SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 28th day of July, 1998 between DLJ HIGH YIELD
BOND FUND (the "Fund"), a Delaware business trust having its principal place of
business at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and FIRST DATA INVESTOR
SERVICES GROUP, INC. ("Investor Services Group"), a Massachusetts corporation
with principal offices at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000.
WITNESSETH
WHEREAS, the Fund desires to appoint Investor Services Group as its fund
accounting agent, fund administrator, custody administrator and agent in
connection with certain other activities and Investor Services Group desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and Investor Services Group agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of Incorporation,
Declaration of Trust, or other similar organizational document as the case may
be, of the Fund as the same may be amended from time to time.
(b) "Authorized Person" shall be deemed to include (i) any authorized officer of
the Fund; or (ii) any person, whether or not such person is an officer or
employee of the Fund, duly authorized to give Oral Instructions or Written
Instructions on behalf of the Fund as indicated in writing to Investor Services
Group from time to time.
(c) "Board Members" shall mean the Directors or Trustees of the governing body
of the Fund, as the case may be.
(d) "Board of Directors" shall mean the Board of Directors or Board of Trustees
of the Fund, as the case may be.
(e) "Commission" shall mean the Securities and Exchange Commission.
(f) "Custodian" refers to any custodian or subcustodian of securities and other
property which the Fund may from time to time deposit, or cause to be deposited
or held under the name or account of such a custodian pursuant to a Custodian
Agreement.
Page 1
(g) "1934 Act" shall mean the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder, all as amended from time to time.
(h) "1940 Act" shall mean the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder, all as amended from time to time.
(i) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by Investor Services Group from a person
reasonably believed by Investor Services Group to be an Authorized Person;
(j) "Prospectus" shall mean the most recently dated Fund Prospectus and
Statement of Additional Information, including any supplements thereto if any,
which has become effective under the Securities Act of 1933 and the 1940 Act.
(k) "Shares" refers collectively to such shares of capital stock or beneficial
interest, as the case may be, or class thereof, of the Fund as may be issued
from time to time.
(l) "Shareholder" shall mean a record owner of Shares of the Fund.
(m) "Written Instructions" shall mean a written communication signed by a person
reasonably believed by Investor Services Group to be an Authorized Person and
actually received by Investor Services Group. Written Instructions shall include
manually executed originals and authorized electronic transmissions, including
telefacsimile of a manually executed original or other process.
Article 2 Appointment of Investor Services Group.
The Fund hereby appoints and constitutes Investor Services Group as custody
administrator, fund administrator and fund accounting agent for the Fund and
Investor Services Group hereby accepts such appointments and agrees to perform
the duties hereinafter set forth.
Article 3 Duties of Investor Services Group.
3.1 Investor Services Group shall be responsible for:
(a) Investor Services Group shall be responsible for the following: performing
the customary services of a fund accounting agent for the Fund, as more fully
described in the written schedule of Duties of Investor Services Group annexed
hereto as Schedule B and incorporated herein, and subject to the supervision and
direction of the Board of Directors of the Fund.
(b) In addition to providing the foregoing services, the Fund hereby engages
Investor Services Group as its agent for the limited purpose of (i) accepting
invoices charged to the Fund for custody services performed by the Custodian on
the Fund's behalf, (ii) remitting payment to the
Page 2
Custodian for such services, and (iii) as more fully described in the written
schedule of Duties of Investor Services Group annexed hereto as Schedule B and
incorporated herein.
(c) Investor Services Group shall be responsible for the following: performing
the customary services of a fund administrator agent for the Fund, as more fully
described in the written schedule of Duties of Investor Services Group annexed
hereto as Schedule B and incorporated herein, and subject to the supervision and
direction of the Board of Directors of the Fund.
3.2 In performing its duties under this Agreement, Investor Services Group: (a)
will act in accordance with the Articles of Incorporation, By-Laws, Prospectuses
and with the Oral Instructions and Written Instructions of the Fund and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal or state laws and regulations; and (b) will consult with
legal counsel to the Fund, as necessary and appropriate. Furthermore, Investor
Services Group shall not have or be required to have any authority to supervise
the investment or reinvestment of the securities or other properties which
comprise the assets of the Fund and shall not provide any investment advisory
services to the Fund.
3.3 In addition to the duties set forth herein, Investor Services Group shall
perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and Investor Services Group.
Article 4 Recordkeeping and Other Information.
4.1 Investor Services Group shall create and maintain all records required of it
pursuant to its duties hereunder and as set forth in Schedule B in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the 1940 Act. Where applicable, such records shall be
maintained by Investor Services Group for the periods and in the places required
by Rule 31a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, Investor Services
Group agrees that all such records prepared or maintained by Investor Services
Group relating to the services to be performed by Investor Services Group
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such section, and will be surrendered promptly
to the Fund on and in accordance with the Fund's request.
Article 5 Fund Instructions.
5.1 Investor Services Group will have no liability when acting upon Written or
Oral Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. Investor Services Group will also have no liability when processing Share
certificates which it reasonably believes to bear the proper manual or
Page 3
facsimile signatures of the officers of the Fund and the proper countersignature
of Investor Services Group.
5.2 At any time, Investor Services Group may request Written Instructions from
the Fund and may seek advice from legal counsel for the Fund, or its own legal
counsel, with respect to any matter arising in connection with this Agreement,
and it shall not be liable for any action taken or not taken or suffered by it
in good faith in accordance with such Written Instructions or in accordance with
the opinion of counsel for the Fund or for Investor Services Group. Written
Instructions requested by Investor Services Group will be provided by the Fund
within a reasonable period of time.
5.3 Investor Services Group, its officers, agents or employees, shall accept
Oral Instructions or Written Instructions given to them by any person
representing or acting on behalf of the Fund only if said representative is an
Authorized Person. The Fund agrees that all Oral Instructions shall be followed
within one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect Investor Services Group's
right to rely on Oral Instructions.
Article 6 Compensation.
6.1 The Fund will compensate Investor Services Group for the performance of its
obligations hereunder in accordance with the fees set forth in the written Fee
Schedule annexed hereto as Schedule C and incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the Fund agrees to
pay, and will be billed separately for, out-of-pocket expenses incurred by
Investor Services Group in the performance of its duties hereunder.
Out-of-pocket expenses shall include, but shall not be limited to, the items
specified in the written schedule of out-of-pocket charges annexed hereto as
Schedule D and incorporated herein. Schedule D may be modified by written
agreement between the parties. Unspecified out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by Investor Services
Group in the performance of its obligations hereunder.
6.3 The Fund hereby authorizes Investor Services Group to collect its fees and
related out-of-pocket expenses by debiting the Fund's custody account for
invoices which are rendered for the services performed for the applicable
function. Invoices for the services performed will be sent to the Fund after
such debiting with an indication that payment has been made.
6.4 Any compensation agreed to hereunder may be adjusted from time to time by
attaching to Schedule C, a revised Fee Schedule executed and dated by the
parties hereto.
6.5 The Fund acknowledges that the fees that Investor Services Group charges the
Fund under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 9.3 and the limitations on
liability and exclusion of remedies in Section 11.2 and Article 12. Modifying
the allocation of risk from what is stated here would affect the fees
Page 4
that Investor Services Group charges, and in consideration of those fees, the
Fund agrees to the stated allocation of risk.
6.6 Investor Services Group will from time to time employ or associate with
itself such person or persons as Investor Services Group may believe to be
particularly suited to assist it in performing services under this Agreement.
Such person or persons may be officers and employees who are employed by both
Investor Services Group and the Fund. The compensation of such person or persons
shall be paid by Investor Services Group and no obligation shall be incurred on
behalf of the Fund in such respect.
6.7 Investor Services Group shall not be required to pay any of the following
expenses incurred by the Fund: membership dues in the Investment Company
Institute or any similar organization; investment advisory expenses; costs of
printing and mailing stock certificates, prospectuses, reports and notices;
interest on borrowed money; brokerage commissions; stock exchange listing fees;
taxes and fees payable to Federal, state and other governmental agencies; fees
of Board Members of the Fund who are not affiliated with Investor Services
Group; outside auditing expenses; outside legal expenses; Blue Sky registration
or filing fees; or other expenses not specified in this Section 6.7 which may be
properly payable by the Fund.
Article 7 Documents.
In connection with the appointment of Investor Services Group, the Fund shall,
on or before the date this Agreement goes into effect, but in any case within a
reasonable period of time for Investor Services Group to prepare to perform its
duties hereunder, deliver or caused to be delivered to Investor Services Group
the documents set forth in the written schedule of Fund Documents annexed hereto
as Schedule E.
Article 8 Investor Services Group System.
8.1 Investor Services Group shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by Investor Services Group in connection
with the services provided by Investor Services Group to the Fund herein (the
"Investor Services Group System").
8.2 Investor Services Group hereby grants to the Fund a limited license to the
Investor Services Group System for the sole and limited purpose of having
Investor Services Group provide the services contemplated hereunder and nothing
contained in this Agreement shall be construed or interpreted otherwise and such
license shall immediately terminate with the termination of this Agreement.
Page 5
8.3 In the event that the Fund, including any affiliate or agent of the Fund or
any third party acting on behalf of the Fund is provided with direct access to
the Investor Services Group System for either account inquiry or to transmit
transaction information, including but not limited to maintenance, exchanges,
purchases and redemptions, such direct access capability shall be limited to
direct entry to the Investor Services Group System by means of on-line mainframe
terminal entry or PC emulation of such mainframe terminal entry and any other
non-conforming method of transmission of information to the Investor Services
Group System is strictly prohibited without the prior written consent of
Investor Services Group.
Article 9 Representations and Warranties.
9.1 Investor Services Group represents and warrants to the Fund that:
(a) it is a corporation duly organized, existing and in good standing under the
laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to authorize it to enter
into this Agreement; and
(d) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
9.2 The Fund represents and warrants to Investor Services Group that:
(a) it is duly organized, existing and in good standing under the laws of the
jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into this Agreement; and
(c) all corporate proceedings required by said Articles of Incorporation,
By-Laws and applicable laws have been taken to authorize it to enter into this
Agreement.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
INVESTOR SERVICES GROUP DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON, 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) OF ANY SERVICES OR ANY GOODS
Page 6
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT. INVESTOR SERVICES
GROUP DISCLAIMS ANY WARRANTY OF TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE
SET FORTH IN THIS AGREEMENT.
Article 10 Indemnification.
10.1 Investor Services Group shall not be responsible for and the Fund shall
indemnify and hold Investor Services Group harmless from and against any and all
claims, costs, expenses (including reasonable attorneys' fees), losses, damages,
charges, payments and liabilities of any sort or kind which may be asserted
against Investor Services Group or for which Investor Services Group may be held
to be liable (a "Claim") arising out of or attributable to any of the following:
(a) any actions of Investor Services Group required to be taken pursuant to this
Agreement unless such Claim resulted from a grossly negligent act or omission to
act or bad faith by Investor Services Group in the performance of its duties
hereunder;
(b) Investor Services Group's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to magnetic
tapes, computer printouts, hard copies and microfilm copies) received by
Investor Services Group from the Fund, or any authorized third party acting on
behalf of the Fund, in the performance of Investor Services Group's duties and
obligations hereunder;
(c) the reliance on, or the implementation of, any Written or Oral Instructions
or any other instructions or requests of the Funds, and
(d) the Fund's refusal or failure to comply with the terms of this Agreement, or
any Claim which arises out of the Fund's negligence or misconduct or the breach
of any representation or warranty of the Fund made herein.
10.2 The Fund agrees and acknowledges that Investor Services Group has not prior
to the date hereof assumed, and will not assume, any obligations or liabilities
arising out of the conduct by the Company prior to the date hereof of those
duties which Investor Services Group has agreed to perform pursuant to this
Agreement. The Fund further agrees to indemnify Investor Services Group against
any losses, claims, damages or liabilities to which Investor Services Group may
become subject in connection with the conduct by the Fund or its agent of such
duties prior to the date hereof.
10.3 In any case in which the Fund may be asked to indemnify or hold Investor
Services Group harmless, Investor Services Group will notify the Fund promptly
after identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Fund although the failure to do
so shall not prevent recovery by Investor Services Group and shall keep the Fund
advised with respect to all developments concerning such situation. The Fund
shall have the option to defend Investor Services Group against any Claim which
may be the subject of this
Page 7
indemnification, and, in the event that the Fund so elects, such defense shall
be conducted by counsel chosen by the Fund and satisfactory to Investor Services
Group, and thereupon the Fund shall take over complete defense of the Claim and
Investor Services Group shall sustain no further legal or other expenses in
respect of such Claim. Investor Services Group will not confess any Claim or
make any compromise in any case in which the Fund will be asked to provide
indemnification, except with the Fund's prior written consent. The obligations
of the parties hereto under this Article 10 shall survive the termination of
this Agreement.
10.4 Any claim for indemnification under this Agreement must be made prior to
the earlier of:
(a) one year after the Fund becomes aware of the event for which indemnification
is claimed; or
(b) one year after the earlier of the termination of this Agreement or the
expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
Investor Services Group's sole and exclusive remedy for claims or other actions
or proceedings to which the Fund's indemnification obligations pursuant to this
Article 10 may apply.
Article 11 Standard of Care.
11.1 Investor Services Group shall at all times act in good faith and agrees to
use its best efforts within commercially reasonable limits to ensure the
accuracy of all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Fund unless said errors are caused by
Investor Services Group's own gross negligence, bad faith or willful misconduct
or that of its employees.
11.3 Neither party may assert any cause of action against the other party under
this Agreement that occurred more than two (2) years prior to the filing of the
suit (or commencement of arbitration proceedings) alleging such cause of action.
11.4 Each party shall have the duty to mitigate damages for which the other
party may become responsible.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL
INVESTOR SERVICES GROUP, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF
TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST
PROFITS, EXEMPLARY, PUNITIVE,
Page 8
SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, 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.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written above and shall
continue for a period of two (2) years (the "Initial Term").
13.2 Upon the expiration of the Initial Term, this Agreement shall automatically
renew for successive terms of one (1) year ("Renewal Terms") each, unless the
Fund or Investor Services Group provides written notice to the other of its
intent not to renew. Such notice must be received not less than ninety (90) days
and not more than one-hundred eighty (180) days prior to the expiration of the
Initial Term or the then current Renewal Term.
13.3 In the event a termination notice is given by the Fund, all expenses
associated with movement of records and materials and conversion thereof to a
successor service provider will be borne by the Fund.
13.4 If a party hereto is guilty of a material failure to perform its duties and
obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party. If Investor Services Group is the Non-Defaulting Party,
its termination of this Agreement shall not constitute a waiver of any other
rights or remedies of Investor Services Group with respect to services performed
prior to such termination of rights of Investor Services Group to be reimbursed
for out-of-pocket expenses. In all cases, termination by the Non-Defaulting
Party shall not constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the Defaulting
Party.
13.5 Should the Fund desire to move any of the services outlined in this
Agreement to a successor service provider prior to the expiration of the Initial
Term or any Renewal Term, or without the required notice period, Investor
Services Group shall make a good faith effort to facilitate the conversion on
such prior date, however, there can be no guarantee that Investor Services Group
will be able to facilitate a conversion of services on such prior date. Should
services be converted to a successor service provider, or if the Fund is
liquidated or its assets merged or purchased or the like with another entity,
prior to the end of the required notice period, payment of fees to Investor
Services Group shall be accelerated to a date prior to the conversion or
termination of services and calculated as if the services had remained at
Investor Services Group until the expiration of the required notice period and
calculated at the asset levels on the date notice of termination was given to
Investor Services Group.
Page 9
Article 14 [Reserved]
Article 15 Confidentiality.
15.1 The parties agree that the Proprietary Information (defined below) and the
contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The Fund
and Investor Services Group shall exercise at least the same degree of care, but
not less than reasonable care, to safeguard the confidentiality of the
Confidential Information of the other as it would exercise to protect its own
confidential information of a similar nature. The Fund and Investor Services
Group shall not duplicate, sell or disclose to others the Confidential
Information of the other, in whole or in part, without the prior written
permission of the other party. The Fund and Investor Services Group may,
however, disclose Confidential Information to their respective parent
corporation, their respective affiliates, their subsidiaries and affiliated
companies and employees, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed in
breach of this Agreement. The Fund and Investor Services Group may also disclose
the Confidential Information to independent contractors, auditors, and
professional advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 15.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
Investor Services Group disclose the Confidential Information to any competitor
of the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive material, and not
generally known to the public, including, but not limited to, information about
product plans, marketing strategies, finance, operations, customer
relationships, customer profiles, sales estimates, business plans, and internal
performance results relating to the past, present or future business activities
of the Fund or Investor Services Group, their respective subsidiaries and
affiliated companies and the customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process, procedure,
formula, or improvement that is commercially valuable and secret in the sense
that its confidentiality affords the Fund or Investor Services Group a
competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation, reports, data,
specifications, computer software, source code, object code, flow charts,
databases, inventions, know-how, show-how and trade secrets, whether or not
patentable or copyrightable.
15.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of
Page 10
material, equipment, prototypes and models, and any other tangible manifestation
of the foregoing of either party which now exist or come into the control or
possession of the other.
15.4 The obligations of confidentiality and restriction on use herein shall not
apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this Agreement or subsequently
came into the public domain through no fault of such party; or
(b) Was lawfully received by the party from a third party free of any obligation
of confidence to such third party; or
(c) Was already in the possession of the party prior to receipt thereof,
directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative proceeding after
all reasonable legal remedies for maintaining such information in confidence
have been exhausted including, but not limited to, giving the other party as
much advance notice of the possibility of such disclosure as practical so the
other party may attempt to stop such disclosure or obtain a protective order
concerning such disclosure; or
(f) Is subsequently and independently developed by employees, consultants or
agents of the party without reference to the Confidential Information disclosed
under this Agreement.
Article 16 Force Majeure.
No party shall be liable for any default or delay in the performance of its
obligations under this Agreement if and to the extent such default or delay is
caused, directly or indirectly, by (i) fire, flood, elements of nature or other
acts of God; (ii) any outbreak or escalation of hostilities, war, riots or civil
disorders in any country, (iii) any act or omission of the other party or any
governmental authority; (iv) any labor disputes (whether or not the employees'
demands are reasonable or within the party's power to satisfy); or (v)
nonperformance by a third party or any similar cause beyond the reasonable
control of such party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the non-performing
party shall be excused from any further performance and observance of the
obligations so affected only for as long as such circumstances prevail and such
party continues to use commercially reasonable efforts to recommence performance
or observance as soon as practicable.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned or otherwise transferred by either
party hereto, without the prior written consent of the
Page 11
other party, which consent shall not be unreasonably withheld; provided,
however, that Investor Services Group may, in its sole discretion, assign all
its right, title and interest in this Agreement to an affiliate, parent or
subsidiary, or to the purchaser of substantially all of its business. Investor
Services Group may, in its sole discretion, engage subcontractors to perform any
of the obligations contained in this Agreement to be performed by Investor
Services Group.
Article 18 Arbitration.
18.1 Any claim or controversy arising out of or relating to this Agreement, or
breach hereof, shall be settled by arbitration administered by the American
Arbitration Association in Boston, Massachusetts in accordance with its
applicable rules, except that the Federal Rules of Evidence and the Federal
Rules of Civil Procedure with respect to the discovery process shall apply.
18.2 The parties hereby agree that judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.
18.3 The parties acknowledge and agree that the performance of the obligations
under this Agreement necessitates the use of instrumentalities of interstate
commerce and, notwithstanding other general choice of law provisions in this
Agreement, the parties agree that the Federal Arbitration Act shall govern and
control with respect to the provisions of this Article 18.
Article 19 Notice.
Any notice or other instrument authorized or required by this Agreement to be
given in writing to the Fund or Investor Services Group, shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
DLJ High Yield Bond Fund
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
To Investor Services Group:
First Data Investor Services Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
with a copy to Investor Services Group's General Counsel
Page 12
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on conflicts
of laws, shall govern the interpretation, validity, and enforcement of this
agreement. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston, and
Investor Services Group and the Fund hereby submit themselves to the exclusive
jurisdiction of those courts.
Article 21 Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 22 Captions.
The captions of this Agreement are included for convenience of reference only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
Article 23 Publicity.
Neither Investor Services Group nor the Fund shall release or publish news
releases, public announcements, advertising or other publicity relating to this
Agreement or to the transactions contemplated by it without the prior review and
written approval of the other party; provided, however, that either party may
make such disclosures as are required by legal, accounting or regulatory
requirements after making reasonable efforts in the circumstances to consult in
advance with the other party.
Article 24 Relationship of Parties/Non-Solicitation.
24.1 The parties agree that they are independent contractors and not partners or
co-venturers and nothing contained herein shall be interpreted or construed
otherwise.
24.2 During the term of this Agreement and for one (1) year afterward, the Fund
shall not recruit, solicit, employ or engage, for the Fund or others, Investor
Services Group's employees.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be
Page 13
valid unless in writing signed by each party. No such writing shall be
effective as against Investor Services Group unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of Investor
Services Group. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same or
another term or condition.
25.2 The parties intend every provision of this Agreement to be severable. If a
court of competent jurisdiction determines that any term or provision is illegal
or invalid for any reason, the illegality or invalidity shall not affect the
validity of the remainder of this Agreement. In such case, the parties shall in
good faith modify or substitute such provision consistent with the original
intent of the parties. Without limiting the generality of this paragraph, if a
court determines that any remedy stated in this Agreement has failed of its
essential purpose, then all other provisions of this Agreement, including the
limitations on liability and exclusion of damages, shall remain fully effective.
Page 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers, as of the day and year first above written.
DLJ HIGH YIELD BOND FUND
By:
-------------------------------------
Title:
----------------------------------
FIRST DATA INVESTOR SERVICES GROUP, INC.
By:
-------------------------------------
Title:
----------------------------------
Page 15
SCHEDULE A
IDENTIFICATION OF PORTFOLIOS
Below are listed the separate Portfolios to which services under this Agreement
are to be performed as of the Execution Date of this Agreement.
DLJ High Yield Bond Fund
This Schedule A may be amended from time to time by agreement of the Parties.
Page 16
SCHEDULE B
SERVICES TO BE PROVIDED BY INVESTOR SERVICES GROUP
TO DLJ HIGH YIELD BOND FUND (THE "FUND")
Investor Services Group will (i) provide its own office space, facilities,
equipment and personnel for the performance of its duties under this Agreement;
and (ii) take all actions it deems necessary to properly execute its
responsibilities hereunder.
1. SERVICES RELATED TO ADMINISTRATIVE SERVICES
I. Regulatory Compliance
A. Compliance - Federal Investment Company Act of 1940
1. Review, report and renew
a. investment advisory contracts
b. fidelity bond
c administration contracts
d. accounting contracts
e. custody administration contracts
f. transfer agent and shareholder services
2. Filings
a. N-SAR (semi-annual report)
b. filing fidelity bond under 17g-1
c. filing shareholder reports under Rule 30b2-1
3. Annual up-dates of biographical information and questionnaires
for Directors/Trustees and Officers
II. Corporate Business and Shareholder/Public Information
A. Directors/Trustees/Management
1. Preparation of meetings
a. agendas - all necessary items of compliance
b. arrange and conduct meetings
c. prepare minutes of meetings
d. keep attendance records
e. maintain corporate records/minute book
B. Coordinate Proposals
Page 17
1. Printers
2. Auditors
3. Literature fulfillment
4. Insurance
C. Maintain Corporate Calendars and Files
D. Release Corporate Information
1. To shareholders
2. To financial and general press
3. To industry publications
a. distributions (dividends and capital gains)
b. tax information
c. letters from management
d. Fund performance
4. Respond to:
a. financial press
b. miscellaneous shareholders inquiries
c. industry questionnaires
E. Communications to Shareholders
1. Coordinate printing and distribution of annual, semi-annual
reports, proxy solicitation materials and prospectuses
III. Financial and Management Reporting
A. Income and Expenses
1. Monitoring of expense accruals, budgets, expense payments and
expense caps
2. Approve and coordinate payment of expenses
3. Establish Fund's operating expense checking account and perform
monthly reconciliation of checking account
Page 18
4. Calculation of advisory fee
5. Authorize the recording and amortization of organizational costs
and pre-paid expenses (supplied by Advisor), for start-up funds
and reorganizations
6. Calculation of average net assets
7. Expense ratios calculated
B. Distributions to Shareholders
1. Calculations of dividends and capital gain distributions
(in conjunction with the Fund and their auditors)
a. compliance with income tax provisions
b. compliance with excise tax provisions
c. compliance with Investment Company Act of 1940
2. Book/Tax identification and adjustments at required distribution
periods (in conjunction with the Fund's auditors)
C. Financial Reporting
1. Liaison between Fund management, independent auditors and
printers for semi-annual and annual shareholder reports
2. Preparation of semi-annual and annual reports to shareholders
3. Preparation of semi-annual and annual NSAR's (Financial Data)
4. Preparation of Financial Statements for required SEC Post
Effective filings (if applicable)
D. Subchapter M Compliance (monthly)
1. Asset diversification and gross income tests
E. Other Financial Analyses
1. Upon request from Fund management, other budgeting and analyses
can be constructed to meet a Fund's specific needs (additional
fees may apply)
2. Sales information, portfolio turnover (monthly)
Page 19
3. Work closely with independent auditors on tax reporting schedules
prepared by Investor Services Group on return of capital
presentation, excise tax calculation
4. Performance (total return) calculation (monthly)
5. 1099 Miscellaneous - prepared and filed for Directors/Trustees
(annual)
6. Analysis of interest derived from various Government obligations
(annual) (if interest income was distributed in a calendar year)
7. Analysis of interest derived, by state, for Municipal Bond Funds
8. Review and characterize 1099-Dividend Forms
9. Prepare and coordinate with printer the printing and mailing of
1099-Dividend Insert Cards
F. Review and Monitoring Functions (monthly)
1. Review expense and reclassification entries to ensure proper
update
2. Perform various reviews to ensure accuracy of Accounting (the
monthly expense analysis) and Custody (review of daily bank
statements to ensure accurate expense money movement for expense
payments)
3. Review accruals, budgets and expenditures (where applicable)
G. Preparation and distribution of monthly operational reports to
management by 10th business day
1. Management Statistics (Recap)
a. portfolio summary
b. book gains/losses/per share
c. net income, book income/per share
d. capital stock activity
e. distributions
2. Performance Analysis (faxed to Fund 1st workday of month) a.
total return b. monthly, quarterly, year to date, average annual
3. Expense Analysis
a. schedule
Page 20
b. summary of due to/from advisor
c. expenses paid
d. expense cap
e. accrual monitoring
f. advisory fee
4. Portfolio Turnover
a. market value
b. cost of purchases
c. net proceeds of sales
d. average market value
5. Asset Diversification and Gross Income Tests
x. xxxxx assets
b. non-qualifying assets
x. xxxxx income test
6. Activity Summary
a. shares sold, redeemed and reinvested
b. change in investment
H. Provide rating agencies statistical data as requested
(monthly/quarterly)
I. Standard schedules for Board Package (Quarterly)
1. Activity Summary (III-G-7 from above)
2. Expense analysis
3. Other schedules can be provided (additional fees may apply)
2. SERVICES RELATED TO PORTFOLIO VALUATION AND FUND ACCOUNTING
All financial data provided to, processed and reported by Investor Services
Group under this Agreement shall be in United States dollars. Investor Services
Group's obligation to convert, equate or deal in foreign currencies or values
extends only to the accurate transposition of information received from the
various pricing and information services.
A. Daily Accounting Services
1. Determine and Report Cash Availability to the Fund by approximately
9:30 a.m. Eastern Time:
Page 21
o Receive daily cash and transaction statements from the agent
responsible for the safekeeping of the Fund's assets (the
"Custodian") by 8:30 a.m. Eastern time.
o Receive previous day shareholder activity reports from the Transfer
Agent by 8:30 a.m. Eastern time.
o Fax hard copy Cash Availability calculations with all details to the
Fund.
o Supply the Fund with 3-day cash projection report. Prepare
daily bank cash reconciliations. Notify the Custodian and the Fund
of any reconciling items.
2. Reconcile and Record All Expense Accruals:
o Accrue expenses based on budget supplied by the Fund either as
percentage of net assets or specific dollar amounts.
o If applicable, monitor expense limitations established by the Fund.
o If applicable, accrue daily amortization of organizational expense.
3. Verify and Record All Daily Income Accruals for Debt Issues:
o Review and verify all system generated Interest and Amortization
reports.
o Establish unique security codes for bond issues to permit segregated
trial balance income reporting.
4. Monitor Securities Held for Cash Dividends, Corporate Actions and
Capital Changes such as splits, mergers, spin-offs, etc. and process
appropriately.
o Monitor electronically received information from pricing vendors for
securities held in the Fund.
o Review current daily security trades for dividend activity. Monitor
collection and postings of corporate actions, dividends and
interest.
5. Enter All Security Trades on Accounting System based on written
instructions from the Fund's Advisor.
o Review system verification of trade and interest calculations.
o Verify settlement through statements supplied by the Custodian.
o Maintain security ledger transaction reporting.
o Maintain tax lot holdings.
o Determine realized gains or losses on security trades. Provide
broker commission reporting.
6. Prepare and Reconcile/Prove Accuracy of the Trial Balance (listing all
asset, liability, equity, income and expense accounts).
o Post manual entries to the general ledger.
o Post Custodian activity.
o Post security transactions.
o Post and verify system generated activity, i.e. income and expense
accruals.
Page 22
7. Review and Reconcile with Custodian Statements:
o Verify all posted interest, dividends, expenses and shareholder and
security payments/receipts, etc. (Discrepancies will be reported to
the Custodian).
o Post all cash settlement activity to the trial balance. Reconcile to
ending cash balance accounts.
o Clear subsidiary reports with settled amounts.
o Track status of past due items and failed trades as reported by the
Custodian.
8. Submission of Accounting Reports to the Fund: (Additional reports
readily available)
o Trial Balance.
o Cash Availability
o 3-Day Cash Projection Report.
9. As appropriate, enter all Fund Share Transactions on Accounting
System:
o Process activity identified on reports supplied by the
o Transfer Agent.
Verify settlement through statements supplied by the Custodian.
o Reconcile to Transfer Agent report balances.
B. Weekly Accounting Services
1. Calculate Net Asset Value ("NAV"):
o Update the daily market value of securities held by the Fund using
Investor Services Group's standard agents for pricing equity and bond
securities. Pricing Services utilized by Investor Services Group are
Reuters, Inc., Xxxxxx Data Corporation, X.X. Xxxxx Co., Inc.,
Interactive Data Corporation (IDC), Dow Xxxxx Markets (formerly
Telerate Systems, Inc.), Municipal Market Data and Xxxxxxx Xxxxx
Pricing Service for equity, bond and money market prices/yields.
Bloomberg is available and used for price research.
o Enter limited number of manual prices supplied by the Fund and/or
broker.
o Prepare NAV proof sheet. Review components of change in NAV
for reasonableness.
o Review variance reporting on-line and in hard copy for price changes
in individual securities using variance levels established by the
Fund. Verify U.S. dollar security prices exceeding variance levels by
notifying the Fund and pricing sources of noted variances.
o Review for ex-dividend items indicated by pricing sources; trace to
Fund's general ledger for agreement.
o Communicate pricing information (NAV) to the Fund, the Fund's
Transfer Agent and, electronically, to NASDAQ.
o Submission of Weekly Accounting Reports to the Fund: (Additional
reports readily available)
Page 23
o Portfolio Valuation (listing inclusive of holdings, costs, market
values, unrealized appreciation/depreciation and percentage of
portfolio comprised of each security).
o NAV Calculation Report.
o Trial Balance.
C. Monthly Accounting Services
1. Full Financial Statement Preparation (automated Statements of Assets and
Liabilities, of Operations and of Changes in Net Assets) and submission
to the Fund by 10th business day.
2. Submission of Monthly Automated Accounting Reports to the Fund:
o Security Purchase/Sales Journal.
o Interest and Maturity Report.
o Brokers Ledger (Commission Report).
o Security Ledger Transaction Report with Realized Gains/Losses.
o Security Ledger Tax Lot Holdings Report.
o Additional reports available upon request.
3. Submit Reconciliation of Accounting Asset Listing to Custodian Asset
Listing:
o Report any security balance discrepancies to the Custodian/the Fund.
4. Provide Monthly Analysis and Reconciliation of Additional Trial Balance
Accounts, such as:
o Security cost and realized gains/losses.
o Interest/dividend receivable and income.
o Payable/receivable for securities purchased and sold.
o Payable/receivable for fund shares; issued and redeemed.
o Expense payments and accruals analysis.
5. Calculate Month-End NAV
D. Annual (and Semi-Annual) Accounting Services
1. Annually assist and supply Fund's auditors with schedules supporting
securities and shareholder transactions, income and expense accruals,
etc. during the year in accordance with standard audit assistance
requirements.
2. Provide N-SAR Reporting (Accounting Questions) on a Semi-Annual Basis:
If applicable, answer the following items:
Page 24
2, 12B, 20, 21, 22, 23, 28, 30A, 31, 32, 35, 36, 37, 43, 53, 55, 62, 63,
64B, 71, 72, 73, 74, 75 and 76
E. Accounts and Records
On each day the New York Stock Exchange is open for regular trading and
subject to the proper receipt (via Oral or Written Instructions) by Investor
Services Group of all information required to fulfill its duties under this
Agreement, Investor Services Group will maintain and keep current the
following Accounts and Records and any other records required to be kept
pursuant to Rule 31a-1 of the Act relating to the business of the Fund in
such form as may be mutually agreed upon between the Fund and Investor
Services Group:
(1)Net Asset Value Calculation Reports (weekly, unless the Fund directs
daily valuations (additional fees apply));
(2)Cash Receipts Report;
(3)Cash Disbursements Report;
(4)Dividends Paid and Payable Schedule;
(5)Purchase and Sales Journals - Portfolio Securities;
(6)Subscription and Redemption Reports;
(7)Security Ledgers - Transaction Report and Tax Lot Holdings Report;
(8)Broker Ledger - Commission Report;
(9)Expense Accruals;
(10) Interest Accruals;
(11) Trial Balance;
(12) Portfolio Interest Receivable and Income Reports;
(13) Portfolio Dividend Receivable and Income Reports;
(14) Listing of Portfolio Holdings - showing cost, market value and
percentage of portfolio comprised of each security; and
(15) Average Net assets provided on monthly basis.
F. Protocol concerning accuracy of Pricing Portfolio Securities
Investor Services Group shall perform the ministerial calculations necessary
to calculate the net asset value each Friday and the last day of each month
(or daily if the Fund directs) that the New York Stock Exchange is open for
business, in accordance with; (i) the current Prospectus and Statement of
Additional Information for the Fund, and (ii) procedures with respect
thereto approved by the Board of Directors and supplied in writing to
Investor Services Group. Fund items for which market quotations are
available by Investor Services Group's use of an automated financial
information service (the "Service") shall be based on the closing prices of
such Service except where the Fund has given or caused to be given specific
Written or Oral Instructions to utilize a different value subject to the
appropriate provisions in the Fund's Prospectus and Statement of Additional
Information then in effect. All of the portfolio securities shall be given
such values as the Fund provides by Written or
Page 25
Oral Instructions including all restricted securities and other securities
requiring valuation not readily ascertainable solely by such Service subject
to the appropriate provisions in the Fund's Prospectus and Statement of
Additional Information then in effect.
Investor Services Group will have no responsibility or liability for (i) the
accuracy of prices quoted by such Service; (ii) the accuracy of the
information supplied by the Fund; or (iii) any loss, liability, damage, or
cost arising out of any inaccuracy of such data. Investor Services Group
will have no responsibility or duty to include information or valuations to
be provided by the Fund in any computation unless and until it is timely
supplied to Investor Services Group in usable form. Investor Services Group
will record corporate action information as received from the Custodians,
the Service or the Fund. Investor Services Group will not have any duty to
gather or record corporate action information not supplied by these sources.
Investor Services Group will assume no liability for price changes caused by
the Advisor or any subadvisor, Custodian, suppliers of security prices,
corporate action and dividend information, or any party other than Investor
Services Group itself.
G. Basic Assumptions:
The Fund Accounting Fees as set forth in Schedule B are based on the
following assumptions. To the extent these assumptions are inaccurate or
requirements change, fee revisions may be necessary.
1. The Fund's portfolio asset composition will be primarily high yield debt
(100 positions), zero coupon issues and other high yield securities.
Ninety percent of the Fund's securities will have cash payments for
income. Trading activity is expected to be moderately high, with an
annual turnover rate of 75%. The Fund's total asset levels are projected
to be $250 - $750 million.
2. The Fund has a tax year-end which coincides with its fiscal year-end. No
additional accounting requirements are necessary to identify or maintain
book-tax differences. Investor Services Group does not provide security
tax accounting which differs from its book accounting under this fee
schedule.
3. The Fund agrees to the use of Investor Services Group's standard current
pricing services for domestic equity, debt, ADR and foreign securities.
It is assumed that Investor Services Group will work closely with the
Fund to ensure the accuracy of the Fund's NAV and to obtain the most
satisfactory pricing sources and specific methodologies prior to the
actual start-up date. The Fund will establish security variance
procedures to minimize NAV miscalculations.
Page 26
4. To the extent the Fund requires a limited number of security prices from
specific brokers (as opposed to pricing information received
electronically), these manual prices will be obtained by the Fund's
Advisor and faxed to Investor Services Group by 4:00 p.m. Eastern time
for inclusion in the NAV calculations. The Advisor will supply Investor
Services Group with the appropriate pricing contacts for these manual
quotes. Additional fees may apply should a high-level of manual prices
be necessary.
5. Investor Services Group will supply Portfolio Valuation Reports to the
Fund's Advisor identifying current security positions,
original/amortized cost, security market values and changes in
unrealized appreciation/depreciation. It will be the responsibility of
the Advisor to review these reports and to promptly notify Investor
Services Group of any possible problems, trade discrepancies, incorrect
security prices or corporate action/capital change information that
could result in a misstated NAV.
6. The Fund does not currently expect to invest in Open-end Regulated
Investment Company's (RIC's), REIT's, Swaps, Futures, Xxxxxx,
Derivatives or foreign (non-U.S. dollar denominated) securities and
currency. To the extent these investment strategies should change,
additional fees may apply after the appropriate procedural discussions
have taken place between Investor Services Group and Fund management.
(Two weeks advance notice is required should the Fund commence trading
in these investments.)
7. The Fund will supply Investor Services Group with income information
such as accrual methods, interest payment frequency details, coupon
payment dates, floating rate reset dates, and complete security
descriptions with issue types and CUSIP/Sedol numbers for all debt
issues. The Fund's Advisor shall supply the yield to maturity, related
cash flow schedules and principal repayment factors for any
mortgage/asset-backed securities held in the Fund not available on
Bloomberg.
8. The Fund is responsible for the establishment and monitoring of any
segregated accounts pertaining to any line of credit for temporary
administrative purposes, and/or leveraging/hedging the portfolio.
Investor Services Group will reflect appropriate trial balance account
entries for interest expense accrual charges on the daily trial balance
adjusting as necessary at month-end.
9. If the Fund commences participation in security lending or short sales
within its portfolio securities, additional fees may apply. Should the
Fund require these additional services, procedural discussions must take
place between Investor Services Group and the Fund's Advisor to clarify
responsibilities. (Two weeks advance notice to Investor Services Group
is required should the Fund desire to participate in the above.)
10. The Fund will supply Investor Services Group with portfolio specific
expense accrual procedures and monitor the expense accrual balances for
adequacy based on outstanding liabilities monthly.
Page 27
11. The following specific deadlines will be met and complete information
will be supplied by the Fund in order to minimize any settlement
problems, NAV miscalculations or income accrual adjustments.
The Fund will direct its Advisor to provide Trade Authorization Forms to
Investor Services Group with the appropriate officer's signature on all
security trades placed by the Fund no later than 12:30 p.m. Eastern time
on settlement/value date for short term money market securities issues
(assuming that trade date equals settlement date); and by 11:00 a.m.
Eastern time on trade date plus one for non-money market securities.
Receipt by Investor Services Group of trade information within these
identified deadlines may be made via telex, fax or on-line system
access. The Advisor will supply Investor Services Group with the trade
details in accordance with the above stated deadlines.
The Advisor will provide all information required by Investor Services
Group, including CUSIP/Sedol numbers and/or ticker symbols for all
trades on the Trade Authorization, telex or on-line support. Investor
Services Group will supply the Advisor with recommended trade ticket
documents to minimize receipt of incomplete information. Investor
Services Group will not be responsible for NAV changes or distribution
rate adjustments that result from incomplete trade information.
12. To the extent the Fund utilizes purchases in-kind (U.S. dollar
denominated securities only) as a method for shareholder subscriptions,
Investor Services Group will provide the Fund with procedures to
properly handle and process such transactions. Should the Fund prefer
procedures other than those provided by Investor Services Group,
additional fees may apply. Discussions shall take place at least two
weeks in advance between Investor Services Group and the Fund to clarify
the appropriate in-kind operational procedures to be followed.
13. The Parties will establish mutually agreed upon amortization procedures
and accretion requirements for debt issues held by the Fund prior to
commencement of operations.
14. The Fund Accounting fees assume Custody Administration will be provided
by Investor Services Group.
3. SERVICES RELATED TO CUSTODY ADMINISTRATION
o Assign a custody administrator to accept, control and process the Fund's
daily portfolio transactions through direct computer link with the
Custodian.
o Match and review DTC eligible ID's and trade information with the Fund's
instructions for accuracy and coordinating with the Custodian and the
Fund's accounting agent for recording and affirmation processing with
the depository.
Page 28
o Systematically settle all depository eligible issues. Transactions
requiring physical delivery will be settled through the Custodian's New
York office.
o Assist the Fund in placing cash management trades through Custodian,
such as commercial paper, CD's and repurchase agreements.
o Provide Investor Services Group the Advisor with daily custodian
statements reflecting all prior day cash activity on behalf of each
portfolio by 8:30 a.m. Eastern time. Complete descriptions of any
posting, inclusive of Sedol/CUSIP numbers, interest/dividend payment
date, capital stock details, expense authorizations, beginning/ending
cash balances, etc., will be provided by the Custodian's reports or
system.
o Provide monthly activity statements combining both cash changes and
security trades, and a full portfolio listing.
o Communicate to the Fund Investor Services Group on any corporate
actions, capital changes and interest rate changes supported by
appropriate supplemental reports received from the Custodian. Follow-up
will be made with the Custodian to ensure all necessary actions and/or
paperwork is completed.
o Work with Investor Services Group and the Custodian on monthly asset
reconciliations.
o Coordinate and resolve unsettled dividends, interest, paydowns and
capital changes. Assist in resolution of failed transactions and any
settlement problems.
o Arrange for securities lending, lines of credit and/or letters of credit
through the Custodian.
o Provide automated mortgage-backed processing through the Custodian.
o Provide broker interface ensuring trade settlement with fail trade
follow-up.
o Provide the Fund's auditors with trade documentation to help expedite
the Fund's audit.
Page 29
SCHEDULE C
After the one year anniversary of the effective date of this Agreement, Investor
Services Group may adjust the above fees once per calendar year, upon thirty
(30) days prior written notice in an amount not to exceed the cumulative
percentage increase in the Consumer Price Index for All Urban Consumers (CPI-U)
U.S. City Average, All items (unadjusted) - (1982-84=100), published by the U.S.
Department of Labor since the last such adjustment in the Fund's monthly fees
(or the Effective Date absent a prior such adjustment).
I. Fees Related to Fund Administration (1/12th payable monthly)
$50,000 per year
II. Fees Related to Fund Accounting and Portfolio Valuation
A. Annual Fee Schedule: U.S. Dollar Denominated Securities only (1/12th
payable monthly)
1) Annual Fee Schedule - Weekly NAV Calculations
$27,000 Annual minimum, plus
.0001 on Average Net Assets to $1 Billion
.000075 on Average Net Assets over $1 Billion
2) Annual Fee Schedule - Daily NAV Calculations
$33,000 Annual minimum, plus
.0001 on Average Net Assets to $1 Billion
.000075 on Average Net Assets over $1 Billion
3) Rights Offering
If such an offering occurs, then there would be an associated
one-time fee not to exceed $5,000, depending on the services required
for each Rights Offering.
B. Pricing Services Quotation Fee
Specific costs will be identified based upon options selected by the
Fund and will be billed monthly.
Investor Services Group does not currently pass along the charges for
the U.S. equity prices supplied by Xxxxxx Data. Should the Fund invest
in security types other than domestic equities supplied by Xxxxxx, the
following fees would apply.
Page 30
Xxxxxx Data Interactive X.X. Xxxxx
Security Types Corp.* Data Corp.* Co., Inc.*
--------------------------------------------------------------------------------
Government Bonds $ $ $
--------------------------------------------------------------------------------
Mortgage-Backed (evaluated, seasoned,
closing)
--------------------------------------------------------------------------------
Corporate Bonds (short and long term)
--------------------------------------------------------------------------------
U.S. Municipal Bonds (short and long
term)
--------------------------------------------------------------------------------
CMO's/ARM's/ABS
--------------------------------------------------------------------------------
Convertible Bonds
--------------------------------------------------------------------------------
High Yield Bonds
--------------------------------------------------------------------------------
Mortgage-Backed Factors (per Issue per
Month)
--------------------------------------------------------------------------------
U.S. Equities (d) .15 n/a
--------------------------------------------------------------------------------
U.S. Options
--------------------------------------------------------------------------------
Domestic Dividends & Capital Changes
(per Issue per Month)
--------------------------------------------------------------------------------
Foreign Securities
--------------------------------------------------------------------------------
Foreign Securities Dividends & Capital
Changes
(per Issue per Month)
--------------------------------------------------------------------------------
Set-up Fees
--------------------------------------------------------------------------------
All Added Items .25 (c)
--------------------------------------------------------------------------------
* Based on current Vendor costs, subject to change. Costs are quoted
based on individual security CUSIP/identifiers and are per issue
per day.
(a) $35.00 per day minimum
(b) $25.00 per day minimum
Page 31
(c) $ 1.00, if no CUSIP
(d) At no additional cost to Investor Services Group clients
(e) Interactive Data also charges monthly transmission costs and
disk storage charges.
C. Futures and Currency Forward Contracts $2.00 per Issue per Day
X. Xxx Xxxxx Markets (formerly Telerate Systems, Inc.)* (if applicable)
*Based on current vendor costs, subject to change.
Specific costs will be identified based upon options selected by DLJ and
will be billed monthly.
E. Reuters, Inc.*
*Based on current vendor costs, subject to change.
Investor Services Group does not currently pass along the charges for
the domestic security prices supplied by Reuters, Inc.
F. Municipal Market Data* (if applicable)
*Based on current vendor costs, subject to change.
Specific costs will be identified based upon options selected by DLJ and
will be billed monthly.
III. Fees Related to Custody Administration of Fund Assets Using Citibank,
N.A. 70% of the following fees will apply
A. Domestic Securities and ADRs: (1/12th payable monthly)
U.S. Dollar Denominated Securities only
.000168 On First $ 75 Million of Average Net Assets
.000120 On the Next $ 75 Million of Average Net Assets
.000100 Over $150 Million of Average Net Assets
Minimum monthly fee is $500 per Portfolio.
B. Custody Domestic Securities Transactions Charge: (billed monthly)
Book Entry DTC, Federal Book Entry, PTC $14.00
Physical/RIC's $24.00
Mortgage Backed Securities -- Principal paydown per pool $11.00
Options $45.00
Page 32
A transaction includes buys, sells, maturities or free security movements.
C. When Issued, Securities Lending, Index Futures, etc.:
Should any investment vehicle require a separate segregated custody
account, a fee of $250 per account per month will apply to the long
term funds, $125 per account per month for the money funds.
D. Custody Miscellaneous Fees
Administrative fees incurred in certain local markets will be passed
onto the customer with a detailed description of the fees. Fees include
income collection, corporate action handling, overdraft charges, funds
transfer, special local taxes, stamp duties, registration fees,
messenger and courier services and other out-of-pocket expenses.
Additional Services
To the extent the Fund commences using investment techniquest such as Security
Lending, Swaps, Leveraging, Short Sales, Derivatives, Precious Metals, or
foreign (non-U.S.D.) securities and currency, additional fees will apply.
Activities of a non-recurring nature such as shareholder inkinds, rights
offerings, fund consolidations, mergers or reorganizations will be subject to
negotiation. Any additional/enhanced services, programming requests, or reports
will be quoted upon request.
Page 33
SCHEDULE D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse Investor Services Group monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
o Microfiche/microfilm production
o Magnetic media tapes and freight
o Printing costs, including certificates, envelopes, checks and stationery
o Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass
through to the Fund
o Due diligence mailings
o Telephone and telecommunication costs, including all lease, maintenance
and line costs
o Ad hoc reports
o Proxy solicitations, mailings and tabulations
o Daily & Distribution advice mailings
o Shipping, Certified and Overnight mail and insurance
o Year-end form production and mailings
o Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
o Duplicating services
o Courier services
o Incoming and outgoing wire charges
o Federal Reserve charges for check clearance
o Overtime, as approved by the Fund
o Temporary staff, as approved by the Fund
o Travel to and from Board meetings
o Travel and entertainment, as approved by the Fund
o Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
o Third party audit reviews
o Ad hoc SQL time
o Insurance
o Pricing services (or services used to determine Fund NAV)
o Forms and supplies for the preparation of Board meetings and other
materials for the Fund
o Vendor set-up charges for Blue Sky services
o Customized programming requests
o SAS 70
o Cold Storage
o Document Retrieval
Page 34
o Vendor pricing comparison
o Manual pricing
o Such other miscellaneous expenses reasonably incurred by Investor
Services Group in performing its duties and responsibilities under
this Agreement.
The Fund agrees that postage and mailing expenses will be paid on the day of or
prior to mailing as agreed with Investor Services Group. In addition, the Fund
will promptly reimburse Investor Services Group for any other unscheduled
expenses incurred by Investor Services Group whenever the Fund and Investor
Services Group mutually agree that such expenses are not otherwise properly
borne by Investor Services Group as part of its duties and obligations under the
Agreement.
SCHEDULE E
FUND DOCUMENTS
Certified copy of the Articles of Incorporation of the Fund, as
amended
Certified copy of the By-laws of the Fund, as amended
Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
Copies of all agreements between the Fund and its service providers
Each Fund's most recent post-effective amendment to its Registration
Statement
Each Fund's most recent prospectus and statement of additional
information, if applicable, and all amendments and supplements
thereto
