Exhibit (h)(5)
AMENDED AND RESTATED
SERVICE
AGREEMENT
THIS AGREEMENT (the “Agreement”)
is amended and restated as of this 24th day of June, 2021, by and between the trusts listed in Appendix A (the “Trusts”),
on behalf of themselves and each of their funds (except as noted) (the “Funds”) and Xxxx Xxxxxxx Investment Management LLC
(formerly, Xxxx Xxxxxxx Advisers, LLC) (“Xxxx Xxxxxxx”).
WHEREAS, each
Trust desires to retain Xxxx Xxxxxxx to provide certain services to the Trust and the Funds as described below; and Xxxx Xxxxxxx is willing
to provide such services in the manner and on the terms hereinafter set forth; and
WHERE AS, each
Trust, except Xxxx Xxxxxxx Collateral Trust and the Xxxx Xxxxxxx Exchange- Traded Fund Trust (the “Existing Trusts”), has
entered into a Service Agreement with Xxxx Xxxxxxx dated as of June 25, 2014, as amended, and each Existing Trust desires to amend and
restate that Agreement and the Xxxx Xxxxxxx Collateral Trust and the Xxxx Xxxxxxx Exchange- Traded Fund Trust desire to become a party
to the Service Agreement;
NOW, THEREFORE, each Trust and Xxxx
Xxxxxxx hereby agree as follows:
1. Services.
Subject to the general supervision of the Boards of Trustees of the Trusts (the “Boards of Trustees”), Xxxx Xxxxxxx will
provide (a) to the Trusts and each of the Funds the services set forth below, and (b) to each of the Funds (if any) that is identified
in Appendix B as a feeder fund (“Feeder Fund”) that invests substantially all of its assets in a corresponding master fund
(“Master Fund”) having substantially similar investment objectives and policies, such additional services and functions set
forth below, as are reasonably necessary for the operation of the Trusts and each Fund (“Services”). The Services, to the
extent not required to be performed by Xxxx Xxxxxxx pursuant to an investment advisory agreement with respect to a Fund, include, but
are not limitedto:
| A. | Legal services as follows: |
| (1) | Maintenance of each Fund’s registration statement and federal and state registration; |
| (2) | Preparation of certainnoticesand proxy materialsfurnished to shareholders of the Funds; |
| (3) | Preparation of periodic reports of each Fund to regulatory authorities, including Form N-SAR and Rule
24f-2 legal opinions; |
| (4) | Preparation of materials in connection with meetings of the Board of Trustees including minutes of
the meeting and all Board Committee meetings; |
| (5) | Administration of the meetings of the Board of Trustees; |
| (6) | Preparation of written contracts, distributions plans, compliance procedures, corporate and trust documents
and other legal documents; |
| (7) | Research advice and consultation about certain legal, regulatory and compliance issues; |
| (8) | Supervision, coordination and evaluation of certain services provided by outside counsel; |
| (9) | Responses to subpoenas and appropriate information requests for shareholder records; and |
| (10) | Management of litigation regarding the Funds. |
| B. | Tax Services as follows: |
| (1) | Preparation (and in some cases reviewing EY’s preparation) of all required tax returns for the
Funds; |
| (2) | Preparation (and in some cases reviewing EY’s preparation) of all required tax returns for the
Funds; |
| (3) | Review of “complex” securities purchased by the Funds; |
| (4) | Preparation of tax information that is included in a Fund’s Form 1099-DIV and distributed to
third party intermediaries; |
| (5) | Preparation of financial statement tax adjustments and disclosures for the Funds; |
| (6) | Monitoring regulatory compliance with applicable IRS rules and regulations; |
| (7) | Preparation of tax provisions for excise, fiscal year-end and calendar year end; |
| (8) | Analysis and consultation regarding certain tax matters; |
| (9) | Oversight of tax services provided by auditing firms such as Ernst & Young; and |
| (10) | Preparation (and in some cases reviewing EY’s preparation) of all required tax returns for the
Funds; |
| (11) | Analysis of complex corporate actions for tax purposes; and |
| (12) | Consultation with the Investment Product group on new products from a tax perspective; |
| C. | Treasury & Portfolio Services as follows: |
| (1) | Review of each Fund’s class-level net asset value computation (as calculated
by the Custodian) using the Line Data system on a daily (next day) basis; |
| (2) | Resolve daily fund accounting, custody, and other operational issues that arise
given the dual-custodian model and number of sub-advisors on the platform; Corporate action oversight; daily yield review, etc. |
| (3) | Provide guidance and support to the Investments team on complex Fund events, investment
types, and other complexities surrounding operational issues that arise; |
| (4) | Subject matter experts on accounting and trading operations related to the Funds
and disposition of all incidents appropriately; |
| (5) | Assessment and review of internal controls at the Custodian bank and perform Custodian
and Fund Accounting agent oversight and due diligence visits as necessary; |
| (6) | Support for and calculation of daily and periodic Fund dividend distributions including
the Excise process; |
| (7) | Review, analysis and disposition of NAV pricing errors including processing and
determination of applicable support for reimbursement of losses and reprocessing of fund shares; |
| (8) | Preparation of Board materials (relevant to TPS) for Fund Administration, including
materials for the annual Fund Contracts review; |
| (9) | Development of Accounting Policies; |
| (10) | Coordinate and execute the duties of the Complex Securities Committee; |
| (11) | Support the RIO (Risk in Investment Operations) process and facilitate meetings,
reporting, and Board materials thereof; |
| (12) | Administer the daily Interfund Lending (IFL) program including adherence to the
SEC Exemptive Order; |
| (13) | Administer daily leveraged line of credit process for the Closed-End funds, including
the monitoring and movement of collateral as required as well as coordination of the annual line of credit analysis; |
| (14) | Daily overdraft monitoring including administration of the open-end line of credit; |
| (15) | Review of cash and securities reconciliations and agedexception items; |
| (16) | Review monthly custodian Operations Report and conduct periodic onsite risk reviews; |
| (11) | Oversight of Blue-Sky filings as they pertain to Fund events; |
| (11) | Coordinate and execute transactions relating to the Funds such as Fund mergers,
sub adviser changes, Fund rebalancing and Fund asset transfers (collectively, “Fund Events”), including the assessment and
selection of transition managers; |
| (12) | Complete and disseminate certain surveys for the Xxxx Xxxxxxx funds, such as the
ICI survey; |
| (13) | Review matters relating to Fund mergers, Fund launches and Fund liquidations; |
| (14) | Prepare N-14 pro-forma merger related information and financial statements for
other Fund transactions; |
| (15) | Administer the Fund Commission Recapture Program; |
| (16) | Oversight and reporting of counterparty exposure across all funds by counterparty and derivative type; |
| (17) | Coordinate operational activities associated with Fund of Funds rebalancing; |
| (18) | Review of financing break even analysis for Closed End Funds; |
| (19) | Review of contractual covenants and coordination of de-leveraging events; associated with closed-end
Fund lines of credit; a nd |
| (20) | Administration of other Closed-End fund-related activities such as the Equity shelf offering and share
repurchase program. |
| (1) | Ensure that the Funds’ Board-approved Valuation Policies and Procedures
are adhered to and updated, as appropriate; |
| (2) | Daily review of Fund market risk, such as suspended securities, significant events,
price discrepancies, vendor discrepancies, and stale prices, including development of reports to identify market risk; |
| (3) | Develop and maintain controls relating to valuation of Fund securities; |
| (4) | Prepare reports to the Funds Board relating to the valuation risks including fair
valuation of securities and resolved securities as prescribed in Board-approved Valuation Policies and Procedures; |
| (5) | Conduct Pricing Committee meetings as needed and assist in the determination of
fair valuation of securities; |
| (6) | Perform due diligence of pricing vendors, including onsite visits; |
| (7) | Prepare materials for monthly Pricing Committee meetings; |
| (8) | Monitor for significant events; |
| (9) | Perform back-testing to determine whether fair valuations were appropriate; |
| (10) | Periodically evaluate trigger levels; and |
| (11) | Document fair value decisions. |
| E. | Financial Reporting as follows: |
| (1) | Preparation of financial data or reports required by the Securities and Exchange
Commission or other regulatory authorities including the preparation of semi- annual and annual reports for the Funds; |
| (2) | Preparation and filing of Form N-CSR, Form N-PORT, Form N-CEN, Form N- MFP and CFTC reporting (as applicable)
for the Funds; |
| (3) | Coordination of independent external audits for the Funds; |
| (4) | Coordination and administration of CEO/CFOcertification materials; |
| (5) | Coordination and administration of Accounting Policies Meeting; |
| (6) | Coordination and administration of Disclosure Controls & Procedures (DC&P) meetings; |
| (7) | Provide business analyst support for Fund Administration initiatives and activities; |
| (8) | Maintain the Funds’ GAAP reporting policies; |
| (9) | Assist the Funds’ Audit Committees in annual fee proposals and monitor auditor independence; |
| (10) | Administer and review the pre-approval process for the Funds’ auditorsregarding non-audit securitiesengagements; |
| (11) | Review and on-going maintenance of Fund financial statement disclosures; |
| (12) | Provide confirmation support for external audit; |
| (13) | Coordinate Closed End Funds annual financial statements and Audit Committee approval |
| (14) | Oversee ETF website reporting in accordance with SEC exemptive order requirements; and |
| (15) | Administration and filing of Form N-PX. |
| F. | Service Provider Oversight (Vendor Management) as follows: |
| (1) | Assistance in the selection of serviceproviders; |
| (2) | Assistance in the negotiation of existing service provider agreements including
appropriate amendments thereto; |
| (3) | Monitoring the performance of and the quality of services provided by service providers
under such agreements including the review of vendor reports, performance measurement reporting (“scorecards”) and periodic
due diligence reviews; |
| (4) | Perform SOC 1 report reviews for key vendors; Review and assess known compliance
violations with serviceproviders; |
| (5) | Monitoring service providers’ compliance with applicable regulatory requirements; |
| (6) | Facilitating the annual due diligence questionnaire process for key service providers
and the issuance of risk assessment memos to the business summarizing the results; |
| (7) | Support Information Risk Management in their review of highest risk vendors through
the collection of risk artifacts and with assistance in the closing of any related risk findings; |
| (8) | Reporting periodically to the Board of Trustees on the service providers and the
services provided to the Trust and the Funds; |
| (9) | Responding to requests from regulators regarding the service providers; |
| (10) | Establish a philosophy and framework for effective management and oversight of
Fund service providers including conducting on-site due diligence visits as necessary; |
| (11) | Development and review of Service Level Agreements as needed; |
| (12) | Monitor news events regarding Funds’ vendor relationships; and |
| (13) | Prepare materials and coordinate key vendor periodic executive meetings. |
| G. | Fund Administration Solutions |
| (1) | Conduct monthly Fund Administration project prioritization meetings with senior
management; |
| (2) | Develop the master project list, prioritization schedule and Project Management
Office staffing model; |
| (3) | Adhere to Manulife’s corporate Information Technology project prioritization
procedures (i.e. Project Gating and Steering Committee participation); |
| (4) | Facilitate project meetings and the development of business requirements, project
plans and summary dashboard reporting documents; execute select projects; |
| (5) | Coordinate activities with internal and external Information Technology representatives; |
| (6) | Lead initiatives, including projects related to regulatory requirements, process
improvements, digitization and process improvement, strategic priorities, and risk reduction needs; and |
| (7) | Manage deployment, enablement and adoption, and ongoing support (including subject
matter expertise) of user enabled technologies. |
| H. | Additional Services to Feeder Funds: |
| (1) | Assist in the development of information and reports to the Board of Trustees
(i) to enable it to make all necessary decisions regarding whether to invest the assets of a Feeder Fund in shares of a particular Master
Fund and (ii) as may be requested by the Board of Trustees from time to time; |
| (2) | Coordination with the board of directors, officers and service providers of each
Master Fund for purposes of obtaining all information, reports, certifications, signatures and other materials reasonably necessary for
preparing and filing of its corresponding Feeder Fund’s registration statement, shareholder reports and other reports that may be
filed pursuant to applicable securities laws and regulations; |
| (3) | Effecting daily trades into or from each Master Fund, settling all such transactions
and performing trading and settlement reconciliations; |
| (4) | Facilitation of distributing Master Fund proxy solicitation materials to corresponding
Feeder Fund shareholders and/or coordinating with officers and service providers of each Master Fund the incorporation of its proxy information
into its corresponding Feeder Fund proxy solicitation materials; and |
| (5) | Coordination with officers and service providers of each Master Fund for purposes
of enabling its corresponding Feeder Fund to compile and maintain such books and records as may be legally required or reasonably necessary
or prudent for such Feeder Fund to compile andmaintain. |
| (1) | Preparation of expense budget for each Fund and update for contractual changes; |
| (2) | Preparation of Form 24f-2 notices for each Fund; |
| (3) | Calculation of expense information and disclosure included in Fund registration statements; |
| (4) | Monitoring of Fund expense caps and waivers; |
| (5) | Assist in completing proforma analysis for new funds and completing expense disclosure for proxy for
potential fund mergers; |
| (6) | Perform 18f-3 reviews; |
| (7) | Complete board materials around overall expenses of funds and tracked to budget; |
| (8) | Oversight of vendor and ensure compliance for state blue sky laws; |
| (9) | Review of Fund expenses and authorization for disbursement including all affiliated fees (inclusive
of advisor, 12b-1, administration and transfer agency); and |
| (10) | Completion and review of 12b-1 expense capcalculations. |
| J. | Liquidity Risk Management Program |
| (1) | Provide oversight of the Liquidity Risk Management Program of the Xxxx Xxxxxxx
Group of Funds to ensure that processes are operating effectively and appropriately to manage liquidity risk; |
| (2) | Review and approve portfolio position liquidity classifications in accordance to
SEC Rule 22e-4; |
| (3) | Monitor fund events and news regarding potential liquidity events on a daily basis; |
| (4) | Manage liquidity event escalation with internal stakeholders and JH Board members
as situations require; and |
| (5) | Provide materials and discuss with the Liquidity Risk Management Committee to
meet the requirements of the Committee charter and Liquidity Risk Management Policy. |
| (1) | Administration and maintenance of the data management system and the Investment Data Hub (“IDH”); |
| (2) | Review data feeds and analyze and resolve exceptions; and |
| (3) | Maintain data governance controls and data quality requirements as outlined by the data governance committee
and data users. |
| (1) | Provide oversight on the daily & monthly calculation and review of the investment performance of
the Funds, including performance attribution; |
| (2) | Reconcile JH performance with key 3rd party vendors – Morningstar and Lipper; |
| (3) | Support performance content and review of JH financial statements; |
| (4) | Support performance content and review of JH annual prospectus filing; |
| (5) | Support JH Investments website content (daily / monthly); |
| (6) | Contributor to monthly DC&P meetings; and |
| (7) | Contributor to board materials as necessary. |
| M. | Securities Lending and FX |
| (1) | Oversight of securities lending agents and custodians; |
| (2) | Ensure all FX trades are executed in a manner consistent with the best interests
of Fund shareholders; |
| (3) | Perform benchmarking Transaction Cost Analysis for both Negotiated and Non- Negotiated
FX trades; |
| (4) | Review of securities lending income received by the Funds, as well as income payments
and past dues; |
| (5) | Coordination and administration of the Cash Management and Security Lending Committee |
| (6) | Ensure compliance with SEC regulations and Xxxx Xxxxxxx agreements and guidelines
(lending limits, collateral coverage, approved collateral, borrowers, and markets); |
| (7) | Monitor loan recalls, sell fails, and restrictions; |
| (8) | Monitor Collateral Trust Fund activity from yield, liquidity, and compliance perspective; |
| (9) | Monitor Collateral Trust Fund cash sweep |
| (10) | Perform benchmark analysis to validate loan rates |
| (11) | Perform due diligence on potential and existing securities lending agents; and |
| (12) | Communicate and monitor lending approvals and transactions related to fund launches, mergers, and liquidations. |
In connection with its provision of the
Services, Xxxx Xxxxxxx will
| (1) | Provide such staff and personnel as are reasonably necessary to perform the Services
for the Trusts and the Funds. Without limiting the generality of the foregoing, such staff and personnel shall be deemed to include officers
of Xxxx Xxxxxxx and its affiliates, and persons employed or otherwise retained by Xxxx Xxxxxxx, to provide or assist in providing the
Services to the Trusts and the Funds; and |
| (2) | Provide the Trusts and the Funds with all office facilities to perform the Services. |
The Services do not include services
performed and personnel provided pursuant to contracts with the Trust or the Funds by third-party custodians, transfer agents and other
service providers.
In connection
with its provision of the Services, Xxxx Xxxxxxx may delegate to one or more companies that Xxxx Xxxxxxx controls, is controlled by, or
is under common control with, or to specified employees of any such companies, some of Xxxx Xxxxxxx’x duties under this Agreement,
provided in each case that (i) Xxxx Xxxxxxx will supervise the activities of each such entity and employees thereof, (ii) such delegation
will not relieve Xxxx Xxxxxxx of any of its duties or obligations under this Agreement, and (iii) any such arrangements are entered into
in accordance with all applicable requirements of the Investment Company Act of 1940 and U.S. Securities and Exchange Commission guidance
thereunder. Notwithstanding the foregoing, Xxxx Xxxxxxx will not delegate or designate the performance of fair value determinations relating
to fund investments.
2. Compensation.
In consideration for the Services provided to the Trusts and the Funds by Xxxx Xxxxxxx and its affiliates pursuant to this Agreement,
each Fund will pay Xxxx Xxxxxxx such fee or other compensation as may be approved by the Board of Trustees from time to time and setforth
in Appendix C hereto as the same may be amended from time to time. Any Services provided by a person or entity other than Xxxx Xxxxxxx
and its affiliates, including, without limitation, services provided by attorneys not affiliated with Xxxx Xxxxxxx, are not covered under
this Agreement and are an expense of the Funds.
3. No
Partnership or Joint Venture. Each Trust, on behalf of itself and each of its Funds, and Xxxx Xxxxxxx are not partners of or joint
venturers with each other, and nothing herein shall be construed
so as to make any of the Trusts, on behalf of itself or any of its Funds, and Xxxx Xxxxxxx partners or joint venturers or impose any liability
as such on the Trust, any Fund or Xxxx Xxxxxxx.
4. Limitation
of Liability. Xxxx Xxxxxxx shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Funds
in connection with the matters to which this Agreement relates, except losses resulting from willful misfeasance, bad faith or negligence
by Xxxx Xxxxxxx in the performance of its duties or from reckless disregard by .Xxxx Xxxxxxx of its obligations under this Agreement.
Any person, even though also employed by Xxxx Xxxxxxx, who may be or become an employee of and paid by any of the Trusts shall be deemed,
when acting within the scope of his or her employment by the Trust, to be acting in such employment solely for the Trusts and not as Xxxx
Xxxxxxx’x employee or agent.
5. Duration
and Termination of Agreement. This Agreement shall remain in effect until the second anniversary of the date on which it was executed,
and from year to year thereafter, but only so long as such continuance is specifically approved at least annually by a majority of the
Board of Trustees and a majority of the Trustees who are not interested persons (as defined in the 0000 Xxx) of any of the Trusts or Xxxx
Xxxxxxx. The Agreement may, on 60 days’ written notice,be terminated at any time without the payment of any penalty by any of the
Trusts on behalf of itself or any of its Funds (by vote of a majority of the Trustees of the Trust) or by Xxxx Xxxxxxx.
6. Amendment.
No provision of this Agreement may be amended, waived, discharged or terminated except by an instrument in writing signed by the party
against which enforcement of the amendment, waiver, discharge or termination is sought.
7. Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts without
regard to the choice of law provisions thereof.
8. Miscellaneous.
The captions in this Agreement are included for convenience of reference only and in no way define or Limit any of the provisions
of this Agreement or otherwise affect their construction or effect. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A copy of the Declaration
of Trust of each Trust xxx.xx is organized as a Massachusetts business trust is on file with the Secretary of State of the Commonwealth
of Massachusetts and provides that no Trustee, shareholder, officer, employee or agent of the Trust shall be subject to any personal liability
in connection with Trust property or the affairs of the Trust, but that only the assets belonging to the Trust, or to the particular Fund
with respect to which an obligation or claim arose, shall beliable.
9. Execution. This Agreement and any amendments hereto and any notices or other communications hereunder that are required to
be in writing may be in electronic form (including without limitation by facsimile and, in the case of notices and other communications,
email) and may be executed by means of electronic signatures.
(THE REMAINDER OF THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF the undersigned
have caused this Agreement to be executed by their duly authorized officers as of the date first written above.
XXXX XXXXXXX INVESTMENT MANAGEMENT LLC |
(formerly, Xxxx Xxxxxxx Advisers,
LLC) |
|
|
|
|
By: |
/s/
Xxx Xxxxxxxxx |
|
Name: |
Xxx Xxxxxxxxx |
|
Title: |
Chief Investment Officer |
|
BY ALL THE
TRUSTS LISTED IN APPENDIX A |
|
|
|
|
By: |
/s/
Xxxxxx X. Xxxxxx |
|
Name: |
Xxxxxx
X. Xxxxxx |
|
Title: |
President and Chief Executive
Officer |
|
Appendix A
Xxxx Xxxxxxx Xxxx Trust
On behalf of each of its series
Xxxx Xxxxxxx Current Interest
On behalf of each of its series
Xxxx Xxxxxxx Funds II
On behalf of each of its series
Xxxx Xxxxxxx Funds III
On behalf of each of its series
Xxxx Xxxxxxx Hedged Equity & Income Fund
Xxxx Xxxxxxx
Income Securities Trust
Xxxx Xxxxxxx Investment Trust
On behalf of each of its series (except Xxxx Xxxxxxx
Fundamental Large Cap Core Fund)
Xxxx Xxxxxxx Investment Trust II
On
behalf ofeach of itsseries
Xxxx Xxxxxxx Investors Trust
Xxxx Xxxxxxx Municipal Securities
Trust
On behalf of each of its series
Xxxx Xxxxxxx Preferred Income Fund
Xxxx Xxxxxxx Preferred
Income Fund II
Xxxx Xxxxxxx Preferred Income Fund III
Xxxx Xxxxxxx Sovereign Bond Fund
On
behalf of each of its series
Xxxx Xxxxxxx Strategic Series
On behalf of each of its series
Xxxx Xxxxxxx Tax-Advantaged Dividend Income Fund
Xxxx Xxxxxxx Tax-Advantaged Global Shareholder Yield Fund
Xxxx Xxxxxxx Collateral Trust
Xxxx Xxxxxxx Exchange-Traded Fund
Trust
On behalf of each of its series
Appendix B
The Feeder Funds are as follows:
None
Appendix C
Compensation
Each Fund
listed in Appendix A shall reimburse Xxxx Xxxxxxx for its expenses associated with providing all such Services described in this Agreement,
including (a) direct compensation and related personnel expenses, (b) direct expenses of office space, office equipment, utilities and
miscellaneous officeexpenses (“Office Support”),(c) direct expenses of computerhardwareand software(and thedevelopmentthereof)
used to supportJohn Xxxxxxx in providingsuch Services and IT support relating to such computer hardware and software, (d) other reasonable
direct expenses incurred by Xxxx Xxxxxxx in providing Services to the Funds including, without limitation, expenses related to services
provided by third parties such as Xxxxxxx River , GainsKeeper and Confluence, Bloomberg to Xxxx Xxxxxxx that are related to Xxxx Xxxxxxx’x
provision of Services to the Funds and (e) overhead expenses (including Manulife Financial Corporation (“Manulife”) corporate
overhead) related to Office Support and personnel who provide services to each Fund (the “Reimbursement”), provided that overhead
expenses related to Office Support shall not exceed levels that are allocated ordinarily to other Manulife business units. Xxxx Xxxxxxx
shall determine, subject to Board approval, the expenses to be reimbursed by each Fund; provided, however, that such expenses shall not
exceed levels that are fair and reasonable in light of the usual and customary charges made by others for services of the same nature
and quality. The Reimbursement shall be calculated and paid monthly in arrears.