EXHIBIT 23(H)(7)
COMPLIANCE SERVICES AGREEMENT
AGREEMENT effective as of the 5th day of October, 2004, between MMA
PRAXIS MUTUAL FUNDS, a Delaware business trust (the "Trust"), having its
principal place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxx 00000, and BISYS
FUND SERVICES OHIO, INC. ("BISYS"), an Ohio corporation having its principal
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Trust is a registered investment company, and will become
subject to the requirements of Rule 38a-1 under the 1940 Act, which requires
each registered investment company to adopt policies and procedures that are
reasonably designed to prevent it from violating the federal securities laws;
WHEREAS, BISYS performs certain management and administration services
for the Trust under an administration agreement between BISYS and the Trust
dated July 1, 2003 and amended on March 17, 2004 as amended to date, (the
"Administration Agreement");
WHEREAS, BISYS offers compliance services through its ComplianceEDGE
program, which may be tailored to create a compliance program for the Trust;
WHEREAS, the Trust desires that BISYS provide its ComplianceEDGE
program services in connection with the institution of a more comprehensive
compliance program for the Trust;
WHEREAS, BISYS is willing to perform the services enumerated in this
Agreement on the terms and conditions set forth in this Agreement; and
WHEREAS, BISYS and the Trust wish to enter into this Agreement in order
to set forth the terms under which BISYS will perform the services enumerated
herein on behalf of the Trust, and to supplement and clarify certain provisions
of the Administration Agreement.
NOW, THEREFORE, in consideration of the covenants herein contained, the
Trust and BISYS hereby agree as follows:
1. Compliance Services.
(a) The parties mutually agree to coordinate and cooperate in
connection with the creation and implementation of written compliance polices
and procedures which, in the aggregate, shall be deemed by the Board of Trustees
of the Trust (the "Board") to be reasonably designed to prevent the Trust from
violating the provisions of the Federal
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securities laws applicable to the Trust (the "Applicable Securities Laws"), as
required under Rule 38a-1 under the 0000 Xxx.
(b) The Trust agrees to provide BISYS with copies of its current
compliance policies and procedures and furnish (and cause its investment
advisers and other service providers to furnish) all such additional information
as may reasonably relate to the design and implementation of the Fund Compliance
Program. Such additional information shall include compliance and related
information pertaining to the investment adviser and any other service providers
to the Trust other than BISYS. BISYS shall review and evaluate all such existing
information and coordinate the creation of a written document or documents
designed to embody the overall fund compliance program and the oversight of the
compliance programs of the service providers to the Trust as provided in Rule
38a-1 ("Service Providers"). Drafts shall be prepared by BISYS in consultation
with the Trust and its counsel and shall be submitted for review and comment.
Upon approval by the Board, such document or documents shall become effective as
the fund compliance program required under Rule 38a-1 (as amended from time to
time upon the approval of the Board, the "Fund Compliance Program").
(c) BISYS will provide the following services in relation to the Fund
Compliance Program during the term of this Agreement: (i) make an individual
available to serve as the Trust's Chief Compliance Officer to administer the
Fund Compliance Program, to the extent provided in Section 3(a) below; (ii)
assist the Trust in developing and implementing the written policies and
procedures comprising the Fund Compliance Program, as contemplated above and as
may be necessary in connection with amendments from time to time; (iii) assist
the Trust in the preparation and evaluation of the results of annual reviews of
the compliance policies and procedures of Service Providers; (iv) provide
support services to the Chief Compliance Officer of the Trust, including support
for conducting an annual review of the Fund Compliance Program; (v) assist in
developing standards for reports to the Board by BISYS and other Service
Providers; (vi) assist in developing standards for reports to the Board by the
Chief Compliance Officer; (vii) assist in preparing or providing documentation
for the Board to make findings and conduct reviews pertaining to the Fund
Compliance Program and compliance programs and related policies and procedures
of Service Providers; and (viii) maintain copies of the policies, procedures,
other materials and records as required under part (d) under Rule 38a-1. BISYS
shall use reasonable professional diligence and good judgment in rendering the
services described in clauses (c)(ii) - (viii) above.
2. Provision of Executive Officers
(a) Provision of Chief Compliance Officer. At the election of the
Trust, in connection with the compliance services to be rendered by BISYS
pursuant to Section 1 above, and subject to the provisions of this Section 2(a)
and to Section 2(d) below, BISYS agrees to make available to the Trust a person
to serve as the Trust's Chief Compliance Officer responsible for administering
the Fund Compliance Program as provided in paragraph (a)(4) of Rule 38a-1 (the
"Chief Compliance Officer"). BISYS'
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obligation in this regard shall be met by providing an appropriately qualified
employee or agent of BISYS (or its affiliates) who, in the exercise of his or
her duties to the Trust, shall act in good faith and in a manner reasonably
believed by him or her to be in the best interests of the Trust. In the event
that the employment relationship or independent contractor agency relationship
between BISYS and any person made available by BISYS to serve as Chief
Compliance Officer terminates for any reason, BISYS shall have no further
responsibility to provide the services of that particular person, and shall have
no responsibility whatsoever for the services to the Trust or other activities
of such person provided or occurring after such termination regardless of
whether or not the Board terminates such person as Chief Compliance Officer. In
such event, upon the request of the Trust, BISYS will employ reasonable good
faith efforts to provide a person to act as a temporary Chief Compliance Officer
for the Trust until a permanent replacement is found, and make another person
available on an ongoing basis to serve as the Chief Compliance Officer.
Following a reasonable opportunity for BISYS to provide a replacement, if the
person(s) BISYS makes available is not acceptable to the Board to serve as the
replacement Chief Compliance Officer, the Trust shall have the ability to
terminate this Agreement upon thirty (30) days notice to BISYS. In the event
that the Trust appoints a Chief Compliance Officer that is not provided by BISYS
but does not elect to terminate this Agreement, BISYS shall continue to render
the other services enumerated in Section 1(c), and the reduced fee set forth on
Schedule A that is applicable under such circumstances shall apply. In addition,
effective at any time after such reduced fee takes effect, BISYS shall have the
right to terminate this Agreement upon thirty (30) days' notice to the Trust.
In connection with BISYS' commitment to make an appropriately qualified
person available to serve as Chief Compliance Officer, BISYS shall pay a level
of total compensation to such person as is consistent with BISYS' compensation
of employees having similar duties, similar seniority, and working at the same
or similar geographical location. BISYS shall not be obligated to pay any
compensation to a Chief Compliance Officer which exceeds that set forth in the
previous sentence. BISYS shall disclose to the Board the compensation and the
components of the compensation of the Chief Compliance Officer, and BISYS shall
coordinate with the Board in order to confirm that its process for determining
any incentive compensation is acceptable to the Board. BISYS shall provide the
Board with the opportunity to review and approve in advance the method for
determining the Chief Compliance Officer's compensation and the range of any
incentive compensation, and any changes thereto. At least annually, BISYS shall
disclose to the Board the components of the Chief Compliance Officer's actual
compensation package in reasonable detail to allow the Board to fulfill its
responsibilities under Rule 38a-1(a)(4)(i) under the 1940 Act and related SEC
staff positions and interpretations, including information BISYS may have
available, if any (if the same may be provided without cost to BISYS), regarding
chief compliance officer compensation for investment companies comparable to the
Trust, and customary cost of living increases and customary bonuses of other
BISYS employees. In addition, BISYS shall represent to the Board that BISYS will
not retaliate against the Chief Compliance Officer should the Chief Compliance
Officer inform the Board of a compliance failure or take aggressive
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actions to ensure compliance with the federal securities laws by the Trust or a
service provider.
The Trust will provide copies of the Fund Compliance Program, related
policies and procedures, and all other books and records of the Trust as the
Chief Compliance Officer deems necessary or desirable in order to carry out his
or her duties hereunder on behalf of the Trust. The Trust shall cooperate with
the Chief Compliance Officer and take reasonable steps to implement and maintain
the cooperation of the investment adviser, the custodian and any other Service
Providers to the Trust, as well as Trust counsel, Independent Trustee counsel
and the Trust's independent accountants (collectively, the "Other Providers"),
and assist the Chief Compliance Officer and BISYS in preparing, implementing and
carrying out the duties of the Chief Compliance Officer under the Fund
Compliance Program and Rule 38a-1. In addition, the Trust shall provide the
Chief Compliance Officer with appropriate access to the executive officers and
trustees of the Trust, and to representatives of and to any records, files and
other documentation prepared by, Service Providers and Other Providers, which
are or may be related to the Fund Compliance Program.
Each party agrees to provide promptly to the other party (and to the
Chief Compliance Officer), upon request, copies of other records and
documentation relating to the compliance by such party with Applicable
Securities Laws (as related to the Fund Compliance Program of the Trust), and
each party also agrees otherwise to assist the other party (and the Chief
Compliance Officer) in complying with the requirements of the Fund Compliance
Program and Applicable Securities Laws.
Subject to the first paragraph of this Section 2(a), BISYS agrees to
provide the services set forth in Section 1 pertaining to the Fund Compliance
Program, whether or not the person serving as Chief Compliance Officer is an
employee or agent of BISYS. In the event that the employment relationship or
independent contractor agency relationship between BISYS and a person made
available by BISYS serving as Chief Compliance Officer terminates for any
reason, BISYS shall have no further responsibility to make that particular
person available, but shall provide the resources and support that are
reasonably necessary for the Chief Compliance Officer (who is not provided by
BISYS) to fulfill any of the services set forth in this Section that are not
fulfilled by BISYS. In such event, however, as provided above, the Trust shall
have the ability to terminate this Agreement upon thirty (30) days notice to
BISYS and the other provisions set forth in the first paragraph of this Section
2(a) shall apply.
(b) AML Compliance Officer. It is understood that the Trust is a
financial institution subject to the law entitled Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism ("U.S.A. Patriot") Act of 2001 and the Bank Secrecy Act (collectively,
the "AML Acts"), and is required to comply with the AML Acts and applicable
regulations thereunder (collectively, the "Applicable AML Laws").
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Subject to the provisions of this Section 2(b) and Section 2(c) below,
BISYS agrees to make available to the Trust a person to serve as the Trust's
anti-money laundering compliance officer ("AML Compliance Officer"). BISYS'
obligation in this regard shall be met by providing an appropriately qualified
employee or agent of BISYS (or its affiliates) who, in the exercise of his or
her duties to the Trust, shall act in good faith and in a manner reasonably
believed by him or her to be in the best interests of the Trust. Subject to the
relevant terms of the transfer agency or other services agreement under which
BISYS provides certain anti-money laundering services to the Trust, the AML
Compliance Officer will assist the Trust in operating the written anti-money
laundering program adopted by the Board of the Trust and provided to BISYS (the
"AML Program"), and shall perform the duties assigned to the AML Compliance
Officer which are set forth in the AML Program.
The Trust shall provide copies of its anti-money laundering compliance
reports and such other books and records of the Trust as the AML Compliance
Officer deems necessary or desirable in order to carry out his or her duties
hereunder on behalf of the Trust. Each party also agrees to provide promptly to
the other party (and to the AML Compliance Officer), upon request, copies of
other records and documentation relating to the compliance by such party with
Applicable AML Laws (in relation to the Trust), and each party also agrees
otherwise to assist the other party (and the AML Compliance Officer) in
complying with the requirements of the AML Program and Applicable AML Laws. Each
party agrees to retain a copy of all documents and records prepared, maintained
or obtained by it relating to shareholders and transactions for a period of at
least five (5) years from the termination of the relationship with each such
shareholder or the date of execution of each such transaction. The foregoing is
not intended to limit any obligation to retain any specified records for any
other period that may be specified in the AML Program or under Applicable AML
Laws.
(c) Additional Provisions Concerning Executive Officers. It is mutually
agreed and acknowledged by the parties that the Chief Compliance Officer and the
AML Compliance Officer contemplated under the provisions of this Section 2 of
this Agreement will be executive officers of the Trust ("Executive Officers").
The provisions of Sections 2(a) - (b) are subject to the internal policies of
BISYS concerning the activities of its employees and their service as officers
of funds (the "BISYS Policies"), a copy of which shall be provided to the Trust.
BISYS represents that at the date of this Agreement, the Chief Compliance
Officer and the AML Compliance Officer are not subject to the disqualification
provisions of Section 9 of the 1940 Act. In addition, BISYS represents that
during the term of this Agreement it shall take reasonable steps to determine
whether the Chief Compliance Officer and the AML Compliance Officer are subject
to the disqualification provisions of Section 9 of the 1940 Act, and if such an
Officer is subject to the disqualification provisions, to replace that Officer.
The Trust's governing documents (including its Agreement and Declaration of
Trust and By-Laws) and/or resolutions of its Board shall contain indemnification
provisions that are applicable to each Executive Officer, that are designed and
intended to have the effect of fully indemnifying him or her and holding him or
her harmless with respect to any claims, liabilities and costs arising out of or
relating to his or her service in good faith in a
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manner reasonably believed to be in the best interests of the Trust and to the
same extent as the indemnification provisions applicable to the other officers
of the Trust, except to the extent he or she would otherwise be liable to the
Trust by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
The Trust shall provide coverage to each Executive Officer under its
directors and officers liability policy that is appropriate to the Executive
Officer's role and title, and consistent with coverage applicable to the other
officers holding positions of executive management.
In appropriate circumstances, each Executive Officer shall have the
discretion to resign from his or her position, in the event that he or she
reasonably determines that there has been or is likely to be (a) a material
deviation from the BISYS Policies, (b) an ongoing pattern of conduct involving
the continuous or repeated violation of Applicable AML Laws or Applicable
Securities Laws, or (c) a material deviation by the Trust from the terms of this
Agreement governing the services of such Executive Officer that is not caused by
such Executive Officer or BISYS. In addition, each Executive Officer shall have
reasonable discretion to resign from his or her position in the event that he or
she determines that he or she has not received sufficient cooperation from the
Trust or its Other Providers to make an informed determination regarding any of
the matters listed above.
Each Executive Officer may, and the Trust shall, promptly notify BISYS
of any issue, matter or event that would be reasonably likely to result in any
claim by the Trust, one or more Trust shareholder(s) or any third party which
involves an allegation that any Executive Officer failed to exercise his or her
obligations to the Trust in a manner consistent with applicable laws (including
but not limited to any claim that a Report failed to meet the standards of
Xxxxxxxx-Xxxxx and other applicable laws).
Notwithstanding any provision of the Administration Agreement or any
other agreement or instrument that expressly or by implication provides to the
contrary, whenever an employee or agent of BISYS serves as an Executive Officer
of the Trust, as long as such Executive Officer acts in good faith and in a
manner reasonably believed to be in the best interests of the Trust (and would
not otherwise be liable to the Trust by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office), the Trust shall indemnify the Executive Officer
and BISYS and hold the Executive Officer and BISYS harmless from any loss,
liability, expenses (including reasonable attorneys fees) and damages incurred
by them arising out of the service of such employee or agent of BISYS as an
Executive Officer of the Trust.
3. Fees and Expenses
(a) BISYS shall be entitled to receive from the Trust the amounts set
forth on Schedule A hereto, reflecting the amounts charged by BISYS for the
performance of
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services under this Agreement. The fees hereunder shall be in addition to all
fees and expenses charged by BISYS under the Administration Agreement.
(b) In addition to paying BISYS the fees set forth in Schedule A, the
Trust agrees to reimburse BISYS for all of its actual out-of-pocket expenses
reasonably incurred in providing services under this Agreement, including but
not limited to the following:
(i) All out of pocket costs incurred in connection with BISYS'
provision of Executive Officers to the Trust in connection
with compliance services, including travel costs for attending
Board meetings, and conducting due diligence of Service
Providers; and
(ii) Any other expenses approved by the Board.
(c) All rights of compensation under this Agreement for services
performed and for expense reimbursement shall survive the termination of this
Agreement.
4. Information to be Furnished by the Trust
(a) The Trust has furnished or shall promptly furnish to BISYS copies
of the following, as amended and current as of the date of this Agreement:
(i) The Fund Compliance Program or the various policies and
procedures of the Trust that have been adopted through the
date hereof which pertain to compliance matters that are
required to be covered by the Fund Compliance Program,
including the compliance programs of Service Providers other
than BISYS, as necessary under Rule 38a-1 for inclusion in the
Fund Compliance Program; and
(ii) The Trust Anti-Money Laundering Policy.
(b) The Trust shall furnish BISYS written copies of any amendments to,
or changes in, any of the items referred to in Section 4(a) hereof, forthwith
upon such amendments or changes becoming effective. In addition, the Trust
agrees that no amendments will be made to the AML Program or the Fund Compliance
Program which might have the effect of changing the procedures employed by BISYS
in providing the services agreed to hereunder or which amendment might affect
the duties of BISYS hereunder unless the Trust first gives BISYS reasonable
notice of such amendments or changes; provided, that BISYS shall have no
responsibility for any material modifications to services that may be
necessitated by such amendments or changes unless it approves of the specific
changes in writing. BISYS will not unreasonably withhold such written approval.
(c) BISYS may rely on all documents furnished to it by the Trust and
its agents in connection with the services to be provided under this Agreement,
including any amendments to or changes in any of the items to be provided by the
Trust pursuant to
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Section 4(a), and shall be entitled to indemnification in accordance with
Section 5 below with regard to such reliance.
The Trust represents and warrants that (i) the provision of certain
officers of the Trust by BISYS, as provided in Section 2 of this Agreement, has
been approved by the Board, and (ii) each of the individuals nominated by BISYS
as the Trust's AML Compliance Officer or Chief Compliance Officer has been
approved and appointed as an officer of the Trust by the Board.
5. Term and Termination
(a) The compliance services to be rendered by BISYS under this
Agreement (the "Compliance Services") shall commence upon the date of this
Agreement and shall continue in effect for one (1) year, until October 5, 2005,
unless earlier terminated pursuant to the terms of this Agreement. During such
one year term, the Compliance Services may be terminated upon thirty (30) days
notice in the event there is "cause," as defined in the Administration
Agreement. Following the one year anniversary of the date of this Agreement, the
Compliance Services may be terminated by either party for "cause," as provided
above, or by providing the other party with sixty (60) days written notice of
termination. However, notwithstanding the above provisions, this Agreement may
be terminated upon thirty (30) days notice in certain circumstances as set forth
in Section 2(a) above. In addition, notwithstanding the above provisions, the
Board will have the right and authority to terminate its relationship with the
Chief Compliance Officer and/or the AML Compliance Officer at any time, with or
without cause.
(b) The obligations of BISYS set forth in Section 2(b) above shall
terminate automatically upon any termination of the transfer agency agreement
under which BISYS provides transfer agency services to the Trust.
(c) Notwithstanding anything in this Agreement to the contrary,
including but not limited to the provisions of Section 5(a), all of the
obligations of BISYS hereunder shall terminate automatically upon any
termination of the Administration Agreement.
6. Notice
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such notice
at the following address: if to the Trust, to MMA Praxis Mutual Funds; Attn:
Xxxx X. Xxxxxxx, President, at 0000 Xxxxx Xxxx Xxxxxx, Xxxxxx, XX 00000; and if
to BISYS, at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000; Attn: President, or at
such other address as such party may from time to time specify in writing to the
other party pursuant to this Section.
7. Governing Law and Matters Relating to the Trust as a Massachusetts
Business Trust
This Agreement shall be construed in accordance with the laws of the
State of Ohio and the applicable provisions of the 1940 Act. To the extent that
the applicable
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laws of the State of Ohio, or any of the provisions herein, conflict with the
applicable provisions of the Investment Company Act of 1940, as amended, the
latter shall control. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on them personally, but shall bind only the trust property
of the Trust as provided in the Trust's Declaration of Trust.
8. Representations and Warranties
Each party represents and warrants to the other that: (i) it is
empowered under applicable laws to enter into this Agreement and perform its
duties under this Agreement; and (ii) all requisite corporate proceedings have
been taken to authorize it to enter into this Agreement and perform its duties
under this Agreement.
9. Miscellaneous
(a) Except as expressly provided in this Agreement, the terms of the
Administration Agreement shall apply to the services rendered under this
Agreement and the general provisions thereof shall be used on a residual basis
to construe any issues arising under this Agreement that are not addressed by
the express terms of this Agreement. Except as provided in this Agreement, the
provisions of the Administration Agreement remain in full force and effect
(including, without limitation, the term of the Agreement).
(b) The provisions set forth in this Agreement supersede all prior
negotiations, understandings and agreements bearing upon the subject matter
covered herein, including any conflicting provisions of the Administration
Agreement.
(c) No amendment or modification to this Agreement shall be valid
unless made in writing and executed by both parties hereto.
(d) Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
This Agreement may be executed in counterparts, each of which shall be an
original but all of which, taken together, shall constitute one and the same
agreement.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
MMA PRAXIS MUTUAL FUNDS
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxx
Title: President
BISYS FUND SERVICES OHIO, INC.
By: /s/ Xxxx Xxxxxxx
---------------------------
Name: Xxxx Xxxxxxx
Title: President
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SCHEDULE A
TO COMPLIANCE SERVICES AGREEMENT
DATED OCTOBER 5, 2004
COMPLIANCE SERVICES FEES
Compliance Services provided under this Agreement:
$35,000 one-time implementation fee*
and $75,000 annual fee**
* One half of the implementation fee is due upon the execution of this
Agreement. The balance shall be paid upon the initial approval by the Board of
the Fund Compliance Program prepared by BISYS, as contemplated in Section 1(b)
above.
** The annual fee will be reduced to $24,000 ($2,000 monthly) if, pursuant to
Section 2(a), the Board of Trustees of the Trust appoints a Chief Compliance
Officer that is not provided by BISYS. Such reduction shall occur on a pro rata
basis from the beginning of the month following the date of the appointment. All
annual fees set forth above shall be payable in equally monthly installments.
OUT OF POCKET EXPENSES
Out of pocket expenses are not included in the above fees and shall also be paid
to BISYS in accordance with the provisions of this Agreement.
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