonable efforts to minimize
any service interruption.
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. Activities of BISYS
The services of BISYS rendered to the Company 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 Directors, 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.
9. Duration of this Agreement
This Agreement shall continue in effect for three (3) years until
September 30, 2006 (the "Initial Term"). Thereafter, unless otherwise terminated
as provided herein, this Agreement shall be renewed automatically for successive
one year periods ("Rollover Periods"). This Agreement may be terminated only (i)
by provision of a notice of non-renewal in the manner set forth below, (ii) by
mutual agreement of the parties or (iii) for "cause," as defined below, upon the
provision of sixty (60) days advance written notice by the party alleging cause.
Written notice of non-renewal must be provided at least one hundred eighty (180)
days prior to the end of the Initial Term or any Rollover Period, as the case
may be.
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 administrative 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 is 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) as provided in
Schedule C (Service Standards). BISYS shall not terminate this Agreement
pursuant to clause (a) above based solely upon the
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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 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
disbursements provided by Sections 5 and 6 hereof, the amount of all of BISYS'
cash disbursements in connection with BISYS' activities in effecting such
termination, including without limitation, the delivery to the Company and/or
its distributor or investment adviser and/or other parties of the Company's
property, records, instruments and documents.
If, for any reason other than (i) non-renewal, (ii) mutual agreement of
the parties, (iii) "cause" for termination of BISYS hereunder, or (iv) as
provided in Schedule C, BISYS' services are terminated hereunder, BISYS is
replaced as 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-Administrator appointed as provided in Section 10 hereof) (any such event
being a "Termination Event"), 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 for its services hereunder during (x) the next six (6) months, if
the Termination Event occurs during the first year of this Agreement, (y) the
next five (5) months, if the Termination Event occurs during the second year of
this Agreement, or (z) the next four (4) months, if the Termination Event occurs
during the third year of this Agreement (or if less than four (4), the number of
months remaining in the 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 net asset values of the Company
and fees payable to BISYS monthly during the twelve (12) months prior to the
Termination Date.
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 prior to the expiration of the then-current 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 administration services consistent with this
Agreement, including the level of 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.
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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.
10. Assignment
This Agreement shall not be assignable by either party without the written
consent of the other party; provided, however, that BISYS may, at its expense
and with the advance approval of the Board, subcontract with any entity or
person concerning the provision of administration services contemplated
hereunder (a "Sub-Administrator"). BISYS shall not, however, be relieved of any
of its obligations under this Agreement by the appointment of any
Sub-Administrator or other subcontractor and BISYS shall be responsible, to the
extent provided in Section 10 hereof, for all acts of any Sub-Administrator as
if such acts were its own. This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective successors and
permitted assigns.
11. 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 and suits, and from and against any and all 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' 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, fund accountant, transfer agent 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 harmless from and
against any and all Losses resulting directly and proximately from BISYS'
willful misfeasance, bad faith or negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties hereunder.
If a BISYS employee serves as the AML Compliance Officer, as long as such
AML Compliance Officer acts in good faith and in a manner reasonably believed to
be in the best interests of the Company (and so long as he or she 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 AML Compliance Officer and
BISYS and hold them harmless from any loss, liability, expenses (including
reasonable attorneys fees) and damages incurred by
14
them arising out of or resulting from the service of such AML Compliance Officer
in his or her capacity as an officer of the Company.
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, provided that any such advanced expenses shall be reimbursed by the
indemnified party if an ultimate determination is made that indemnification is
not merited under the circumstances. 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 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 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 unreasonably withheld or delayed.
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, whose
approval shall not be unreasonably withheld. 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. 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.
12. Certain Records
BISYS shall maintain customary records in connection with its duties as
specified in this Agreement. Any records required to be maintained and preserved
pursuant to Rules 31a-1 and 31a-2 under the 1940 Act which are prepared or
maintained by BISYS on behalf of the Company shall be prepared and maintained at
the expense of BISYS, but shall be the property of the Company and will be
surrendered promptly to the Company on request, and made available for
inspection by the Company or by the Commission at reasonable times.
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' 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
15
BISYS for six years from the year of creation, in which case BISYS shall provide
a list of what is retained. 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.
In case of any request or demand for the inspection of such records by
another party, BISYS shall notify the Company and follow the Company's
instructions as to permitting or refusing such inspection; provided that BISYS
may exhibit such records in any case where (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 the Company. 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.
13. 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 promptly 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 promptly 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.
14. Legal Advice; Reliance on Prospectus and Instructions
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' 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'
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' willful misfeasance,
bad faith, negligence or reckless disregard of BISYS' responsibilities and
duties.
As to the services to be provided hereunder, BISYS may rely conclusively
upon the terms of the Prospectuses and Statement of Additional Information of
the Company relating to the relevant Funds to the extent that such services are
described therein, as
16
well as the minutes of Board meetings (if applicable) and other records of the
Company unless BISYS receives written instructions to the contrary in a timely
manner from the Company.
Also, BISYS shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. The Administrator 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.
15. Notice
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 First Focus Funds, Inc.; at 0000
Xxxxx Xxxxxx, Xxxxx, XX 00000; Attn: ____________, ; and if to BISYS, at 0000
Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000; 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.
16. Governing Law and Matters Relating to the Company as a Nebraska
corporation
This Agreement 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 Directors, shareholders, nominees, officers, agents or
employees of the Company personally, but shall bind only the Company property.
The execution and delivery of this Agreement have been authorized by the
Directors, and this Agreement has been signed and delivered by an authorized
officer of the Company, acting as such.
17. Representations and Warranties
The Company represents and warrants to BISYS that 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 rights and remedies of creditors and secured parties.
BISYS represents and warrants that: (a) the various procedures and systems
which BISYS 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' records, data, equipment, facilities and
other property used in the performance of its obligations hereunder 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 (b) this
Agreement has been duly authorized by BISYS and, when executed and delivered by
BISYS, will constitute a legal, valid and binding
17
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.
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. 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. 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.
19. 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.
(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. The parties hereto may amend
such procedures as may be 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
18
of BISYS) does not conflict with or violate any requirements of the
Company's Articles of Incorporation, By-Laws or then-current
prospectuses, or any rule, regulation or requirement of any
regulatory body.
(e) The terms "interested person" and "affiliated person," when used in
this Agreement, shall have the respective meanings specified in the
1940 Act and the rules and regulations thereunder, subject to such
exemptions as may be granted by the Commission.
* * * * *
19
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
FIRST FOCUS FUNDS, INC
By: /s/Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
Title: President
BISYS FUND SERVICES OHIO, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
20
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
BETWEEN
FIRST FOCUS FUNDS, INC
AND BISYS FUND SERVICES OHIO, INC
FEES
In consideration of the services rendered and the expenses incurred by
BISYS pursuant to this Agreement, and subject to the annual minimum fees set
forth below, BISYS shall be paid from each Fund on the first business day of
each month, or at such other time(s) as the parties hereto shall agree, fees
computed at the annual rate set forth below, based on average daily net assets:
Assets Fees
------ ----
First $600 Million 15 basis points (0.15%)
$600-$800 Million 13 basis points (0.13%)
Over $800 Million 11 basis points (0.11%)
The foregoing is subject to a minimum Fund complex fee, which will be
determined by multiplying the number of Funds times $30,000.
In addition to the foregoing, BISYS will charge an annual fee of $15,000
for providing an employee to serve as the Company's AML Compliance Officer.
BISYS will provide up to $50,000 during the initial transition period to
cover any web-site development or printing and design of fund related marketing
materials.
21
SCHEDULE B
TO THE ADMINISTRATION AGREEMENT
BETWEEN
FIRST FOCUS FUNDS, INC
AND
BISYS FUND SERVICES OHIO, INC
AML COMPLIANCE OFFICER SERVICES
The AML Compliance Officer shall have the following responsibilities:
1. The duties listed in the Company's AML Program.
2. On at least an annual basis and more frequently if necessary or desirable,
provide a report to the Board that assesses the Company's compliance with
Applicable AML Laws.
3. At the Company's expense, attend, no less frequently than annually, training
or educational sessions designed to address prevention and detection of money
laundering and reporting responsibilities relevant to the Company. Such training
may be provided by BISYS or an affiliate of BISYS.
22
SCHEDULE C
TO THE ADMINISTRATION AGREEMENT
BETWEEN
FIRST FOCUS FUNDS, INC
AND BISYS FUND SERVICES OHIO, INC.
SERVICE STANDARDS
1. The service standards set forth in the table below are designated as Category
A and Category B, and are treated separately.
2. For purposes of the service standards, a failure to meet the standard occurs
only when there is a failure to perform the relevant function under the terms of
the Services Agreement governing BISYS' services, for which BISYS would not be
excused and for which BISYS would be responsible under the Agreement (including,
without limitation, under Articles 7 and 14).
3. If the required Performance Measurement associated with a Function is
measured in a percentage that is applied monthly, it will be determined by
dividing the total number of times that Function was satisfactorily performed
during the month by the total number of times that Function occurred during the
month.
EXAMPLE: With respect to the calculation of NAVs, if there were 22 business days
and 9 non-money market funds in a particular month ("Month 1"), there should be
198 NAV calculations in Month 1. If there are 2 inaccurate NAV calculations in
Month 1, the Performance Level for the month is 98.9% (196/198).
4. An inaccurate calculation of an NAV is defined as when the correct
calculation is $.01 per share or more difference from the originally stated NAV.
Such inaccuracy is considered one event and will only be counted on the day it
first occurred, unless the source of the inaccuracy changes during the relevant
period. An NAV error occurs at the Fund level and not the class level.
5. As concerns that timely transmission of NAVs to NASDAQ, it is anticipated
that the Trust would not wish that BISYS deliver an NAV to NASDAQ if the
accuracy of the NAV is in question at the time it is necessary to transmit the
NAV to NASDAQ. If BISYS has reason to believe that an NAV is or may be
incorrect, it may either "withhold" the NAV from NASDAQ or "withdraw" an NAV
previously submitted, in consultation with the Funds' pricing committee or the
appropriate representative of the Funds. In such event, BISYS shall not be
deemed to have failed to report to NASDAQ by the applicable cut-off time.
23
CATEGORY A
For Category A Standards, there will be certain financial penalties assessed as
follows. The first failure to meet a Category A Performance Standard (a
"Deficiency") shall not result in any penalty, and there shall not be a penalty
for any Deficiency that occurs when there had been no Deficiency during the
immediately preceding 12-month period ("Annual Period"). For any subsequent
Deficiency involving a Category A Standard within a rolling Annual Period
following any previous Deficiency, the monthly service fees payable to BISYS for
the month in which the latest Deficiency occurs shall be reduced (or credited
back to the Trust, if previously paid) as follows:
Second Deficiency -- 10% of the BISYS fees for the relevant month
Third Deficiency -- 15% of the BISYS fees for the relevant month
Fourth Deficiency -- 25% of the BISYS fees for the relevant month
Fifth and each additional Deficiency -- 35% of the BISYS fees for the relevant
month
As per paragraph 3 above, if the required Performance Measurement associated
with a Function is measured in a percentage that is applied monthly, no
Deficiency will have occurred unless the monthly Performance Standard is not
met. In the event that more than one such Deficiency occurs with respect to the
same month, such month's fees shall be reduced by the higher of the applicable
percentages, but not both.
EXAMPLE: If in the Service Standards commence in January of Year 1, and there is
a deficiency for February of Year 1, January of Year 2, and March of Year 2, the
monthly services fees payable for January of Year 2 and for March of Year 2 are
each to be reduced by 10%, as each constituted the second Deficiency within the
most recent Annual Period. No other fees would be reduced unless additional
Deficiencies.
CATEGORY B
For Category B Standards, In the event that BISYS fails to perform the same
Function according to the required Performance Measurement during any six (6)
consecutive months, such failure shall be deemed to be one "Deficiency" for
purposes of the termination provision below but are not subject to the financial
penalties for Category A Deficiencies.
TERMINATION PROVISION FOR MULTIPLE DEFICIENCIES
In the event that six (6) or more "Deficiencies," as defined above with respect
to any combination of Category A and Category B Service Standards occurs during
any Annual Period, the Trust shall have the right, exercisable within the sixty
(60) days following the reporting of the sixth Deficiency, to terminate this
Agreement upon sixty (60) days' notice to BISYS.
24
FUNCTIONS PERFORMANCE STANDARD CATEGORY
--------- -------------------- --------
FUND ADMINISTRATION
Monthly Compliance Reports Completed review 10 business B
Sec Compliance Check days after receipt of source reports
Adviser Compliance
REPORTS
IRS Compliance Check
Form N-SAR's 60 days after fiscal year end A
Preparation of identified items
Form 24f-2's 90 days after fiscal year end A
Review
Within the timeframe required by
Review 485 Prospectus Filings applicable regulation. B
FINANCIAL SERVICES
Verification of Performance Info Verified performance info to B
Lipper info as published in The
Wall Street Journal for applicable fds.
Expense Budgeting and Analysis Analyzed and adjusted expense B
accruals, as needed, on a monthly basis.
BISYS will supply analysis by the 15th
calendar day of the following month.
Payment of Invoices All invoices paid accurately within 3 wks B
of receipt of invoice by BISYS.
Payment of Asset-Based Fees Recalculated and prepared payment B
authorizations for all asset-based fees on
a monthly basis.
Annual and Semi-Annual Reports Completed and mailed to shareholders A
by the 60th day following the report date
Capital gain calculations and subsequent Capital gain calculations and subsequent
distributions distributions must meet IRS A
25
FUNCTIONS PERFORMANCE STANDARD CATEGORY
--------- -------------------- --------
distribution requirements.
FUND ACCOUNTING
NAV's accurately completed and reviewed 99% accurately completed and reviewed A
NAV's accurately reported to NASDAQ 99% accurately reported A
NAV's reported by NASDAQ Deadline 99% meet deadline A
NAV's interfaced with T/A Target time is 6:15 p.m. A
Faxed A.M. cash sheets to portfolio Target time is 11:00 am A
26
SCHEDULE D
ADMINISTRATION AGREEMENT
BETWEEN
FIRST FOCUS FUNDS, INC.
AND BISYS FUND SERVICES OHIO, INC.
SUPPLEMENTAL SERVICES
To assist the Company in connection with its obligations under Sections
302 and 906 of the Sarbanes Oxley Act of 2002 and Rule 30a-2 under the 1940 Act
(collectively, with such other related regulatory provisions applicable to the
Company, "Xxxxxxxx-Xxxxx"), BISYS will internally establish and maintain
controls and procedures ("BISYS internal controls") designed to ensure that
information recorded, processed, summarized, or reported by BISYS and its
affiliates on behalf of the Company and included in financial information
certified by Company officers ("Certifying Officers") on Form N-CSR ("Reports")
is (a) recorded, processed, summarized, and reported by BISYS within the time
periods specified in the Commission's rules and forms and the corresponding
disclosure controls and procedures of the Funds ("Fund DCPs"), and (b)
accumulated and communicated to the relevant Certifying Officers consistent with
the Fund DCPs.
If requested by Certifying Officers with respect to a fiscal period during
which BISYS serves or served as financial administrator, BISYS will provide a
sub-certification consistent with the requirements of Xxxxxxxx-Xxxxx pertaining
to BISYS' services. In rendering such sub-certifications concerning Fund
Reports, BISYS may (a) limit its representations to information prepared,
processed and reported by BISYS; (b) rely upon and assume the accuracy of the
information provided by officers and other authorized agents of the Funds,
including any other service providers to the Funds (other than BISYS and its
affiliates) and compliance by such officers and agents with the Fund DCPs,
including but not limited to, each Fund's investment adviser(s) and custodian;
and (c) assume that the Company has selected the appropriate accounting policies
for the Funds.
The Company shall assist and cooperate with BISYS (and shall cause its
officers, investment advisers and other service providers to assist and
cooperate with BISYS) to facilitate the delivery of information requested by
BISYS in connection with the preparation of the Fund's Form N-CSR, including
Fund financial statements, so that BISYS may submit a draft Report to the Funds'
Disclosure Controls and Procedures Committee ("Fund DCP Committee") at least ten
(10) days prior to the date the relevant Report is to be filed. The relevant
Certifying Officers and the Chief Legal Officer of the Fund shall be deemed to
constitute the Fund DCP Committee in cases in which no other Fund DCP Committee
has been designated or is operative. In connection with its review and
evaluations, the Fund DCP Committee shall establish a schedule to ensure that
all required disclosures in Form N-CSR and in the financial statements for the
Fund are
27
identified and prepared in a timeframe sufficient to allow review by the Fund
DCP Committee. At the request of the Company or its Certifying Officers, BISYS
shall provide reasonable administrative assistance to the Company in connection
with obtaining service provider sub-certifications and SAS-70 reports on
internal controls, and in preparing summaries of issues raised in such
documents.
The Company recognizes its obligation to comply with Xxxxxxxx-Xxxxx.
Without limitation of the foregoing, the Company shall maintain responsibility
for, and shall support and facilitate the role of each Certifying Officer and
the Fund DCP Committee in, designing and maintaining the Fund DCPs in accordance
with applicable laws, including (a) ensuring that the Fund DCP Committee and/or
Certifying Officers obtain and review sub-certifications and reports on internal
controls from the Fund's investment adviser(s) and other service providers, if
any, sufficiently in advance of the date upon which the relevant financial
statements must be finalized by BISYS (in order to print, distribute and/or file
the same), and (b) evaluating the effectiveness of the design and operation of
the Fund DCP, with (at the Company's election) the participation of the
Certifying Officers, within the requisite timeframe prior to the filing of each
Report.
The Company agrees and acknowledges that BISYS Policies are applicable to
the service of any BISYS employee as a Certifying Officer or as Chief Legal
Officer of the Company (an "Employee/Executive Officer"), and that to the extent
this service is rendered by BISYS it is limited, in each case, to providing an
Employee/Executive Officer 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. BISYS shall select, and may
replace, the specific employee that it makes available to serve in the
designated capacity as an Employee/Executive Officer, in BISYS' reasonable
discretion, taking into account such person's responsibilities concerning, and
familiarity with, the Company's operations.
BISYS' provision of each Employee/Executive Officer is also subject to,
and conditioned upon, the following:
(a) The Fund DCPs shall contain (or the Company and BISYS shall
otherwise establish) mutually agreeable procedures governing the
certification process, and the parties shall comply with such
procedures in all material respects. Among other things, the
procedures shall provide as follows:
(i) The Company shall establish and maintain a Fund DCP Committee
comprised of persons including (at a minimum) the Company's
Principal Executive Officer, Chief Financial Officer and Chief
Legal Officer and such other individuals as may be reasonably
necessary or appropriate for the Fund DCP Committee to ensure
the cooperation of, and to oversee, each of the Company's
agents that records, processes, summarizes, or reports
information contained in Fund Reports (or other information
from which such information is derived), including the
investment adviser and custodian (each, a "Service Provider").
In connection therewith,
28
the Fund DCP Committee shall assist the Certifying Officers by
requiring that sub-certifications acceptable to the Certifying
Officers be provided by Service Providers.
(ii) The Fund DCP Committee shall (i) meet within 10 days before
the filing date of each Report to review the accuracy and
completeness of the relevant Report and (ii) record its
considerations and conclusions in a written memorandum
sufficient to support conclusions pertaining to Fund DCPs as
required by Item 9 of Form N-CSR. In conducting its review and
evaluations, the Fund DCP Committee shall:
A) 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;
B) 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 a
Report, the DCP Committee shall request a written
representation 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
the bring-down certification;
C) consider whether there are any significant deficiencies
in the design or operation of the Fund 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 Fund's Certifying Officers, the Fund's audit
committee and its auditors;
D) consider whether, to the knowledge of each member of the
Fund 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 (collectively, the "Executive Officers"),
so that the Executive Officers may inform the Fund's
audit committee and its auditors; and
E) determine whether there were significant changes in
internal controls or in other factors that could
significantly affect internal controls subsequent to the
date of the most recent evaluation of internal controls,
including any corrective actions with regard to
significant deficiencies
29
and material weaknesses, and if there were any, take all
steps necessary so that such changes and corrective
actions are reflected in the Report.
(f) The Company's governing documents (such as its Charter and By-Laws)
and/or resolutions of its Board shall contain mandatory
indemnification provisions that are applicable to each
Employee/Executive Officer, and which are 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 as an Employee/Executive
Officer 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 0000 Xxx.
(g) The Company shall provide coverage to each Employee/Executive
Officer under its directors and officers liability policy that is
appropriate to the Employee/Executive Officer's role and title, and
that is consistent with coverage applicable to other executive
management-level officers;
(h) An Employee/Executive Officer that serves as a Certifying Officer
shall have the full discretion to decline to certify a particular
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, 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 Xxxxxxxx-Xxxxx 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.
(i) Each Employee/Executive Officer 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 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 Xxxxxxxx-Xxxxx and other applicable laws.
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