COMPLIANCE SERVICES AGREEMENT
Exhibit (h)(15)
AGREEMENT effective as of the 5th day of October, 2004, between First Focus
Funds, Inc. a Nebraska Corporation having its principal place of business at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000, (“Funds”) 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 Funds is a registered investment company, and will become subject to the
requirements of Rule 38a-1 under the Investment Company Act of 1940, 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 Funds under an
administration agreement between BISYS and the Funds (the “Administration Agreement”);
WHEREAS, BISYS offers compliance services through its ComplianceEDGE program, which may be
tailored to create a compliance program for the Funds;
WHEREAS, the Funds desire that BISYS provide its ComplianceEDGE program services in connection
with the institution of a more comprehensive compliance program for the Funds;
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 Funds 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 Funds, and to
supplement and clarify certain provisions of the Administration Agreement.
NOW, THEREFORE, in consideration of the covenants herein contained, the Funds 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 Directors of the Funds (the “Board”) to be reasonably designed to prevent
the Funds from violating the provisions of the Federal securities laws applicable to the Funds (the
“Applicable Securities Laws”), as required under Rule 38a-1 under the 1940 Act.
(b) The Funds agree to provide BISYS with copies of their current compliance policies and
procedures and furnish (and cause their investment advisers and other service providers to furnish)
all such additional information as may reasonably relate to
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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 Funds 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 Funds as provided in Rule 38a-1 (“Service Providers”). Drafts shall be prepared
by BISYS in consultation with the Funds and their counsel and shall be submitted for review and
comment. Upon approval by the Board, such documents 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 Fund’s Chief
Compliance Officer to administer the Fund Compliance Program, to the extent provided in Section
3(a) below; (ii) assist the Funds 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 Funds 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 Funds, 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; and (vi) 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.
2. Provision of Executive Officers
(a) Provision of Chief Compliance Officer. At the election of the Funds, 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 Funds a person to serve as the Funds’ 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’ 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 Funds, shall act in good faith and in a manner reasonably believed by him or her to be in
the best interests of the Funds. In the event that the employment 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 Funds 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 Funds,
BISYS will employ reasonable
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good faith efforts to make another person available to serve as the Chief Compliance Officer. In
addition, should the Funds no longer require the services of the Chief Compliance Officer as
contemplated by this Agreement, the other services enumerated in Section 1 (c) shall continue in
effect for the remaining term of the contract.
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.
The Funds will provide copies of the Fund Compliance Program, related policies and procedures,
and all other books and records of the Funds as the Chief Compliance Officer deems necessary or
desirable in order to carry out his or her duties hereunder on behalf of the Funds. The Funds
shall cooperate with the Chief Compliance Officer and ensure the cooperation of the investment
adviser, the custodian and any other Service Providers to the Funds, as well as Funds counsel,
Independent Director’s counsel and the Fund’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 Funds shall provide the Chief Compliance Officer with appropriate access
to the executive officers and directors of the Funds, 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
Funds), 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.
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, and shall have no responsibility concerning such person’s services after the date the
Funds are notified of such termination. In such event, upon the request of the Funds, BISYS will
employ reasonable good faith efforts to make another person available to serve as the Chief
Compliance Officer.
(b) AML Compliance Officer. It is understood that the Funds are 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
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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”).
Subject to the provisions of this Section 2(b) and Section 2(c) below, BISYS agrees to make
available to the Funds a person to serve as the Funds’ 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 Funds, shall act in good faith and in a manner reasonably believed by him or
her to be in the best interests of the Funds. Subject to the relevant terms of the transfer agency
or other services agreement under which BISYS provides certain anti-money laundering services to
the Funds, the AML Compliance Officer will assist the Funds in operating the written anti-money
laundering program adopted by the Board of the Funds 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 Funds shall provide copies of their anti-money laundering compliance reports and such
other books and records of the Funds as the AML Compliance Officer deems necessary or desirable in
order to carry out his or her duties hereunder on behalf of the Funds. 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 Funds), 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 Funds (“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 Funds upon request. The
Funds’ governing documents (including their Agreement and Articles of Incorporation and By-Laws)
and/or resolutions of their Board shall contain mandatory 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 manner reasonably
believed to be in the best interests of the Funds, except to the extent he or she would otherwise
be liable to the Funds by reason of willful
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misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
The Funds shall provide coverage to each Executive Officer under their 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 Funds 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 Funds or their Other Providers to make an informed determination regarding any
of the matters listed above.
Each Executive Officer may, and the Funds shall, promptly notify BISYS of any issue, matter or
event that would be reasonably likely to result in any claim by the Funds, one or more Funds
shareholder(s) or any third party which involves an allegation that any Executive Officer failed to
exercise his or her obligations to the Funds 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, (a) it is expressly agreed
and acknowledged that BISYS cannot ensure that the Funds comply with Applicable AML Laws or the
Applicable Securities Laws, and (b) whenever an employee or agent of BISYS serves as an Executive
Officer of the Funds, as long as such Executive Officer acts in good faith and in a manner
reasonably believed to be in the best interests of the Funds (and would not otherwise be liable to
the Funds 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 Funds 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 or
related to the service of such employee or agent of BISYS as an Executive Officer of the Funds.
3. Fees and Expenses
(a) BISYS shall be entitled to receive from the Funds the amounts set forth on Schedule A
hereto, reflecting the amounts charged by BISYS for the performance of services under this
Agreement. The fees hereunder shall be in addition to all fees and expenses charged by BISYS under
the Administration Agreement.
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(b) In addition to paying BISYS the fees set forth in Schedule A, the Funds agree 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 Funds in connection with compliance services, including
travel costs for attending Board meetings, conducting due diligence of Service
Providers, and attending training conferences and seminars (plus the costs of
training);
(ii) If applicable initially or from time to time hereafter, upon the approval of
the Funds, costs to recruit a Chief Compliance Officer; and
(iii) The costs incurred by BISYS in connection with the Fund Compliance Program,
including those incurred by or with respect to Other Providers, in providing
reports to the Chief Compliance Officer under the Fund Compliance Program.
(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 Funds
(a) The Funds 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 Funds 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 Funds Anti-Money Laundering Policy. |
(b) The Funds 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 Funds agree 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 Funds first obtain BISYS’s approval of such amendments or changes, which
approval shall not be withheld unreasonably.
(c) BISYS may rely on all documents furnished to it by the Funds 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 Funds 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 Funds represent and warrant that (i) the provision of certain officers of the Funds 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 Funds’ AML Compliance Officer or Chief Compliance Officer
has been approved and appointed as an officer of the Funds 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 , 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 ninety (90) days written
notice of termination.
(b) 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 Funds,
to ; Attn: , at ; 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
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 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 Funds hereunder shall not be binding upon any of the Directors, shareholders,
nominees, officers, agents or employees of the Funds personally, but shall bind only the trust
property of the Funds. The execution and delivery of this Agreement have been authorized by the
Directors, and this Agreement has been signed and delivered by an authorized officer of the Funds,
acting as such, and neither such authorization by the Directors nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to impose any
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liability on them personally, but shall bind only the trust property of the Funds as provided
in the Funds’ Articles of Incorporation.
8. Representations and Warranties
Each party represents and warrants to the other that this Agreement has been duly authorized
and, when executed and delivered by it, will constitute a legal, valid and binding obligation of
it, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the rights and remedies
of creditors and secured parties.
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.
(e) 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.
| FIRST FOCUS FUNDS, INC. | ||||||
| By: | /s/ Xxxxx X. Xxxxx
|
|||||
| Name: | Xxxxx X. Xxxxx | |||||
| Title: | President | |||||
| BISYS FUND SERVICES OHIO, INC. | ||||||
| By: | /s/ Xxxx Xxxxxxx | |||||
| Name: | Xxxx Xxxxxxx | |||||
| Title: | President | |||||
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SCHEDULE A
Dated ___, 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.
All recurring fees set forth above shall be subject to adjustment annually commencing on the
one-year anniversary of the date of this Agreement by the percentage increase in consumer prices
for services as measured by the United States Consumer Price Index entitled “All Services Less Rent
of Shelter” or a similar index should such index no longer be published.
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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