Exhibit (h)(1)
FUND ADMINISTRATION AND ACCOUNTING AGREEMENT
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AGREEMENT made as of July 24, 2007, by and between each entity listed
on Exhibit A hereto (each a "Fund", collectively the "Funds"), and The Bank of
New York, a New York banking organization ("BNY").
W I T N E S S E T H :
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WHEREAS, each Fund is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, each Fund desires to retain BNY to provide for the portfolios
identified on Exhibit A hereto (each, a "Series") the services described herein,
and BNY is willing to provide such services, all as more fully set forth below;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereby agree as follows:
1. Appointment.
Each Fund hereby appoints BNY as its agent for the term of this
Agreement to perform the services described herein. BNY hereby accepts such
appointment and agrees to perform the duties hereinafter set forth.
2. Representations and Warranties.
(a) Each Fund hereby represents and warrants to BNY, which
representations and warranties shall be deemed to be continuing, that:
(i) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on
its business as now conducted, to enter into this Agreement
and to perform its obligations hereunder;
(ii) This Agreement has been duly authorized, executed and
delivered by the Fund in accordance with all requisite action
and constitutes a valid and legally binding obligation of the
Fund, enforceable in accordance with its terms;
(iii) It is conducting its business in compliance with all
applicable laws and regulations, both state and federal, and
has obtained all regulatory licenses, approvals and consents
necessary to carry on its business as now conducted; there is
no statute, regulation, rule, order or judgment binding on it
and no provision of its charter or by-laws, nor of any
mortgage, indenture, credit agreement or other contract
binding on it or affecting its property which would prohibit
its execution or performance of this Agreement;
(iv) To the extent the performance of any of the valuation
services or other computations described in Schedule II
attached hereto by BNY in accordance with the then effective
Prospectus (as hereinafter defined) for the Fund or pricing
policies adopted by the Board would violate any applicable
laws or regulations, the Fund shall immediately so notify BNY
in writing and thereafter shall either furnish BNY with the
appropriate values of securities, net asset value or other
computation, as the case may be, or, subject to the prior
approval of BNY, instruct BNY in writing to value securities
and/or compute net asset value or other computations in a
manner the Fund specifies in writing, and either the
furnishing of such values or the giving of such instructions
shall constitute a representation by the Fund that the same is
consistent with all applicable laws and regulations and with
its Prospectus; and
(v) It has implemented, and is acting in accordance with,
procedures reasonably designed to ensure that it will
disseminate to all market participants, other than
Authorized Participants (as defined in its Prospectus
and Statement of Additional Information), each
calculation of net asset value provided by BNY
hereunder to Authorized Participants.
(b) BNY hereby represents and warrants to the Fund, which
representations and warranties shall be deemed to be continuing, that:
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(i) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on
its business as now conducted, to enter into this Agreement
and to perform its obligations hereunder.
(ii) This Agreement has been duly authorized, executed and
delivered by BNY in accordance with all requisite action of
its governing body and constitutes a valid and legally binding
obligation of BNY enforceable in accordance with its terms.
(iii) To the best of BNY's knowledge, information and belief,
it is conducting its business in material compliance with all
applicable laws and regulations insofar as such laws and
regulations apply to the services being provided by BNY under
this Agreement and has obtained all regulatory licenses,
approvals and consents necessary for its execution and
performance of this Agreement; there is no statute,
regulation, rule, order or judgment binding on it and no
provision of its organizational and governing documents, nor
of any mortgage, indenture, credit agreement or other contract
binding on it or affecting its property which would prevent
its execution or performance of this Agreement.
(iv) It will maintain personnel and infrastructure appropriate
to enable it to perform its obligations hereunder.
3. Delivery of Documents.
(a) Each Fund will promptly deliver to BNY true and correct
copies of each of the following documents as currently in effect and will
promptly deliver to it all future amendments and supplements thereto, if any:
(i) The Fund's articles of incorporation or other
organizational document and all amendments thereto (the "Charter");
(ii) The Fund's bylaws (the "Bylaws");
(iii) Resolutions of the Fund's board of directors or
other governing
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body (the "Board") authorizing the execution, delivery and performance of this
Agreement by the Fund;
(iv) The Fund's registration statement most recently
filed with the Securities and Exchange Commission (the "SEC") relating to the
shares of the Fund (the "Registration Statement");
(v) The Fund's Notification of Registration under the
1940 Act on Form N-8A filed with the SEC; and
(vi) The Fund's Prospectus and Statement of
Additional Information pertaining to each Series (collectively, the
"Prospectus").
(b) Each copy of the Charter shall be certified by the
Secretary of State (or other appropriate official) of the state of organization,
and if the Charter is required by law also to be filed with a county or other
officer or official body, a certificate of such filing shall be filed with a
certified copy submitted to BNY. Each copy of the Bylaws, Registration Statement
and Prospectus, and all amendments thereto, and copies of Board resolutions,
shall be certified by the Secretary or an Assistant Secretary of the appropriate
Fund.
(c) It shall be the sole responsibility of each Fund to
deliver to BNY its currently effective Prospectus and BNY shall not be deemed to
have notice of any information contained in such Prospectus until it is actually
received by BNY.
4. Duties and Obligations of BNY.
(a) Subject to the direction and control of each Fund's Board
and the provisions of this Agreement, BNY shall provide to each Fund (i) the
administrative services set forth on Schedule I attached hereto and (ii) the
valuation, accounting and computation services listed on Schedule II attached
hereto.
(b) In performing hereunder, BNY shall provide, at its
expense, office space, facilities, equipment and personnel necessary for the
performance of its duties hereunder.
(c) BNY shall not provide any services under this Agreement
relating to the management, investment advisory or sub-advisory functions of any
Fund, distribution of shares of any Fund, maintenance of any Fund's financial
records (except to the extent such financial
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records are generated by BNY in the course of the performance of its duties
hereunder, in which case BNY will preserve and retain such records on behalf of
the Fund in accordance with BNY's record retention policies and procedures) or
other services normally performed by the Funds' respective counsel or
independent auditors.
(d) Upon receipt of a Fund's prior written consent (which
shall not be unreasonably withheld), BNY may delegate any of its duties and
obligations hereunder to any delegee or agent whenever and on such terms and
conditions as it deems necessary or appropriate. Notwithstanding the foregoing,
no Fund consent shall be required for any such delegation to any other
subsidiary of The Bank of New York Company, Inc.. Notwithstanding any such
delegation, and irrespective of whether or not the consent of the Funds is
required (or has been obtained) for such delegation, BNY shall be responsible
for the reasonable selection of any such delegee or agent, and shall not be
discharged of its duties to provide the delegated services. BNY shall not be
liable to any Fund for any loss or damage arising out of, or in connection with,
the actions or omissions to act of any delegee or agent utilized hereunder so
long as BNY acts in good faith and without negligence or wilful misconduct in
the selection of such delegee or agent.
(e) Each Fund shall cause its officers, advisors, sponsor,
distributor, legal counsel, independent accountants, current administrator (if
any), transfer agent, and any other service provider to cooperate with BNY and
to provide BNY, upon request, with such information, documents and advice
relating to such Fund as is within the possession or knowledge of such persons,
and which in the opinion of BNY, is necessary in order to enable it to perform
its duties hereunder. BNY shall not be responsible for, under any duty to
inquire into, or be deemed to make any assurances with respect to the accuracy,
validity or propriety of any information, documents or advice provided to BNY by
any of the aforementioned persons. BNY shall not be liable for any loss, damage
or expense resulting from or arising out of the failure of the Fund to cause any
information, documents or advice to be provided to BNY as provided herein and
shall be held harmless by each Fund when acting in good faith and in reliance
upon such information, documents or advice relating to such Fund. All fees or
costs charged by such persons shall be borne by the appropriate Fund. In the
event that any services performed by BNY hereunder rely, in whole or in part,
upon information obtained from a third party service utilized
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or subscribed to by BNY which BNY in good faith and in its reasonable judgment
deems reliable, BNY shall not have any responsibility or liability for, under
any duty to inquire into, or deemed to make any assurances with respect to, the
accuracy or completeness of such information.
(f) Nothing in this Agreement shall limit or restrict BNY, any
affiliate of BNY or any officer or employee thereof from acting for or with any
third parties, and providing services similar or identical to same or all of the
services provided hereunder.
(g) Subject to the provisions of this Agreement, BNY shall
compute the net asset value per share of the Fund and shall value the securities
held by the Fund at such times and dates and in the manner specified in the then
currently effective Prospectus of the Fund, except that notwithstanding any
language in the Prospectus, in no event shall BNY be required to determine, or
have any obligations with respect to, whether a market price represents any fair
or true value, nor to adjust any price to reflect any events or announcements,
including, without limitation, those with respect to the issuer thereof, it
being agreed that all such determinations and considerations shall be solely the
responsibility of the Fund. BNY shall provide a report of such net asset value
to the Fund and Authorized Participants at the respective times set forth in
Schedule II, as amended from time to time. To the extent valuation of securities
or computation of a net asset value as specified in the Fund's then currently
effective Prospectus is at any time inconsistent with any applicable laws or
regulations, the Fund shall immediately so notify BNY in writing and thereafter
shall either furnish BNY at all appropriate times with the values of such
securities and the Fund's net asset value, or subject to the prior approval of
BNY, instruct BNY in writing to value securities and compute net asset value in
a manner which the Fund then represents in writing to be consistent with all
applicable laws and regulations. The Fund may also from time to time, subject to
the prior approval of BNY, instruct BNY in writing to compute the value of the
securities or net asset value in a manner other than as specified in this
paragraph. By giving such instruction, the Fund shall be deemed to have
represented that such instruction is consistent with all applicable laws and
regulations and the then currently effective Prospectus of the Fund. The Fund
shall have sole responsibility for determining the method of valuation of
securities and the method of computing net asset value.
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(h) Each Fund shall furnish BNY with any and all instructions,
explanations, information, specifications and documentation deemed necessary by
BNY in the performance of its duties hereunder, including, without limitation,
the amounts or written formula for calculating the amounts and times of accrual
of Fund liabilities and expenses. BNY shall not be required to include as Fund
liabilities and expenses, nor as a reduction of net asset value, any accrual for
any federal, state, or foreign income taxes unless the Fund shall have specified
to BNY the precise amount of the same to be included in liabilities and expenses
or used to reduce net asset value. Each Fund shall also furnish BNY with bid,
offer, or market values of Securities if BNY notifies such Fund that same are
not available to BNY from a security pricing or similar service utilized, or
subscribed to, by BNY which BNY in its judgment deems reliable at the time such
information is required for calculations hereunder. At any time and from time to
time, the Fund also may furnish BNY with bid, offer, or market values of
Securities and instruct BNY to use such information in its calculations
hereunder. BNY shall at no time be required or obligated to commence or maintain
any utilization of, or subscriptions to, any particular securities pricing or
similar service.
(i) BNY may apply to an officer or duly authorized agent of
any Fund for written instructions with respect to any matter arising in
connection with BNY's performance hereunder for such Fund, and BNY shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with such instructions. Such application for instructions may, at the
option of BNY, set forth in writing any action proposed to be taken or omitted
to be taken by BNY with respect to its duties or obligations under this
Agreement and the date on and/or after which such action shall be taken, and BNY
shall not be liable for any action taken or omitted to be taken in accordance
with a proposal included in any such application on or after the date specified
therein unless, prior to taking or omitting to take any such action, BNY has
received written instructions in response to such application specifying the
action to be taken or omitted.
(j) BNY may consult with counsel to the appropriate Fund at
such Fund's expense, or its own counsel at its own expense, provided that such
counsel has been approved by the Fund, where notice from BNY as to its selected
counsel which is not objected to in writing by the Fund within one business day
shall constitute the Fund's approval, and BNY shall be fully
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protected with respect to anything done or omitted by it in good faith in
accordance with the advice or opinion of such counsel.
(k) Notwithstanding any other provision contained in this
Agreement or Schedule I or II attached hereto, BNY shall have no duty or
obligation to with respect to, including, without limitation, any duty or
obligation to determine, or advise or notify any Fund of: (i) the taxable nature
of any distribution or amount received or deemed received by, or payable to, a
Fund, (ii) the taxable nature or effect on a Fund or its shareholders of any
corporate actions, class actions, tax reclaims, tax refunds or similar events,
(iii) the taxable nature or taxable amount of any distribution or dividend paid,
payable or deemed paid, by a Fund to its shareholders; or (iv) the effect under
any federal, state, or foreign income tax laws of a Fund making or not making
any distribution or dividend payment, or any election with respect thereto.
(l) With respect to the services contemplated hereunder, BNY
shall have no duties or responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agreement and Schedules I
and II attached hereto.
(m) BNY, in performing the services required of it under the
terms of this Agreement, shall be entitled to rely fully on the accuracy and
validity of any and all instructions, explanations, information, specifications
and documentation furnished to it by a Fund and shall have no duty or obligation
to review the accuracy, validity or propriety of such instructions,
explanations, information, specifications or documentation, including, without
limitation, evaluations of Securities; the amounts or formula for calculating
the amounts and times of accrual of Series' liabilities and expenses; the
amounts receivable and the amounts payable on the sale or purchase of
Securities; and amounts receivable or amounts payable for the sale or redemption
of Fund shares effected by or on behalf of a Fund. In the event BNY's
computations hereunder rely, in whole or in part, upon information, including,
without limitation, bid, offer or market values of Securities or other assets,
or accruals of interest or earnings thereon, from a pricing or similar service
utilized, or subscribed to, by BNY which BNY in its judgment deems reliable, and
which is consistent with the pricing policies as adopted by the Board and
provided to BNY, BNY shall not be responsible for, under any duty to inquire
into, or deemed to make any assurances with respect to, the accuracy or
completeness of such information. Without limiting
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the generality of the foregoing, BNY shall not be required to inquire into any
valuation of securities or other assets by a Fund or any third party described
in this (m) even though BNY in performing services similar to the services
provided pursuant to this Agreement for others may receive different valuations
of the same or different securities of the same issuers.
(n) BNY, in performing the services required of it under the
terms of this Agreement, shall not be responsible for determining whether any
interest accruable to a Fund is or will be actually paid, but will accrue such
interest until otherwise instructed by such Fund.
(o) BNY shall not be responsible for delays or errors which
occur by reason of circumstances beyond its control in the performance of its
duties under this Agreement, including, without limitation, labor difficulties
within or without BNY, mechanical breakdowns, flood or catastrophe, acts of God,
failures of transportation, interruptions, loss, or malfunctions of utilities,
communications or computer (hardware or software) services. Nor shall BNY be
responsible for delays or failures to supply the information or services
specified in this Agreement where such delays or failures are caused by the
failure of any person(s) other than BNY, its employees or or its affiliates, to
supply any instructions, explanations, information, specifications or
documentation deemed in good faith to be necessary by BNY in the performance of
its duties under this Agreement. BNY will in such instances as promptly as is
reasonable under the circumstances notify the Fund of such failures.
(o) BNY shall keep confidential all books and records relating to the Funds and
its shareholders, except when (i) disclosure is required by law, (ii) BNY is
advised by counsel that it may incur liability for failure to make a disclosure,
(iii) BNY is requested to divulge such information by a court, governmental
agency or entity or by a self-regulatory organization registered under the
Securities Exchange Act of 1934, or (iv) as requested or authorized by Funds or
the Advisor (including pursuant to this Agreement or its policies and
procedures). BNY shall provide the Funds with reasonable advance notice of
disclosure pursuant to items (i) - (iii) of the previous sentence, to the extent
reasonably practicable and permissible by law. BNY shall promptly upon the
Funds' demand, turn over to the Funds and cease to retain the files, records and
documents created and maintained by it pursuant to this Agreement which are no
longer
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needed by it in the performance of its services or in accordance with relevant
law, regulation, or bank policy.
5. Allocation of Expenses.
Except as otherwise provided herein, all costs and expenses arising or
incurred in connection with the performance of this Agreement shall be paid by
the appropriate Fund, including but not limited to, organizational costs and
costs of maintaining corporate existence, taxes, interest, brokerage fees and
commissions, insurance premiums, compensation and expenses of such Fund's
trustees, directors, officers or employees, legal, accounting and audit
expenses, management, advisory, sub-advisory, administration and shareholder
servicing fees, charges of custodians, transfer and dividend disbursing agents,
expenses (including clerical expenses) incident to the issuance, redemption or
repurchase of Fund shares, fees and expenses incident to the registration or
qualification under federal or state securities laws of the Fund or its shares,
costs (including printing and mailing costs) of preparing and distributing
Prospectuses, reports, notices and proxy material to such Fund's shareholders,
all expenses incidental to holding meetings of such Fund's trustees, directors
and shareholders, and extraordinary expenses as may arise, including litigation
affecting such Fund and legal obligations relating thereto for which the Fund
may have to indemnify its trustees, directors and officers.
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6. Compliance Services.
(a) If Schedule I contains a requirement for the BNY to
provide the Fund with compliance services, such services shall be provided
pursuant to the terms of this Section 6 (the "Compliance Services"). The precise
compliance review and testing services to be provided shall be as mutually
agreed between BNY and each Fund, and the results of BNY's Compliance Services
shall be detailed in a compliance summary report (the "Compliance Summary
Report") prepared on a periodic basis as mutually agreed. Each Compliance
Summary Report shall be subject to review and approval by the Fund. BNY shall
have no responsibility or obligation to provide Compliance Services other than
those services specifically listed in Schedule I.
(b) The Fund will examine each Compliance Summary Report
delivered to it by BNY and notify BNY of any error, omission or discrepancy
within ten (10) days of its receipt. The Fund agrees to notify BNY promptly if
it fails to receive any such Compliance Summary Report. The Fund further
acknowledges that unless it notifies the BNY of any error, omission or
discrepancy within 10 days, such Compliance Summary Report shall be deemed to be
correct and conclusive in all respects. In addition, if the Fund learns of any
out-of-compliance condition before receiving a Compliance Summary Report
reflecting such condition, the Fund will notify BNY of such condition within one
business day after discovery thereof.
(c) While BNY will endeavor in good faith to identify
out-of-compliance conditions, BNY does not and could not for the fees charged,
make any guarantees, representations or warranties with respect to its ability
to identify all such conditions. In the event of any errors or omissions in the
performance of Compliance Services, the Fund's sole and exclusive remedy and
BNY's sole liability shall be limited to re-performance by BNY of the Compliance
Services affected and in connection therewith the correction of any error or
omission, if practicable and the preparation of a corrected report, at no cost
to the Fund.
7. Standard of Care; Indemnification.
(a) BNY shall act in good faith in carrying out its duties
hereunder. Except as otherwise provided herein, BNY shall not be liable for any
costs, expenses, damages, liabilities or claims (including attorneys' and
accountants' fees) incurred by a Fund, except those costs,
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expenses, damages, liabilities or claims arising out of BNY's own gross
negligence, bad faith or wilful misconduct or reckless disregard for its duties
and obligations hereunder. In no event shall BNY be liable to any Fund or any
third party for special, indirect or consequential damages, or lost profits or
loss of business, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and regardless of the
form of action. BNY shall not be liable for any loss, damage or expense,
including counsel fees and other costs and expenses of a defense against any
claim or liability, resulting from, arising out of, or in connection with its
performance hereunder, including its actions or omissions, the incompleteness or
inaccuracy of any specifications or other information furnished by the Fund, or
for delays caused by circumstances beyond BNY's control, unless such loss,
damage or expense arises out of the gross negligence, bad faith or willful
misconduct of BNY or reckless disregard for its duties and obligations
hereunder.
(b) Each Fund shall indemnify and hold harmless BNY from and
against any and all costs, expenses, damages, liabilities and claims (including
claims asserted by a Fund), and reasonable attorneys' and accountants' fees
relating thereto, which are sustained or incurred or which may be asserted
against BNY, by reason of or as a result of any action taken or omitted to be
taken by BNY in good faith hereunder or in reliance upon (i) any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed, (ii) such Fund's Registration
Statement or Prospectus, (iii) any instructions of an officer of such Fund, or
(iv) any opinion of legal counsel for such Fund; provided however that if BNY
after making a good faith effort to seek guidance from Fund counsel does not
receive the required guidance in a reasonable period of time, then BNY may seek
and rely on the advice of counsel to BNY, provided that such counsel has been
approved by the Fund, where notice from BNY as to its selected counsel which is
not objected to in writing by the Fund within one business day shall constitute
the Fund's approval,, or arising out of transactions or other activities of such
Fund which occurred prior to the commencement of this Agreement; provided, that
no Fund shall indemnify BNY for costs, expenses, damages, liabilities or claims
for which BNY is liable under preceding 6(a). This indemnity shall be a
continuing obligation of each Fund, its successors and assigns, notwithstanding
the termination of this Agreement. Without limiting the generality of the
foregoing, each Fund shall indemnify BNY against and save BNY harmless
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from any loss, damage or expense, including counsel fees and other costs and
expenses of a defense against any claim or liability, arising from any one or
more of the following:
(i) Errors in records or instructions, explanations,
information, specifications or documentation of any kind, as the case may be,
supplied to BNY as described above or by or on behalf of a Fund;
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(ii) Action or inaction taken or omitted to be taken
by BNY pursuant to written or oral instructions of the Fund or otherwise without
gross or willful misconduct;
(iii) Any action taken or omitted to be taken by BNY
in good faith in accordance with the advice or opinion of counsel for a Fund or
its own counsel, provided that such counsel has been approved by the Fund, where
notice from BNY as to its selected counsel which is not objected to in writing
by the Fund within one business day shall constitute the Fund's approval,
subject to the limitations set forth above;
(iv) Any improper use by a Fund or its agents,
distributor or investment advisor of any valuations or computations supplied by
BNY pursuant to this Agreement;
(v) The method of valuation of the Securities and the
method of computing each Series' net asset value; or
(vi) Any valuations of Securities or net asset value
provided by a Fund.
(c) Actions taken or omitted in reliance on oral or written
instructions, or upon any information, order, indenture, stock certificate,
power of attorney, assignment, affidavit or other instrument believed by BNY to
be genuine or bearing the signature of a person or persons believed to be
authorized to sign, countersign or execute the same, or upon the opinion of
legal counsel for a Fund or its own counsel, subject to the limitations set
forth herein, shall be conclusively presumed to have been taken or omitted in
good faith.
(d) Notwithstanding any other provision contained in this
Agreement, BNY shall have no duty or obligation with respect to, including,
without limitation, any duty or obligation to determine, or advise or notify the
Fund of: (a) the taxable nature of any distribution or amount received or deemed
received by, or payable to, a Fund; (b) the taxable nature or effect on a Fund
or its shareholders of any corporate actions, class actions, tax reclaims, tax
refunds, or similar events; (c) the taxable nature or taxable amount of any
distribution or dividend paid, payable or deemed paid, by a Fund to its
shareholders; or (d) the effect under any federal, state, or foreign income tax
laws of the Fund making or not making any distribution or dividend payment, or
any election with respect thereto.
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8. Compensation.
For the services provided hereunder, each Fund agrees to pay BNY such
compensation as is mutually agreed from time to time and such out-of-pocket
expenses (e.g., telecommunication charges, postage and delivery charges, record
retention costs, reproduction charges and transportation and lodging costs) as
are incurred by BNY in performing its duties hereunder. Except as hereinafter
set forth, compensation shall be calculated and accrued daily and paid monthly.
Each Fund authorizes BNY to debit such Fund's custody account for all amounts
due and payable hereunder, subject to the acknowledgement as to anticipated
payment by the Advisor (as defined below) in this Section 8. BNY shall deliver
to each Fund invoices for services rendered after debiting such Fund's custody
account with an indication that payment has been made. Upon termination of this
Agreement before the end of any month, the compensation for such part of a month
shall be prorated according to the proportion which such period bears to the
full monthly period and shall be payable upon the effective date of termination
of this Agreement. For the purpose of determining compensation payable to BNY,
each Fund's net asset value shall be computed at the times and in the manner
specified in the Fund's Prospectus. BNY understands and agrees that XShares
Advisors LLC, the investment adviser to the Fund (the "Advisor") may pay the
fees and expenses under this Agreement directly to BNY as a result of its
contractual arrangements with the Fund and any such payment by the Advisor will
discharge the Fund of its obligations hereunder. Notwithstanding any such
arrangements, nothing herein shall be deemed to relieve the Fund of its
obligations to pay such fees and expenses if such payment is not made by the
Advisor. In such circumstances, after notice to the Fund that the Advisor has
not paid such amounts, each Fund authorizes BNY to debit such Fund's custody
account for all amounts due and payable hereunder
9. Term of Agreement.
(a) This Agreement shall continue until terminated by either
BNY giving to a Fund, or a Fund giving to BNY, a notice in writing specifying
the date of such termination, which date shall be not less than 90 days after
the date of the giving of such notice. Upon termination hereof, the affected
Fund(s) shall pay to BNY such compensation as may be due as of the date of such
termination, and shall reimburse BNY for any disbursements and expenses
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made or incurred by BNY and payable or reimbursable hereunder.
(b) Notwithstanding the foregoing, BNY may terminate this
Agreement upon 30 days prior written notice to a Fund if such Fund shall
terminate its custody agreement with The Bank of New York, or fail to perform
its obligations hereunder in a material respect. The Fund may terminate this
Agreement for "Cause" upon 30 days prior written notice to BNY. For purposes of
this Section 9, "Cause" shall mean (a) a material breach of this Agreement by
BNY, including a material breach of any representation or warranty, that has not
been cured within 30 days following written notice of such breach; (b) a final
unappealable judicial, regulatory or administrative ruling or order in which
BNY, its directors, officers employees or agents, has been found to be guilty of
criminal or unethical behavior or conduct in connection with the provision of
services similar to the services covered by this Agreement; or (c) the
commencement of any voluntary or involuntary action under chapter 11 of the
United States Code or any other law relating to the liquidation or dissolution
of BNY, the reorganization of its debtors or the alteration of rights of its
creditors.
10. Authorized Persons.
Attached hereto as Exhibit B is a list of persons duly authorized by
the Board of each Fund to execute this Agreement and give any written or oral
instructions, or written or oral specifications, by or on behalf of such Fund.
From time to time each Fund may deliver a new Exhibit B to add or delete any
person and BNY shall be entitled to rely on the last Exhibit B actually received
by BNY.
11. Amendment.
This Agreement may not be amended or modified in any manner except by a
written agreement executed by BNY and the Fund to be bound thereby, and
authorized or approved by such Fund's Board.
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12. Assignment.
This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by any Fund without the written consent
of BNY, or by BNY without the written consent of the affected Fund accompanied
by the authorization or approval of such Fund's Board.
13. Governing Law; Consent to Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York, without regard to conflict of laws principles thereof. Each
Fund hereby consents to the jurisdiction of a state or federal court situated in
New York City, New York in connection with any dispute arising hereunder, and
waives to the fullest extent permitted by law its right to a trial by jury. To
the extent that in any jurisdiction any Fund may now or hereafter be entitled to
claim, for itself or its assets, immunity from suit, execution, attachment
(before or after judgment) or other legal process, such Fund irrevocably agrees
not to claim, and it hereby waives, such immunity.
14. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby, and if any provision is inapplicable to any
person or circumstances, it shall nevertheless remain applicable to all other
persons and circumstances.
15. No Waiver.
Each and every right granted to BNY hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of BNY to exercise, and no delay in exercising, any right will
operate as a waiver thereof, nor will any single or partial exercise by BNY of
any right preclude any other or future exercise thereof or the exercise of any
other right.
- 17 -
16. Notices.
All notices, requests, consents and other communications pursuant to
this Agreement in writing shall be sent as follows:
if to a Fund, at
TDAX Funds, Inc.
c/o XShares Advisors LLC
000 Xxxxxxxxx Xxx., Xxxxx 0000
Xxx Xxxx, XX 00000
if to BNY, at
The Bank of New York
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Title:
or at such other place as may from time to time be designated in writing.
Notices hereunder shall be effective upon receipt.
17. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts together shall
constitute only one instrument.
18. Several Obligations.
The parties acknowledge that the obligations of the Funds hereunder are
several and not joint, that no Fund shall be liable for any amount owing by
another Fund and that the Funds have executed one instrument for convenience
only.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereunto affixed, all as of the day and year first above written.
TDAX FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Title: CFO and Secretary
THE BANK OF NEW YORK
By: /s/ Xxxxxx X. XxXxxx
----------------------------------------
Title: Managing Director
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EXHIBIT A
---------
TDAX Independence 2010 Exchange-Traded Fund
TDAX Independence 2020 Exchange-Traded Fund
TDAX Independence 2030 Exchange-Traded Fund
TDAX Independence 2040 Exchange-Traded Fund
TDAX Independence In-Target Exchange-Traded Fund
EXHIBIT B
---------
I, Xxxxx X. Xxxxxx, Secretary and Treasurer, of TDAX Funds, Inc., a
Maryland Corporation (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the
Fund, and each has been duly elected or appointed by the Board of Directors of
the Fund to each such position and qualified therefor in conformity with the
Fund's Articles of Incorporation and By-Laws. Each such person is authorized to
give written or oral instructions or written or oral specifications by or on
behalf of the Fund to the Bank.
Xxxxx X. Xxxxxx President
---------------------------- -------------------------------
Name Title
Xxxxxxx X. Xxxxxxxxx Chief Operating Officer
---------------------------- -------------------------------
Name Title
Xxxxx X. Xxxxxx Secretary and Treasurer
---------------------------- -------------------------------
Name Title
SCHEDULE I
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ADMINISTRATIVE SERVICES
-----------------------
1. Prepare minutes of Board of Director meetings and assist the Secretary
of each Fund in preparation for Board meetings. Such minutes, meeting
agendas and other material prepared in preparation for each Board
meeting are subject to the review and approval of Fund counsel.
2. Perform for each Fund, the compliance tests as mutually agreed and
which shall be specific to each Series. The Compliance Summary Reports
listing the results of such tests are subject to review and approval by
each Fund.
3. Participate in the periodic updating of each Fund's Registration
Statement and Prospectus and, subject to approval by such Fund's
Treasurer and legal counsel, coordinate the preparation, filing,
printing and dissemination of periodic reports and other information to
the SEC and the Fund's shareholders, including annual and semi-annual
reports to shareholders, Form N-SAR, Form N-CSR, Form N-Q and notices
pursuant to Rule 24f-2, Form N-PX.
4. Prepare workpapers supporting the preparation of federal, state and
local income tax returns for each Fund for review and approval by each
Fund's independent auditors; perform ongoing wash sales review (i.e.,
purchases and sales of Fund investments within 30 days of each other);
and prepare Form 1099s with respect to each Fund's directors or
trustees and file such forms upon the approval of the Fund's Treasurer.
5. Prepare and, subject to approval of each Fund's Treasurer, disseminate
to such Fund's Board quarterly unaudited financial statements and
schedules of such Fund's investments and make presentations to the
Board, as appropriate.
6. Subject to approval of each Fund's Board, assist such Fund in obtaining
and filing fidelity bond and E&O/D&O insurance coverage.
7. Prepare statistical reports for outside information services (e.g.,
IBC/Xxxxxxxx, ICI, Lipper Analytical and Morningstar).
8. Attend shareholder and Board meetings as requested from time to time.
9. Subject to review and approval by the Fund Treasurer, establish
appropriate expense accruals, maintain expense files and coordinate the
payment of invoices for each Fund.
10. Calculate ordinary income and capital gain distributions for review and
approval by the Funds' officers and independent auditor.
11. Monthly calculation of performance on NAV
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SCHEDULE II
-----------
ACCOUNTING, VALUATION AND COMPUTATION SERVICES
----------------------------------------------
I. BNY shall maintain the following records on a daily basis for each
Series.
1. Report of current values of all portfolio securities
2. Statement of net asset value per share
II. BNY shall maintain the following records on a monthly basis for each
Series:
1. General Ledger
2. General Journal
3. Cash Receipts Journal
4. Cash Disbursements Journal
5. Subscriptions Journal
6. Redemptions Journal
7. Accounts Receivable Reports
8. Accounts Payable Reports
9. Open Subscriptions/Redemption Reports
10. Transaction (Securities) Journal
11. Broker Net Trades Reports
III. BNY shall prepare a Holdings Ledger on a quarterly basis, and a
Buy-Sell Ledger (Broker's Ledger) on a semiannual basis for each Series.
Schedule D shall be produced on an annual basis for each Series.
The above reports may be printed according to any other required
frequency to meet the requirements of the Internal Revenue Service, The
Securities and Exchange Commission and the Fund's Auditors.
IV. For internal control purposes, BNY uses the Account Journals
produced by The Bank of New York Custody System to record daily settlements of
the following for each Series:
1. Securities bought
2. Securities sold
3. Interest received
4. Dividends received
5. Capital stock sold
6. Capital stock redeemed
7. Other income and expenses
All portfolio purchases for the Fund are recorded to reflect expected
maturity value and total cost including any prepaid interest.
- 2 -
