Exhibit (h)(1)
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FUND ADMINISTRATION AND ACCOUNTING AGREEMENT
AGREEMENT made as of September 18, 2007, by and between each entity
listed on Exhibit A hereto (each a "Fund", collectively the "Funds"), and The
Bank of New York, a New York banking organization ("BNY").
W I T N E S S E T H :
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WHEREAS, each Fund is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, each Fund desires to retain BNY to provide for the portfolios
identified on Exhibit A hereto (each, a "Series") the services described herein,
and BNY is willing to provide such services, all as more fully set forth below;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereby agree as follows:
1. Appointment.
Each Fund hereby appoints BNY as its agent for the term of this
Agreement to perform the services described herein. BNY hereby accepts such
appointment and agrees to perform the duties hereinafter set forth.
2. Representations and Warranties.
(a) Each Fund hereby represents and warrants to BNY, which
representations and warranties shall be deemed to be continuing, that:
(i) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its
business as now conducted, to enter into this Agreement and to
perform its obligations hereunder;
(ii) This Agreement has been duly authorized, executed and
delivered by the Fund in accordance with all requisite action and
constitutes a valid and legally binding obligation of the Fund,
enforceable in accordance with its terms;
(iii) It is conducting its business in compliance with all
applicable laws and regulations, both state and federal, and has
obtained all regulatory licenses, approvals and consents necessary
to carry on its business as now conducted; there is no statute,
regulation, rule, order or judgment binding on it and no provision
of its charter or by-laws, nor of any mortgage, indenture, credit
agreement or other contract binding on it or affecting its
property which would prohibit its execution or performance of this
Agreement;
(iv) To the extent the performance of any of the valuation
services or other computations described in Schedule II attached
hereto by BNY in accordance with the then effective Prospectus (as
hereinafter defined) for the Fund or pricing policies adopted by
the Board would violate any applicable laws or regulations, the
Fund shall immediately so notify BNY in writing and thereafter
shall either furnish BNY with the appropriate values of
securities, net asset value or other computation, as the case may
be, or, subject to the prior approval of BNY, instruct BNY in
writing to value securities and/or compute net asset value or
other computations in a manner the Fund specifies in writing, and
either the furnishing of such values or the giving of such
instructions shall constitute a representation by the Fund that
the same is consistent with all applicable laws and regulations
and with its Prospectus; and
(v) It has implemented, and is acting in accordance with,
procedures reasonably designed to ensure that it will disseminate
to all market participants, other than Authorized Participants (as
defined in its Prospectus and Statement of Additional
Information), each calculation of net asset value provided by BNY
hereunder to Authorized Participants.
(b) BNY hereby represents and warrants to the Fund, which
representations and warranties shall be deemed to be continuing, that:
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(i) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on
its business as now conducted, to enter into this Agreement
and to perform its obligations hereunder.
(ii) This Agreement has been duly authorized, executed and
delivered by BNY in accordance with all requisite action of
its governing body and constitutes a valid and legally binding
obligation of BNY enforceable in accordance with its terms.
(iii) To the best of BNY's knowledge, information and belief,
it is conducting its business in material compliance with all
applicable laws and regulations insofar as such laws and
regulations apply to the services being provided by BNY under
this Agreement and has obtained all regulatory licenses,
approvals and consents necessary for its execution and
performance of this Agreement; there is no statute,
regulation, rule, order or judgment binding on it and no
provision of its organizational and governing documents, nor
of any mortgage, indenture, credit agreement or other contract
binding on it or affecting its property which would prevent
its execution or performance of this Agreement.
(iv) It will maintain personnel and infrastructure appropriate
to enable it to perform its obligations hereunder.
3. Delivery of Documents.
(a) Each Fund will promptly deliver to BNY true and correct copies
of each of the following documents as currently in effect and will promptly
deliver to it all future amendments and supplements thereto, if any:
(i) The Fund's articles of incorporation or other
organizational document and all amendments thereto (the "Charter");
(ii) The Fund's bylaws (the "Bylaws");
(iii) Resolutions of the Fund's board of directors or other
governing
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body (the "Board") authorizing the execution, delivery and performance of this
Agreement by the Fund;
(iv) The Fund's registration statement most recently filed
with the Securities and Exchange Commission (the "SEC") relating to the shares
of the Fund (the "Registration Statement");
(v) The Fund's Notification of Registration under the 1940 Act
on Form N-8A filed with the SEC; and
(vi) The Fund's Prospectus and Statement of Additional
Information pertaining to each Series (collectively, the "Prospectus").
(b) Each copy of the Charter shall be certified by the Secretary
of State (or other appropriate official) of the state of organization, and if
the Charter is required by law also to be filed with a county or other officer
or official body, a certificate of such filing shall be filed with a certified
copy submitted to BNY. Each copy of the Bylaws, Registration Statement and
Prospectus, and all amendments thereto, and copies of Board resolutions, shall
be certified by the Secretary or an Assistant Secretary of the appropriate Fund.
(c) It shall be the sole responsibility of each Fund to deliver to
BNY its currently effective Prospectus and BNY shall not be deemed to have
notice of any information contained in such Prospectus until it is actually
received by BNY.
4. Duties and Obligations of BNY.
(a) Subject to the direction and control of each Fund's Board and
the provisions of this Agreement, BNY shall provide to each Fund (i) the
administrative services set forth on Schedule I attached hereto and (ii) the
valuation, accounting and computation services listed on Schedule II attached
hereto.
(b) In performing hereunder, BNY shall provide, at its expense,
office space, facilities, equipment and personnel necessary for the performance
of its duties hereunder.
(c) BNY shall not provide any services under this Agreement
relating to the management, investment advisory or sub-advisory functions of any
Fund, distribution of shares of any Fund, maintenance of any Fund's financial
records (except to the extent such financial
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records are generated by BNY in the course of the performance of its duties
hereunder, in which case BNY will preserve and retain such records on behalf of
the Fund in accordance with BNY's record retention policies and procedures) or
other services normally performed by the Funds' respective counsel or
independent auditors.
(d) Upon receipt of a Fund's prior written consent (which shall
not be unreasonably withheld), BNY may delegate any of its duties and
obligations hereunder to any delegee or agent whenever and on such terms and
conditions as it deems necessary or appropriate. Notwithstanding the foregoing,
no Fund consent shall be required for any such delegation to any other
subsidiary of The Bank of New York Company, Inc.. Notwithstanding any such
delegation, and irrespective of whether or not the consent of the Funds is
required (or has been obtained) for such delegation, BNY shall be responsible
for the reasonable selection of any such delegee or agent, and shall not be
discharged of its duties to provide the delegated services. BNY shall not be
liable to any Fund for any loss or damage arising out of, or in connection with,
the actions or omissions to act of any delegee or agent utilized hereunder so
long as BNY acts in good faith and without negligence or wilful misconduct in
the selection of such delegee or agent.
(e) Each Fund shall cause its officers, advisors, sponsor,
distributor, legal counsel, independent accountants, current administrator (if
any), transfer agent, and any other service provider to cooperate with BNY and
to provide BNY, upon request, with such information, documents and advice
relating to such Fund as is within the possession or knowledge of such persons,
and which in the opinion of BNY, is necessary in order to enable it to perform
its duties hereunder. BNY shall not be responsible for, under any duty to
inquire into, or be deemed to make any assurances with respect to the accuracy,
validity or propriety of any information, documents or advice provided to BNY by
any of the aforementioned persons. BNY shall not be liable for any loss, damage
or expense resulting from or arising out of the failure of the Fund to cause any
information, documents or advice to be provided to BNY as provided herein and
shall be held harmless by each Fund when acting in good faith and in reliance
upon such information, documents or advice relating to such Fund. All fees or
costs charged by such persons shall be borne by the appropriate Fund. In the
event that any services performed by BNY hereunder rely, in whole or in part,
upon information obtained from a third party service utilized
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or subscribed to by BNY which BNY in good faith and in its reasonable judgment
deems reliable, BNY shall not have any responsibility or liability for, under
any duty to inquire into, or deemed to make any assurances with respect to, the
accuracy or completeness of such information.
(f) Nothing in this Agreement shall limit or restrict BNY, any
affiliate of BNY or any officer or employee thereof from acting for or with any
third parties, and providing services similar or identical to same or all of the
services provided hereunder.
(g) Subject to the provisions of this Agreement, BNY shall compute
the net asset value per share of the Fund and shall value the securities held by
the Fund at such times and dates and in the manner specified in the then
currently effective Prospectus of the Fund, except that notwithstanding any
language in the Prospectus, in no event shall BNY be required to determine, or
have any obligations with respect to, whether a market price represents any fair
or true value, nor to adjust any price to reflect any events or announcements,
including, without limitation, those with respect to the issuer thereof, it
being agreed that all such determinations and considerations shall be solely the
responsibility of the Fund. BNY shall provide a report of such net asset value
to the Fund and Authorized Participants at the respective times set forth in
Schedule II, as amended from time to time. To the extent valuation of securities
or computation of a net asset value as specified in the Fund's then currently
effective Prospectus is at any time inconsistent with any applicable laws or
regulations, the Fund shall immediately so notify BNY in writing and thereafter
shall either furnish BNY at all appropriate times with the values of such
securities and the Fund's net asset value, or subject to the prior approval of
BNY, instruct BNY in writing to value securities and compute net asset value in
a manner which the Fund then represents in writing to be consistent with all
applicable laws and regulations. The Fund may also from time to time, subject to
the prior approval of BNY, instruct BNY in writing to compute the value of the
securities or net asset value in a manner other than as specified in this
paragraph. By giving such instruction, the Fund shall be deemed to have
represented that such instruction is consistent with all applicable laws and
regulations and the then currently effective Prospectus of the Fund. The Fund
shall have sole responsibility for determining the method of valuation of
securities and the method of computing net asset value.
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(h) Each Fund shall furnish BNY with any and all instructions,
explanations, information, specifications and documentation deemed necessary by
BNY in the performance of its duties hereunder, including, without limitation,
the amounts or written formula for calculating the amounts and times of accrual
of Fund liabilities and expenses. BNY shall not be required to include as Fund
liabilities and expenses, nor as a reduction of net asset value, any accrual for
any federal, state, or foreign income taxes unless the Fund shall have specified
to BNY the precise amount of the same to be included in liabilities and expenses
or used to reduce net asset value. Each Fund shall also furnish BNY with bid,
offer, or market values of Securities if BNY notifies such Fund that same are
not available to BNY from a security pricing or similar service utilized, or
subscribed to, by BNY which BNY in its judgment deems reliable at the time such
information is required for calculations hereunder. At any time and from time to
time, the Fund also may furnish BNY with bid, offer, or market values of
Securities and instruct BNY to use such information in its calculations
hereunder. BNY shall at no time be required or obligated to commence or maintain
any utilization of, or subscriptions to, any particular securities pricing or
similar service.
(i) BNY may apply to an officer or duly authorized agent of any
Fund for written instructions with respect to any matter arising in connection
with BNY's performance hereunder for such Fund, and BNY shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
such instructions. Such application for instructions may, at the option of BNY,
set forth in writing any action proposed to be taken or omitted to be taken by
BNY with respect to its duties or obligations under this Agreement and the date
on and/or after which such action shall be taken, and BNY shall not be liable
for any action taken or omitted to be taken in accordance with a proposal
included in any such application on or after the date specified therein unless,
prior to taking or omitting to take any such action, BNY has received written
instructions in response to such application specifying the action to be taken
or omitted.
(j) BNY may consult with counsel to the appropriate Fund at such
Fund's expense, or its own counsel at its own expense, provided that such
counsel has been approved by the Fund, where notice from BNY as to its selected
counsel which is not objected to in writing by the Fund within one business day
shall constitute the Fund's approval, and BNY shall be fully
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protected with respect to anything done or omitted by it in good faith in
accordance with the advice or opinion of such counsel.
(k) Notwithstanding any other provision contained in this
Agreement or Schedule I or II attached hereto, BNY shall have no duty or
obligation to with respect to, including, without limitation, any duty or
obligation to determine, or advise or notify any Fund of: (i) the taxable nature
of any distribution or amount received or deemed received by, or payable to, a
Fund, (ii) the taxable nature or effect on a Fund or its shareholders of any
corporate actions, class actions, tax reclaims, tax refunds or similar events,
(iii) the taxable nature or taxable amount of any distribution or dividend paid,
payable or deemed paid, by a Fund to its shareholders; or (iv) the effect under
any federal, state, or foreign income tax laws of a Fund making or not making
any distribution or dividend payment, or any election with respect thereto.
(l) With respect to the services contemplated hereunder, BNY shall
have no duties or responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agreement and Schedules I
and II attached hereto.
(m) BNY, in performing the services required of it under the terms
of this Agreement, shall be entitled to rely fully on the accuracy and validity
of any and all instructions, explanations, information, specifications and
documentation furnished to it by a Fund and shall have no duty or obligation to
review the accuracy, validity or propriety of such instructions, explanations,
information, specifications or documentation, including, without limitation,
evaluations of Securities; the amounts or formula for calculating the amounts
and times of accrual of Series' liabilities and expenses; the amounts receivable
and the amounts payable on the sale or purchase of Securities; and amounts
receivable or amounts payable for the sale or redemption of Fund shares effected
by or on behalf of a Fund. In the event BNY's computations hereunder rely, in
whole or in part, upon information, including, without limitation, bid, offer or
market values of Securities or other assets, or accruals of interest or earnings
thereon, from a pricing or similar service utilized, or subscribed to, by BNY
which BNY in its judgment deems reliable, and which is consistent with the
pricing policies as adopted by the Board and provided to BNY, BNY shall not be
responsible for, under any duty to inquire into, or deemed to make any
assurances with respect to, the accuracy or completeness of such information.
Without limiting
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the generality of the foregoing, BNY shall not be required to inquire into any
valuation of securities or other assets by a Fund or any third party described
in this (m) even though BNY in performing services similar to the services
provided pursuant to this Agreement for others may receive different valuations
of the same or different securities of the same issuers.
(n) BNY, in performing the services required of it under the terms
of this Agreement, shall not be responsible for determining whether any interest
accruable to a Fund is or will be actually paid, but will accrue such interest
until otherwise instructed by such Fund.
(o) BNY shall not be responsible for delays or errors which occur
by reason of circumstances beyond its control in the performance of its duties
under this Agreement, including, without limitation, labor difficulties within
or without BNY, mechanical breakdowns, flood or catastrophe, acts of God,
failures of transportation, interruptions, loss, or malfunctions of utilities,
communications or computer (hardware or software) services. Nor shall BNY be
responsible for delays or failures to supply the information or services
specified in this Agreement where such delays or failures are caused by the
failure of any person(s) other than BNY, its employees or or its affiliates, to
supply any instructions, explanations, information, specifications or
documentation deemed in good faith to be necessary by BNY in the performance of
its duties under this Agreement. BNY will in such instances as promptly as is
reasonable under the circumstances notify the Fund of such failures.
(p) BNY shall keep confidential all books and records relating to
the Funds and its shareholders, except when (i) disclosure is required by law,
(ii) BNY is advised by counsel that it may incur liability for failure to make a
disclosure, (iii) BNY is requested to divulge such information by a court,
governmental agency or entity or by a self-regulatory organization registered
under the Securities Exchange Act of 1934, or (iv) as requested or authorized by
Funds or the Advisor (including pursuant to this Agreement or its policies and
procedures). BNY shall provide the Funds with reasonable advance notice of
disclosure pursuant to items (i) - (iii) of the previous sentence, to the extent
reasonably practicable and permissible by law. BNY shall promptly upon the
Funds' demand, turn over to the Funds and cease to retain the files, records and
documents created and maintained by it pursuant to this Agreement which are no
longer
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needed by it in the performance of its services or in accordance with relevant
law, regulation, or bank policy.
5. Allocation of Expenses.
Except as otherwise provided herein, all costs and expenses arising or
incurred in connection with the performance of this Agreement shall be paid by
the appropriate Fund, including but not limited to, organizational costs and
costs of maintaining corporate existence, taxes, interest, brokerage fees and
commissions, insurance premiums, compensation and expenses of such Fund's
trustees, directors, officers or employees, legal, accounting and audit
expenses, management, advisory, sub-advisory, administration and shareholder
servicing fees, charges of custodians, transfer and dividend disbursing agents,
expenses (including clerical expenses) incident to the issuance, redemption or
repurchase of Fund shares, fees and expenses incident to the registration or
qualification under federal or state securities laws of the Fund or its shares,
costs (including printing and mailing costs) of preparing and distributing
Prospectuses, reports, notices and proxy material to such Fund's shareholders,
all expenses incidental to holding meetings of such Fund's trustees, directors
and shareholders, and extraordinary expenses as may arise, including litigation
affecting such Fund and legal obligations relating thereto for which the Fund
may have to indemnify its trustees, directors and officers.
6. Compliance Services.
(a) If Schedule I contains a requirement for the BNY to provide
the Fund with compliance services, such services shall be provided pursuant to
the terms of this Section 6 (the "Compliance Services"). The precise compliance
review and testing services to be provided shall be as mutually agreed between
BNY and each Fund, and the results of BNY's Compliance Services shall be
detailed in a compliance summary report (the "Compliance Summary Report")
prepared on a periodic basis as mutually agreed. Each Compliance Summary Report
shall be
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subject to review and approval by the Fund. BNY shall have no responsibility or
obligation to provide Compliance Services other than those services specifically
listed in Schedule I.
(b) The Fund will examine each Compliance Summary Report delivered
to it by BNY and notify BNY of any error, omission or discrepancy within ten
(10) days of its receipt. The Fund agrees to notify BNY promptly if it fails to
receive any such Compliance Summary Report. The Fund further acknowledges that
unless it notifies the BNY of any error, omission or discrepancy within 10 days,
such Compliance Summary Report shall be deemed to be correct and conclusive in
all respects. In addition, if the Fund learns of any out-of-compliance condition
before receiving a Compliance Summary Report reflecting such condition, the Fund
will notify BNY of such condition within one business day after discovery
thereof.
(c) While BNY will endeavor in good faith to identify
out-of-compliance conditions, BNY does not and could not for the fees charged,
make any guarantees, representations or warranties with respect to its ability
to identify all such conditions. In the event of any errors or omissions in the
performance of Compliance Services, the Fund's sole and exclusive remedy and
BNY's sole liability shall be limited to re-performance by BNY of the Compliance
Services affected and in connection therewith the correction of any error or
omission, if practicable and the preparation of a corrected report, at no cost
to the Fund.
7. Standard of Care; Indemnification.
(a) BNY shall act in good faith in carrying out its duties
hereunder. Except as otherwise provided herein, BNY shall not be liable for any
costs, expenses, damages, liabilities or claims (including attorneys' and
accountants' fees) incurred by a Fund, except those costs, expenses, damages,
liabilities or claims arising out of BNY's own gross negligence, bad faith or
wilful misconduct or reckless disregard for its duties and obligations
hereunder. In no event shall BNY be liable to any Fund or any third party for
special, indirect or consequential damages, or lost profits or loss of business,
arising under or in connection with this Agreement, even if previously informed
of the possibility of such damages and regardless of the form of action. BNY
shall not be liable for any loss, damage or expense, including counsel fees and
other costs and expenses of a defense against any claim or liability, resulting
from, arising out of, or in
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connection with its performance hereunder, including its actions or omissions,
the incompleteness or inaccuracy of any specifications or other information
furnished by the Fund, or for delays caused by circumstances beyond BNY's
control, unless such loss, damage or expense arises out of the gross negligence,
bad faith or willful misconduct of BNY or reckless disregard for its duties and
obligations hereunder.
(b) Each Fund shall indemnify and hold harmless BNY from and
against any and all costs, expenses, damages, liabilities and claims (including
claims asserted by a Fund), and reasonable attorneys' and accountants' fees
relating thereto, which are sustained or incurred or which may be asserted
against BNY, by reason of or as a result of any action taken or omitted to be
taken by BNY in good faith hereunder or in reliance upon (i) any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed, (ii) such Fund's Registration
Statement or Prospectus, (iii) any instructions of an officer of such Fund, or
(iv) any opinion of legal counsel for such Fund; provided however that if BNY
after making a good faith effort to seek guidance from Fund counsel does not
receive the required guidance in a reasonable period of time, then BNY may seek
and rely on the advice of counsel to BNY, provided that such counsel has been
approved by the Fund, where notice from BNY as to its selected counsel which is
not objected to in writing by the Fund within one business day shall constitute
the Fund's approval,, or arising out of transactions or other activities of such
Fund which occurred prior to the commencement of this Agreement; provided, that
no Fund shall indemnify BNY for costs, expenses, damages, liabilities or claims
for which BNY is liable under preceding 6(a). This indemnity shall be a
continuing obligation of each Fund, its successors and assigns, notwithstanding
the termination of this Agreement. Without limiting the generality of the
foregoing, each Fund shall indemnify BNY against and save BNY harmless from any
loss, damage or expense, including counsel fees and other costs and expenses of
a defense against any claim or liability, arising from any one or more of the
following:
(i) Errors in records or instructions, explanations,
information, specifications or documentation of any kind, as the case may be,
supplied to BNY as described above or by or on behalf of a Fund;
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(ii) Action or inaction taken or omitted to be taken by BNY
pursuant to written or oral instructions of the Fund or otherwise without gross
or willful misconduct;
(iii) Any action taken or omitted to be taken by BNY in good
faith in accordance with the advice or opinion of counsel for a Fund or its own
counsel, provided that such counsel has been approved by the Fund, where notice
from BNY as to its selected counsel which is not objected to in writing by the
Fund within one business day shall constitute the Fund's approval, subject to
the limitations set forth above;
(iv) Any improper use by a Fund or its agents, distributor or
investment advisor of any valuations or computations supplied by BNY pursuant to
this Agreement;
(v) The method of valuation of the Securities and the method
of computing each Series' net asset value; or
(vi) Any valuations of Securities or net asset value provided
by a Fund.
(c) Actions taken or omitted in reliance on oral or written
instructions, or upon any information, order, indenture, stock certificate,
power of attorney, assignment, affidavit or other instrument believed by BNY to
be genuine or bearing the signature of a person or persons believed to be
authorized to sign, countersign or execute the same, or upon the opinion of
legal counsel for a Fund or its own counsel, subject to the limitations set
forth herein, shall be conclusively presumed to have been taken or omitted in
good faith.
(d) Notwithstanding any other provision contained in this
Agreement, BNY shall have no duty or obligation with respect to, including,
without limitation, any duty or obligation to determine, or advise or notify the
Fund of: (a) the taxable nature of any distribution or amount received or deemed
received by, or payable to, a Fund; (b) the taxable nature or effect on a Fund
or its shareholders of any corporate actions, class actions, tax reclaims, tax
refunds, or similar events; (c) the taxable nature or taxable amount of any
distribution or dividend paid, payable or deemed paid, by a Fund to its
shareholders; or (d) the effect under any federal, state, or foreign income tax
laws of the Fund making or not making any distribution or dividend payment, or
any election with respect thereto.
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8. Compensation.
For the services provided hereunder, each Fund agrees to pay BNY such
compensation as is mutually agreed from time to time and such out-of-pocket
expenses (e.g., telecommunication charges, postage and delivery charges, record
retention costs, reproduction charges and transportation and lodging costs) as
are incurred by BNY in performing its duties hereunder. Except as hereinafter
set forth, compensation shall be calculated and accrued daily and paid monthly.
Each Fund authorizes BNY to debit such Fund's custody account for all amounts
due and payable hereunder, subject to the acknowledgement as to anticipated
payment by the Advisor (as defined below) in this Section 8. BNY shall deliver
to each Fund invoices for services rendered after debiting such Fund's custody
account with an indication that payment has been made. Upon termination of this
Agreement before the end of any month, the compensation for such part of a month
shall be prorated according to the proportion which such period bears to the
full monthly period and shall be payable upon the effective date of termination
of this Agreement. For the purpose of determining compensation payable to BNY,
each Fund's net asset value shall be computed at the times and in the manner
specified in the Fund's Prospectus. BNY understands and agrees that XShares
Advisors LLC, the investment adviser to the Fund (the "Advisor") may pay the
fees and expenses under this Agreement directly to BNY as a result of its
contractual arrangements with the Fund and any such payment by the Advisor will
discharge the Fund of its obligations hereunder. Notwithstanding any such
arrangements, nothing herein shall be deemed to relieve the Fund of its
obligations to pay such fees and expenses if such payment is not made by the
Advisor. In such circumstances, after notice to the Fund that the Advisor has
not paid such amounts, each Fund authorizes BNY to debit such Fund's custody
account for all amounts due and payable hereunder
9. Term of Agreement.
(a) This Agreement shall continue until terminated by either BNY
giving to a Fund, or a Fund giving to BNY, a notice in writing specifying the
date of such termination, which date shall be not less than 90 days after the
date of the giving of such notice. Upon termination hereof, the affected Fund(s)
shall pay to BNY such compensation as may be due as of the date of such
termination, and shall reimburse BNY for any disbursements and expenses
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made or incurred by BNY and payable or reimbursable hereunder.
(b) Notwithstanding the foregoing, BNY may terminate this
Agreement upon 30 days prior written notice to a Fund if such Fund shall
terminate its custody agreement with The Bank of New York, or fail to perform
its obligations hereunder in a material respect. The Fund may terminate this
Agreement for "Cause" upon 30 days prior written notice to BNY. For purposes of
this Section 9, "Cause" shall mean (a) a material breach of this Agreement by
BNY, including a material breach of any representation or warranty, that has not
been cured within 30 days following written notice of such breach; (b) a final
unappealable judicial, regulatory or administrative ruling or order in which
BNY, its directors, officers employees or agents, has been found to be guilty of
criminal or unethical behavior or conduct in connection with the provision of
services similar to the services covered by this Agreement; or (c) the
commencement of any voluntary or involuntary action under chapter 11 of the
United States Code or any other law relating to the liquidation or dissolution
of BNY, the reorganization of its debtors or the alteration of rights of its
creditors.
10. Authorized Persons.
Attached hereto as Exhibit B is a list of persons duly authorized by
the Board of each Fund to execute this Agreement and give any written or oral
instructions, or written or oral specifications, by or on behalf of such Fund.
From time to time each Fund may deliver a new Exhibit B to add or delete any
person and BNY shall be entitled to rely on the last Exhibit B actually received
by BNY.
11. Amendment.
This Agreement may not be amended or modified in any manner except by a
written agreement executed by BNY and the Fund to be bound thereby, and
authorized or approved by such Fund's Board.
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12. Assignment.
This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by any Fund without the written consent
of BNY, or by BNY without the written consent of the affected Fund accompanied
by the authorization or approval of such Fund's Board.
13. Governing Law; Consent to Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York, without regard to conflict of laws principles thereof. Each
Fund hereby consents to the jurisdiction of a state or federal court situated in
New York City, New York in connection with any dispute arising hereunder, and
waives to the fullest extent permitted by law its right to a trial by jury. To
the extent that in any jurisdiction any Fund may now or hereafter be entitled to
claim, for itself or its assets, immunity from suit, execution, attachment
(before or after judgment) or other legal process, such Fund irrevocably agrees
not to claim, and it hereby waives, such immunity.
14. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby, and if any provision is inapplicable to any
person or circumstances, it shall nevertheless remain applicable to all other
persons and circumstances.
15. No Waiver.
Each and every right granted to BNY hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of BNY to exercise, and no delay in exercising, any right will
operate as a waiver thereof, nor will any single or partial exercise by BNY of
any right preclude any other or future exercise thereof or the exercise of any
other right.
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16. Notices.
All notices, requests, consents and other communications pursuant to
this Agreement in writing shall be sent as follows:
if to a Fund, at
Realty Funds, Inc.
c/o XShares Advisors, LLC
000 Xxxxxxxxx Xxx., Xxxxx 0000
Xxx Xxxx, XX 00000
if to BNY, at
The Bank of New York
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Title:
or at such other place as may from time to time be designated in writing.
Notices hereunder shall be effective upon receipt.
17. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts together shall
constitute only one instrument.
18. Several Obligations.
The parties acknowledge that the obligations of the Funds hereunder are
several and not joint, that no Fund shall be liable for any amount owing by
another Fund and that the Funds have executed one instrument for convenience
only.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereunto affixed, all as of the day and year first above written.
Realty Funds, Inc.
By: /s/ Xxxxx Xxxxxxxx
------------------
Title: CFO, Secretary and Treasurer
THE BANK OF NEW YORK
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Title: Managing Director
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EXHIBIT A
Adelante Shares RE Growth(TM) Exchange-Traded Fund
Adelante Shares RE Value(TM) Exchange-Traded Fund
Adelante Shares RE Classics(TM) Exchange-Traded Fund
Adelante Shares RE Kings(TM) Exchange-Traded Fund
Adelante Shares RE Yield Plus(TM) Exchange-Traded Fund
Adelante Shares RE Shelter(TM) Exchange-Traded Fund
Adelante Shares RE Composite(TM) Exchange-Traded Fund
EXHIBIT B
---------
I, Xxxxx XxXxxxxxx, of Realty Funds, Inc., a Maryland Corporation (the
"Fund"), do hereby certify that:
The following individuals serve in the following positions with the
Fund, and each has been duly elected or appointed by the Board of Directors of
the Fund to each such position and qualified therefor in conformity with the
Fund's Articles of Incorporation and By-Laws, and the signatures set forth
opposite their respective names are their true and correct signatures. Each such
person is authorized to give written or oral instructions or written or oral
specifications by or on behalf of the Fund to the Bank.
Xxxxxxx X. Xxxxxxxxx President
-------------------- ---------
Name Title
Xxxxx X. Xxxxxx Chairman
--------------- --------
Name Title
Xxxxx XxXxxxxxx CFO, Secretary and Treasurer
--------------- ----------------------------
Name Title
SCHEDULE I
----------
ADMINISTRATIVE SERVICES
-----------------------
1. Prepare minutes of Board of Director meetings and assist the Secretary
of each Fund in preparation for Board meetings. Such minutes, meeting
agendas and other material prepared in preparation for each Board
meeting are subject to the review and approval of Fund counsel.
2. Perform for each Fund, the compliance tests as mutually agreed and
which shall be specific to each Series. The Compliance Summary Reports
listing the results of such tests are subject to review and approval by
each Fund.
3. Participate in the periodic updating of each Fund's Registration
Statement and Prospectus and, subject to approval by such Fund's
Treasurer and legal counsel, coordinate the preparation, filing,
printing and dissemination of periodic reports and other information to
the SEC and the Fund's shareholders, including annual and semi-annual
reports to shareholders, Form N-SAR, Form N-CSR, Form N-Q and notices
pursuant to Rule 24f-2, Form N-PX.
4. Prepare workpapers supporting the preparation of federal, state and
local income tax returns for each Fund for review and approval by each
Fund's independent auditors; perform ongoing wash sales review (i.e.,
purchases and sales of Fund investments within 30 days of each other);
and prepare Form 1099s with respect to each Fund's directors or
trustees and file such forms upon the approval of the Fund's Treasurer.
5. Prepare and, subject to approval of each Fund's Treasurer, disseminate
to such Fund's Board quarterly unaudited financial statements and
schedules of such Fund's investments and make presentations to the
Board, as appropriate.
6. Subject to approval of each Fund's Board, assist such Fund in obtaining
and filing fidelity bond and E&O/D&O insurance coverage.
7. Prepare statistical reports for outside information services (e.g.,
IBC/Xxxxxxxx, ICI, Lipper Analytical and Morningstar).
8. Attend shareholder and Board meetings as requested from time to time.
9. Subject to review and approval by the Fund Treasurer, establish
appropriate expense accruals, maintain expense files and coordinate the
payment of invoices for each Fund.
10. Calculate ordinary income and capital gain distributions for review and
approval by the Funds' officers and independent auditor.
11. Monthly calculation of performance on NAV
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SCHEDULE II
-----------
ACCOUNTING, VALUATION AND COMPUTATION SERVICES
----------------------------------------------
I. BNY shall maintain the following records on a daily basis for each
Series.
1. Report of current values of all portfolio securities
2. Statement of net asset value per share
II. BNY shall maintain the following records on a monthly basis for each
Series:
1. General Ledger
2. General Journal
3. Cash Receipts Journal
4. Cash Disbursements Journal
5. Subscriptions Journal
6. Redemptions Journal
7. Accounts Receivable Reports
8. Accounts Payable Reports
9. Open Subscriptions/Redemption Reports
10. Transaction (Securities) Journal
11. Broker Net Trades Reports
III. BNY shall prepare a Holdings Ledger on a quarterly basis, and a
Buy-Sell Ledger (Broker's Ledger) on a semiannual basis for each Series.
Schedule D shall be produced on an annual basis for each Series.
The above reports may be printed according to any other required frequency
to meet the requirements of the Internal Revenue Service, The Securities and
Exchange Commission and the Fund's Auditors.
IV. For internal control purposes, BNY uses the Account Journals produced
by The Bank of New York Custody System to record daily settlements of the
following for each Series:
1. Securities bought
2. Securities sold
3. Interest received
4. Dividends received
5. Capital stock sold
6. Capital stock redeemed
7. Other income and expenses
All portfolio purchases for the Fund are recorded to reflect expected
maturity value and total cost including any prepaid interest.
- 2 -
