SOUND SHORE FUND, INC.
COMPLIANCE SERVICES AGREEMENT
AGREEMENT made as of the 1st of October 2004 and as amended and restated on
January 31, 2008, by and between Sound Shore Fund, Inc., a Maryland corporation,
with its principal office and place of business at ____________________________
(the "Fund"), and Foreside Compliance Services, LLC, a Delaware limited
liability company with its principal office and place of business at Xxx
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000 ("FCS").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and
issues its shares of common stock, $0.001 par value (the "Shares"); and
WHEREAS, the Fund desires that FCS perform certain compliance services and
FCS is willing to provide those services on the terms and conditions set forth
in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund and FCS hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) Subject to the approval of the Board of Directors of the Fund, FCS
hereby agrees, to provide a Chief Compliance Officer ("CCO"), as described in
Rule 38a-1 of the 1940 Act ("Rule 38a-1") and an Anti-Money Laundering
Compliance Officer ("AMLCO") to the Fund for the period and on the terms and
conditions set forth in this Agreement.
(b) In connection therewith, the Fund has delivered to FCS copies of: (i)
the Fund's Articles of Incorporation and Bylaws (collectively, as amended from
time to time, "Organizational Documents"); (ii) the Fund's current Registration
Statement, as amended or supplemented, filed with the U.S. Securities and
Exchange Commission ("SEC") pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), or the 1940 Act (the "Registration Statement"); (iii)
the Fund's current Prospectus and Statement of Additional Information
(collectively, as currently in effect and as amended or supplemented, the
"Prospectus" or "SAI", as the case may be, or the "Disclosure Documents"); (iv)
each plan of distribution or similar document adopted by the Fund under Rule
12b-1 under the 1940 Act ("Plan") and each current shareholder service plan or
similar document adopted by the Fund ("Service Plan"); (v) copies of the Fund's
current annual and semi-annual reports to shareholders; and (vi) all policies,
programs and procedures adopted by the Fund with respect to the Funds (e.g.,
repurchase agreement procedures), and shall promptly furnish FCS with all
amendments of or supplements to the foregoing. The Fund shall deliver to FCS a
certified copy of the resolution of the Board of Directors of the Fund (the
"Board") appointing FCS hereunder and authorizing the execution and delivery of
this Agreement.
SECTION 2. DUTIES OF FCS
(a) Subject to the approval of the Board, FCS shall make available a
qualified person to act as the Fund's CCO who is competent and knowledgeable
regarding the federal securities laws and who shall act in good faith and in a
manner reasonably believed by him or her to be in the best interest of the Fund.
FCS' responsibility for the activities of the CCO are limited to the extent that
the Board shall make all decisions regarding the designation, termination and
level of compensation of the CCO as provided by Rule 38a-1.
(b) With respect to the Fund, the CCO shall:
(i) Report directly to the Board;
(ii) Review and administer the Fund'xxx compliance program policies
and procedures including those policies and procedures of the Fund's
adviser, administrator, principal underwriter and transfer agent
(collectively, Service Providers") that relate to the Fund;
(iii) Conduct periodic reviews of the Fund's compliance program to
incorporate any new or changed regulations, best practice
recommendations or other guidelines that may be appropriate;
(iv) Review no less frequently than annually, the adequacy of the
policies and procedures of the Fund and its Service Providers and the
effectiveness of their implementation;
(v) Apprise the Board of significant compliance events at the Fund or
its Services Providers;
(vi) Design testing methods for the Fund's compliance program policies
and procedures;
(vii) Perform and document periodic testing of certain key control
procedures (as appropriate to the circumstances), including reviewing
reports, investigating exceptions, and making inquiries of Fund
management and Service Providers;
(viii) Conduct periodic site visits to advisers and other Service
Providers as necessary;
(ix) Provide training and deliver updates to the Fund or its Service
Providers, as necessary;
-2-
(x) Establish a quarterly reporting process to the Board, including
both written and oral reports. The CCO will attend regularly scheduled
board meetings as well as special meetings on an as-needed basis.
(xi) Prepare a written annual report for the Board. Such report shall,
at a minimum, address (A) the operation of the Fund's and its Service
Providers' policies and procedures since the last report to the Board;
(B) any material changes to such policies and procedures since the
last report; (C) any recommendations for material changes to the
policies and procedures as a result of the periodic or annual reviews
referred to in Sections 2(b)(iii) and (iv) above; and (D) any
"material compliance matters" (as defined in Rule 38a-1) since the
date of the last report; and
(xii) No less than annually, the CCO shall meet separately with the
Fund's independent Directors.
(c) With respect to the Fund, FCS shall
(i) Subject to the approval of the Board, make available a qualified
person to act as the Fund's Anti-Money Laundering Compliance Officer
("AMLCO") who is competent and knowledgeable regarding anti-money
laundering rules and regulations applicable to mutual funds and who
shall act in good faith and in a manner reasonably believed by him or
her to be in the best interest of the Fund; and
(ii) Assist the Fund with compliance matters as requested.
(d) FCS shall provide such other services and assistance relating to the
affairs of the Fund as the Fund may, from time to time, reasonably request
pursuant to mutually acceptable compensation and implementation agreements.
(e) FCS shall maintain records relating to its services, such as compliance
policies and procedures, relevant Board presentations, annual reviews, and other
records, as are required to be maintained under the 1940 Act and Rule 38a-1
thereunder. Such reports shall be maintained in the manner and for the periods
as are required under the applicable rule or regulation. The books and records
pertaining to the Fund that are in the possession of FCS shall be the property
of the Fund. The Fund, or the Fund's authorized representatives, shall have
access to such books and records at all times during FCS' normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided promptly by FCS to the Fund or the Fund's authorized
representatives at the Fund's expense.
(f) Nothing contained herein shall be construed to require FCS to perform
any service that could cause FCS to be deemed an investment adviser for purposes
of the 1940 Act or the Investment Advisers Act of 1940, as amended, or that
could cause the Fund to act in contravention of the Fund's Prospectus or any
provision of the 1940 Act. Except with respect to
-3-
FCS' duties as set forth in this Section 2 and except as otherwise specifically
provided herein, the Fund assumes all responsibility for ensuring that the Fund
complies with all applicable requirements of the Securities Act, the Exchange
Act, the 1940 Act and any laws, rules and regulations of governmental
authorities with jurisdiction over the Fund. All references to any law in this
Agreement shall be deemed to include reference to the applicable rules and
regulations promulgated under authority of the law and all official
interpretations of such law or rules or regulations.
(g) In order for FCS to perform the services required by this Section 2,
the Fund (i) shall take reasonable steps to encourage all Service Providers to
furnish any and all information to FCS as reasonably requested by FCS, and
assist FCS as may be required and (ii) shall take reasonable steps to obtain the
result that FCS has access to all records and documents maintained by the Fund
or any service provider to the Fund.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION
(a) Whenever an employee or agent of Foreside serves as CCO or AMLCO of the
Fund, as long as such CCO or AMLCO acts in good faith and in a manner reasonably
believed by him or her to be in the best interests of the Fund (and would not
otherwise be liable to the Fund by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office), the Fund shall indemnify the CCO or AMLCO and Foreside and
all other of its employees, agents, directors, officers and managers and any
person who controls Foreside within the meaning of Section 15 of the Securities
Act of 1933 or Section 20 of the Securities Exchange Act of 1934 (the "Foreside
Indemnitees") and hold the CCO and AMLCO and the Foreside Indemnitees harmless
from any loss, liability, expenses (including reasonable attorneys fees) and
damages incurred by them arising out of or related to the service of such
employee or agent of Foreside as CCO or AMLCO of the Fund.
(b) FCS agrees to indemnify and hold harmless the Fund, its employees,
agents, directors, officers and managers (other than the CCO and AMLCO) ("Fund
Indemnitees"), from any loss, liability, expenses (including reasonable
attorneys fees) and damages incurred by them arising out of or related to (i)
CCO or AMLCO actions taken or failures to act with respect to the Fund that are
by reason of his or her willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office;
(ii) any breach of this Agreement by FCS; or (iii) any breach of FCS'
representations set forth in Section 4.
(c) FCS shall not be liable for the errors of other service providers to
the Fund or their systems.
(d) The Fund, and not FCS, shall be solely responsible for approval of the
designation and compensation of the Fund CCO, as well as for removing the CCO
from his or her responsibilities related to the Fund in accordance with Rule
38a-1. Therefore, notwithstanding the provisions of this section 3, the Fund
shall supervise the activities of the Fund CCO with regard to such activities.
-4-
SECTION 4. REPRESENTATIONS AND WARRANTIES
(a) FCS represents and warrants to the Fund that:
(i) It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware;
(ii) It is duly qualified to carry on its business in the State of
Maine;
(iii) It is empowered under applicable laws and by its Operating
Agreement to enter into this Agreement and perform its duties under
this Agreement;
(iv) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement;
(v) It has access to the necessary facilities, equipment, and
personnel to assist the CCO in the performance of his or her duties
and obligations under this Agreement;
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of FCS, enforceable against FCS in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties;
(vii) It shall make available a person who is competent and
knowledgeable regarding the federal securities laws and is otherwise
reasonably qualified to act as a CCO and who will, in the exercise of
his or her duties to the Fund, act in good faith and in a manner
reasonably believed by him or her to be in the best interests of the
Fund ;
(viii) It shall compensate the CCO fairly, subject to the Board's
right under any applicable regulation (e.g., Rule 38a-1) to approve
the designation, termination and level of compensation of the CCO. In
addition, it shall not retaliate against the CCO should the CCO inform
the Board of a compliance failure or take aggressive action to ensure
compliance with the federal securities laws by the Fund or a Service
Provider;
(ix) It shall report to the Board promptly if FCS learns about CCO
malfeasance or in the event the CCO is terminated as a CCO by another
Fund; and
(x) It shall report to the Board if at any time the CCO is subject to
the "bad boy" disqualifications as set forth in Section 15(b)(4) of
the Exchange Act or Section 9 of the 1940 Act.
-5-
(b) The Fund represents and warrants to FCS that:
(i) It is a corporation duly organized and existing and in good
standing under the laws of the State of Maryland and is qualified to
do business and is in good standing under the laws of the State of
Maryland;
(ii) It is empowered under applicable laws and by its Fund Documents
to enter into this Agreement and perform its duties under this
Agreement;
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement;
(iv) It is an open-end management investment company registered under
the 1940 Act;
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Fund, enforceable against
the Fund in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties;
(vi) A registration statement under the Securities Act and the
Exchange Act is currently effective and will remain effective and
appropriate State securities law filings have been made and will
continue to be made with respect the Fund; and
(vii) The CCO and AMLCO shall be covered by the Fund's Directors &
Officers/Errors & Omissions Policy (the "Policy"), and the Fund shall
use reasonable efforts to ensure that the CCO's coverage be (a)
reinstated should the Policy be cancelled; (b) continued after the CCO
ceases to serve as the Fund's CCO on substantially the same terms as
such coverage is provided for the Fund officers after such persons are
no longer officers of the Fund; or (c) continued in the event the Fund
merges or terminates, on substantially the same terms as such coverage
is provided for the Fund officers (but for a period no less than six
years). The Fund shall provide FCS with proof of current coverage,
including a copy of the Policy, and shall notify FCS immediately
should the Policy be cancelled or terminated.
SECTION 5. COMPENSATION AND EXPENSES
(a) In consideration of the compliance services provided by FCS pursuant to
this Agreement, the Fund shall pay FCS the fees set forth in Appendix A hereto.
All fees payable hereunder shall be accrued daily by the Fund. The fees
payable for the services listed in Appendix A hereto shall be payable monthly in
arrears on the first business day
-6-
of each calendar month for services performed during the prior calendar month.
Any out-of-pocket charges incurred by FCS as set forth in Appendix A shall be
paid as incurred. If fees begin to accrue in the middle of a month or if this
Agreement terminates before the end of any month, all fees for the period from
that date to the end of that month or from the beginning of that month to the
date of termination, as the case may be, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement, the Fund shall pay
to FCS such compensation, as shall be payable prior to the effective date of
termination.
(b) FCS may, with respect to questions of law relating to its services
hereunder, apply to and obtain the advice and opinion of Fund counsel. The costs
of any such advice or opinion shall be borne by the Fund.
(c) FCS shall not be responsible for and will not assume the obligation for
payment of the expenses of the Fund, including, without limitation: (i) the fee
payable under this Agreement; (ii) the fees payable to the investment adviser
under an agreement between the investment adviser and the Fund; (iii) expenses
of issue, repurchase and redemption of Fund Shares; (iv) interest charges, taxes
and brokerage fees and commissions; (v) premiums of insurance for the Fund, the
directors and officers and fidelity bond premiums; (vi) fees, interest charges
and expenses of third parties, including Fund counsel, counsel to the Fund's
independent directors, independent public accountants, compliance audit firms,
custodians, transfer agents, dividend disbursing agents and Fund accountants;
(vii) fees of pricing, interest, dividend, credit and other reporting services;
(viii) costs of membership in trade associations; (ix) telecommunications
expenses; (x) transmission expenses; (xi) costs of maintaining the Fund's
existence; (xii) costs of preparing, filing and printing the Fund's Prospectus,
subscription application forms and stockholder reports and other communications
and delivering them to existing stockholders, whether of record or beneficial;
(xiii) expenses of meetings of stockholders and proxy solicitations therefor;
(xiv) costs of maintaining books of original entry for portfolio and Fund
accounting and other required books and accounts and of calculating the net
asset value of Shares; (xv) costs of stationery, supplies and postage; (xvi)
fees and expenses of the Fund's directors and officers (except those incurred by
officers affiliated with FCS); (xvii) costs of other personnel performing
services for the Fund; (xviii) costs of Board, Board committee, and other
corporate meetings; (xix) SEC registration fees and related expenses; and (xx)
state, territory or foreign securities laws registration fees and related
expenses.
SECTION 6. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective on the date indicated above or
such time FCS commences providing services under this Agreement, whichever is
later. Upon effectiveness of this Agreement, this Agreement shall constitute the
entire agreement between the parties and shall supersede all previous agreements
between the parties, whether oral or written relating to the Fund.
(b) This Agreement shall continue in effect until terminated.
-7-
(c) This Agreement may be terminated at any time, without the payment of
any penalty (i) by the Board on sixty (60) days' written notice to FCS or (ii)
by FCS on sixty (60) days' written notice to the Fund; provided that the
provisions of this Agreement related to services pursuant to Section 2, may be
terminated at any time by the Board, effective upon written notice to FCS,
without the payment of any penalty; the remaining portions of this Agreement
shall be considered severable and not affected.
(d) The provisions of Sections 2(e), 3, 6(d), 6(e), 7, 8, 10, 11, and 12
shall survive any termination of this Agreement.
(e) This Agreement and the rights and duties under this Agreement otherwise
shall not be assignable by either FCS or the Fund except by the specific written
consent of the other party. All terms and provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
SECTION 7. CONFIDENTIALITY
Each Party shall comply with the laws and regulations applicable to it in
connection with its use of Confidential Information, including, without
limitation, Regulation S-P (if applicable). FCS agrees to treat all records and
other information related to the Fund as proprietary information of the Fund
and, on behalf of itself and its employees, to keep confidential all such
information, except that FCS may
(a) Release such other information (i) as approved in writing by the Fund,
which approval shall not be unreasonably withheld and may not be withheld where
FCS is advised by counsel that it may be exposed to civil or criminal contempt
proceedings for failure to release the information (provided, however, that FCS
shall seek the approval of the Fund as promptly as possible so as to enable the
Fund to pursue such legal or other action as it may desire to prevent the
release of such information) or (ii) when so requested by the Fund.
SECTION 8. FORCE MAJEURE
FCS shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
system or power supply. In addition, to the extent FCS' obligations hereunder
are to oversee or monitor the activities of third parties, FCS shall not be
liable for any failure or delay in the performance of FCS' duties caused,
directly or indirectly, by the failure or delay of such third parties in
performing their respective duties or cooperating reasonably and in a timely
manner with FCS.
SECTION 9. ACTIVITIES OF FCS
-8-
(a) Except to the extent necessary to perform FCS' obligations under this
Agreement, nothing herein shall be deemed to limit or restrict FCS' right, or
the right of any of FCS' managers, officers or employees who also may be a
director, officer or employee of the Fund, or who are otherwise affiliated
persons of the Fund, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
(b) Upon notice to the Fund, FCS may subcontract any or all of its
functions or responsibilities pursuant to this Agreement to one or more persons,
which may be affiliated persons of FCS, who agree to comply with the terms of
this Agreement; provided, that any such subcontracting shall not relieve FCS of
its responsibilities hereunder. FCS may pay those persons for their services,
but no such payment will increase FCS' compensation or reimbursement of expenses
from the Fund.
SECTION 10. COOPERATION WITH INDEPENDENT PUBLIC ACCOUNTANTS
FCS shall cooperate with the Fund's independent public accountants and
shall take reasonable action to make all necessary information available to the
accountants for the performance of the accountants' duties.
SECTION 11. LIMITATION OF STOCKHOLDER AND DIRECTOR LIABILITY
The directors of the Fund and the stockholders of the Fund shall not be
liable for any obligations of the Fund under this Agreement, and FCS agrees
that, in asserting any rights or claims under this Agreement, it shall look only
to the assets and property of the Fund.
SECTION 12. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party for
consequential, special or indirect damages under any provision of this
Agreement.
(b) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(c) This Agreement may be executed by the parties hereto in any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) If any part, term or provision of this Agreement is held to be illegal,
in conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced
-9-
as if the Agreement did not contain the particular part, term or provision held
to be illegal or invalid. This Agreement shall be construed as if drafted
jointly by both FCS and Fund and no presumptions shall arise favoring any party
by virtue of authorship of any provision of this Agreement.
(e) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(f) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(g) Nothing contained in this Agreement is intended to or shall require
FCS, in any capacity hereunder, to perform any functions or duties on any day
other than a Fund business day. Functions or duties normally scheduled to be
performed on any day which is not a Fund business day shall be performed on, and
as of, the next Fund business day, unless otherwise required by law.
(h) The term "affiliate" and all forms thereof used herein shall have the
meanings ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
SOUND SHORE FUND, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FORESIDECOMPLIANCE SERVICES, LLC
By:
------------------------------------
Xxxxx X. Xxxxxxx
President
-10-
SOUND SHORE FUND, INC.
COMPLIANCE SERVICES AGREEMENT
APPENDIX A
AS OF OCTOBER 1, 2004
AND AS AMENDED AND RESTATED JANUARY 31, 2008
(1) COMPLIANCE OFFICER SERVICES
(a) Standard Annual Fee:
$40,000
(2) OTHER COMPLIANCE SERVICES
(a) Basis Point Fee (% of Fund Annual Average Daily Net Assets):
0.0045%
(3) OUT-OF-POCKET AND RELATED EXPENSES
The Fund shall reimburse FCS for the following out-of-pocket and ancillary
expenses:
(i) communications
(ii) postage and delivery services
(iii) record storage and retention (imaging, microfilm and shareholder record
storage)
(iv) reproduction
(v) reasonable travel expenses for the CCO incurred in connection with his
oversight of the compliance programs of the Service Providers
(vi) reasonable travel expenses incurred in connection with travel requested by
the Board
(vii) other expenses incurred in connection with providing the services
described in this Agreement if approved by the Fund
-A1-
