Exhibit (h)(3)
AMENDED AND
RESTATED
SERVICE AGREEMENT
THIS AGREEMENT
(the “Agreement”) is amended and restated as of this 30th day of June, 2020, 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 limited to:
| A. | Legal services
as follows: |
| (1) | Maintenance
of each Fund’s registration statement and federal and state registration; |
| (2) | Preparation
of certain notices and proxy materials furnished 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 aged exception 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 eve n analysis for Closed End Funds; |
| (19) | Review
of contractual covenants and coordination of de-leveraging events; associated with closed-end
Fund lines of credit; and |
| (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/CFO certification 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’ auditors regarding non-audit
securities engagements; |
| (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 service providers; |
| (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
service providers; |
| (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 and maintain. |
| (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 cap calculations. |
| 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.
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 set forth 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 be liable.
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 of each of its
series
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 office expenses (“Office Support”), (c) direct expenses of computer hardware and software (and the
development thereof) used to support Xxxx Xxxxxxx in providing such Serv ices 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 deter mine, 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.
