COMPLIANCE SERVICES AGREEMENT
AGREEMENT effective as of the 4th day of October, 2004, between XXXXXXX
MULTIFUND TRUST (the "Trust"), a Massachusetts business trust having its
principal place of business at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx,
Xxxxxxxxx 00000, and XXXXXXX CAPITAL MANAGEMENT, INC. (the "Adviser"), a
Minnesota corporation having its principal place of business at 0000 Xxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxxx 00000.
WHEREAS, the Trust is a registered open-end management investment company,
and will become subject to the requirements of Rule 38a-1 under the Investment
Company Act of 1940 (the "1940 Act"), which requires each registered investment
company to designate a Chief Compliance Officer;
WHEREAS, the Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" (as defined by the 0000 Xxx) of the
Trust (the "Disinterested Trustees"), have designated Xx. Xxxxxx X. Xxxxxxx, an
employee of the Adviser, to be the Chief Compliance Officer of the Trust and has
approved her compensation for serving in such a capacity;
WHEREAS, the Trust agrees to compensate Xx. Xxxxxxx for her services as
Chief Compliance Officer of the Trust as set forth in this Agreement;
WHEREAS, the Adviser is willing to perform the services enumerated in this
Agreement on the terms and conditions set forth in this Agreement; and
WHEREAS, the Trust and the Adviser wish to enter into this Agreement in
order to set forth the terms under which the Adviser will perform the services
enumerated herein on behalf of the Trust.
NOW, THEREFORE, in consideration of the covenants herein contained, the
Trust and the Adviser hereby agree as follows:
1. Compliance Services
(a) Provision of Chief Compliance Officer. The Adviser will provide Xx.
Xxxxxxx, whose designation and compensation as the Trust's Chief Compliance
Officer has been approved by the Trust's Board of Trustees, to serve as the
Trust's Chief Compliance Officer to administer the Fund's policies and
procedures pursuant to Rule 38a-1 of the 1940 Act (the "Compliance Program").
Xx. Xxxxxxx'x compensation and any changes to such compensation will be subject
to the approval of the Board of Trustees, including a majority of the
Disinterested Trustees. Xx. Xxxxxxx may be removed at any time by the Board of
Trustees, including a majority of the Disinterested Trustees. Subject to the
direction and control of the Board of Trustees of the Trust, Xx. Xxxxxxx, as the
Chief Compliance Officer, shall perform the compliance services for the Trust
detailed in the attached Schedule A.
In the event that the Adviser decides to terminate the employment of Xx.
Xxxxxxx, the Adviser shall use its best efforts to notify the Trust in advance
of such termination, and provide as much notice to the Trust of the termination
as may be practical under the circumstances. In addition, the Adviser shall
inform the Trust of such information as may be available and disclosable
(subject to any privilege) as to the reason for the termination and such
information as may be relevant to any consideration that the Board may give to
continuing to retain Xx. Xxxxxxx as the Trust's Chief Compliance Officer
notwithstanding the termination of employment by the Adviser.
In the event that the employment relationship between the Adviser and Xx.
Xxxxxxx terminates for any reason, the Adviser shall have no further
responsibility to provide the services of Xx. Xxxxxxx. In such event, or in the
event that the Board terminates the Chief Compliance Officer or notifies the
Adviser that it intends to terminate the Chief Compliance Officer, the Adviser
will (without any unnecessary or unreasonable delay) employ reasonable good
faith efforts to make another appropriately qualified person available to serve
as the Chief Compliance Officer. In the event that, following a reasonable
opportunity for the Adviser to provide such replacement, the Board does not find
that any proposed replacement for the Chief Compliance Officer offered by the
Adviser is acceptable to the Board, the Trust may terminate this Agreement,
immediately upon written notice to the Adviser.
In connection with the Adviser's commitment to make an appropriately
qualified person available to serve as Chief Compliance Officer, the Adviser
shall pay a level of total compensation to such person as is consistent with the
Adviser's compensation of employees having similar duties and similar seniority.
The Adviser shall not be obligated to pay any compensation to a Chief Compliance
Officer which exceeds that set forth in the previous sentence. At least
annually, the Adviser 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.
The Trust will provide copies of the Trust's 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 her
duties hereunder on behalf of the Trust. The Trust shall cooperate with the
Chief Compliance Officer and assist the Chief Compliance Officer in preparing,
implementing and carrying out her duties under the Compliance Program and Rule
38a-1 of the 1940 Act. 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 the Trust's service providers (as defined in Rule
38a-1)("Service Providers") and by Trust and Disinterested Trustee counsel, the
Trust's custodian and the Trust's independent accountants (collectively, the
"Other Providers"), which are or may be related to the Compliance Program.
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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 all federal securities laws
applicable to the Trust (as defined under Rule 38a-1 of the 1940 Act), and each
party also agrees otherwise to assist the other party (and the Chief Compliance
Officer) in complying with the requirements of the Compliance Program and all
applicable federal securities laws.
(b) Additional Provisions Concerning Chief Compliance Officer. It is
mutually agreed and acknowledged by the parties that the Chief Compliance
Officer contemplated under the provisions of this Section 1 of this Agreement
will be an officer of the Trust that is eligible for Trust indemnification.
Section 1(a) is subject to the internal policies of the Adviser concerning the
activities of its employees and their service as officers of funds (the
"Adviser's Policies"). The Trust's governing documents (including its Agreement
and Declaration of Trust and By-Laws) and/or resolutions of its Board of
Trustees shall contain mandatory indemnification provisions that are applicable
to the Chief Compliance Officer, that are designed and intended to have the
effect of fully indemnifying her and holding her harmless with respect to any
claims, liabilities and costs arising out of or relating to her service in good
faith in a manner reasonably believed to be in the best interests of the Trust,
except to the extent 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 her office.
The Trust shall provide coverage to the Chief Compliance Officer under its
directors and officers liability policy that is appropriate to the Chief
Compliance Officer's role and title, and consistent with coverage applicable to
the other officers holding positions of executive management.
In appropriate circumstances, the Chief Compliance 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 Adviser's Policies, (b) an ongoing pattern of conduct
involving the continuous or repeated violation of applicable federal securities
laws, or (c) a material deviation by the Trust from the terms of this Agreement
governing the services of the Chief Compliance Officer that is not caused by the
Chief Compliance Officer or the Adviser. In addition, the Chief Compliance
Officer shall have reasonable discretion to resign from his or her position in
the event that she determines that she has not received sufficient cooperation
from the Trust or its Service Providers to make an informed determination
regarding any of the matters listed above.
The Chief Compliance Officer may, and the Trust shall, promptly notify the
Adviser 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
with respect to services performed under this Agreement.
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Notwithstanding any provision of any other agreement or instrument that
expressly or by implication provides to the contrary, it is expressly agreed and
acknowledged that whenever an employee or agent of the Adviser serves as the
Chief Compliance Officer of the Trust, as long as the Chief Compliance 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 Chief Compliance Officer and the Adviser and hold the Chief Compliance
Officer and the Adviser 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 the Adviser as the Chief
Compliance Officer of the Trust.
2. Reimbursement of Fees and Expenses
(a) The Adviser hereby agrees to pay to Xx. Xxxxxxx (or her successor as
provided by the Adviser pursuant to Section 1(a)) the compensation for serving
as the Trust's Chief Compliance Officer approved by the Trust's Board of
Trustees and set forth in the attached Schedule B. The Trust hereby agrees to
reimburse the Adviser for such payment to the Chief Compliance Officer and for
all out-of-pocket expenses reasonably related to the Chief Compliance Officer in
providing services under this Agreement, including but not limited to the
following:
(i) Travel costs, if any, related to conducting due diligence of
Service Providers;
(ii) The costs of attending training conferences and seminars;
(iii) The fees or other costs charged by Other Providers in
providing reports to the Chief Compliance Officer under the Compliance
Program; and
(iv) Any other out of pocket expenses which have been reviewed and
approved by the Board or an independent committee thereof.
(b) All rights of compensation under this Agreement for fee and expense
reimbursements shall survive the termination of this Agreement.
3. Term and Termination
(a) The compliance services to be rendered by the Adviser under this
Agreement shall commence upon the date of this Agreement and shall continue in
effect for one (1) year, until October 4, 2005 ("Initial Term"), and shall
continue in force for successive one year terms thereafter ("Renewal Term")
subject to the approval of the Trust's Board of Trustees, unless otherwise
terminated pursuant to the terms of this Agreement, including Section 1(a). This
Agreement may be terminated, without penalty, (i) by the Trust at any time upon
written notice to the Adviser, or (ii) by the Adviser upon ninety (90) days'
prior written notice to the Trust.
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(b) Notwithstanding anything in this Agreement to the contrary, including
but not limited to the provisions of Section 3(a), all of the obligations of the
Adviser hereunder shall terminate automatically upon any termination of the
Investment Advisory Agreement between the Adviser and the Trust, dated December
30, 2002, with respect to the Trust.
4. Indemnification.
The Trust agrees to indemnify and hold harmless the Adviser, its
employees, agents, directors, officers and nominees from and against any claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses (including reasonable investigation
expenses) of every nature and character (collectively, "Losses") resulting
directly and proximately from the Adviser's performance of services under this
Agreement or based, if applicable, upon Adviser's reasonable reliance on
information, records, instructions or requests pertaining to services hereunder,
that are given or made to the Adviser by the Trust, or other authorized agents
of the Trust with which the Adviser must interface in providing services;
provided that this indemnification shall not apply to actions or omissions of
the Adviser (including the Chief Compliance Officer) involving bad faith,
willful misfeasance, negligence or reckless disregard by it of its obligations
and duties.
The Adviser shall indemnify, defend, and hold the Trust, and its
directors, officers, agents and nominees harmless from and against any Losses
resulting directly and proximately from the Adviser's willful misfeasance, bad
faith or negligence in the performance of, or the reckless disregard of, its
duties or obligations hereunder .
The indemnification rights hereunder shall include the right to reasonable
advances of defense expenses in the event of any pending or threatened
litigation with respect to which indemnification hereunder may ultimately be
merited. In order that the indemnification provisions contained herein shall
apply, however, it is understood that if in any case a party may be asked to
indemnify or hold the other party harmless, the indemnifying party shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnified party will use all
reasonable care to identify and notify the indemnifying party promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the indemnifying party,
but failure to do so in good faith shall not affect the rights hereunder except
to the extent the indemnifying party is materially prejudiced thereby. As to any
matter eligible for indemnification, an indemnified party shall act reasonably
and in accordance with good faith business judgment and shall not effect any
settlement or confess judgment without the consent of the indemnifying party,
which consent shall not be withheld or delayed unreasonably.
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The indemnifying party shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If the indemnifying party elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by it and reasonably satisfactory to the indemnified party. In the event
that the indemnifying party elects to assume the defense of any suit and retain
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. An indemnifying party shall not effect any
settlement without the consent of the indemnified party (which shall not be
withheld or delayed unreasonably by the indemnified party) unless such
settlement imposes no liability, responsibility or other obligation upon the
indemnified party and relieves it of all fault. If the indemnifying party does
not elect to assume the defense of suit, it will reimburse the indemnified party
for the reasonable fees and expenses of any counsel retained by the indemnified
party. The indemnity and defense provisions set forth herein shall indefinitely
survive the termination of this Agreement.
5. Record Retention and Confidentiality.
All records and other data relating to the services to be performed under
this Agreement are the exclusive property of the Trust and all such records and
data will be furnished to the Trust upon request in appropriate form as soon as
practicable after termination of this Agreement for any reason. The Chief
Compliance Officer shall promptly upon the Trust's demand, turn over to the
Trust and cease to retain the chif Compliance Officer's files, records and
documents created and maintained by the Chief Compliance Officer pursuant to
this Agreement which are no longer needed by the Chief Compliance Officer in the
performance of her services or for her legal protection. If not so turned over
to the Trust, such documents and records shall be retained by the Adviser for
six (6) years from the year of creation. At the end of such six-year period,
such records and documents shall be turned over to the Trust unless the Trust
authorizes in writing the destruction of such records and documents.
All parties hereto agree that any nonpublic information obtained hereunder
concerning another party is confidential and may not be disclosed without the
consent of the other party, except as may be required by applicable law or at
the request of a governmental agency. The parties further agree that a breach of
this provision would irreparably damage the other party and accordingly agree
that each of them is entitled, in addition to all other remedies at law or in
equity to an injunction or injunctions without bond or other security to prevent
breaches of this provision.
All parties hereto agree that nonpublic personal shareholder information
shall remain the sole property of the Trust. Such information shall not be
disclosed or used for any purpose except in connection with the performance of
the duties and responsibilities described herein or as required or permitted by
law. The provisions of this Section shall survive the termination of this
Agreement. The parties agree to comply with any and all regulations promulgated
by the SEC or other applicable laws regarding the confidentiality of shareholder
information.
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6. Standard of Care; Uncontrollable Events; Limitation of Liability
The Adviser shall use reasonable professional diligence in the performance
of all services under this Agreement, but shall not be liable to the Trust for
any action taken or omitted by the Adviser in the absence of bad faith, willful
misfeasance, negligence or reckless disregard by it of its obligations and
duties. The duties of the Adviser under this Agreement shall be confined to
those expressly set forth herein, and no implied duties are assumed by or may be
asserted against the Adviser hereunder.
The Adviser shall maintain adequate and reliable computer and other
equipment (including back-ups) necessary or appropriate for the Chief Compliance
Officer to carry out her obligations under this Agreement. Upon the Trust's
reasonable request, the Adviser shall provide supplemental information
concerning the aspects of its disaster recovery and business continuity plan
that are relevant to the services provided hereunder. Notwithstanding the
foregoing or any other provision of this Agreement, the Adviser assumes no
responsibility hereunder, and shall not be liable for, any damage, loss of data,
delay or any other loss whatsoever caused by events beyond its reasonable
control. Events beyond the Adviser's reasonable control include, without
limitation, force majeure events. Force majeure events include natural
disasters, actions or decrees of governmental bodies, and communication lines
failures that are not the fault of either party. In the event of force majeure,
computer or other equipment failures or other events beyond its reasonable
control, the Adviser shall follow applicable procedures in its disaster recovery
and business continuity plan and use all commercially reasonable efforts to
minimize any service interruption.
The Adviser shall provide the Trust, at such times as the Trust may
reasonably request, copies of reports rendered by independent public accountants
on the internal controls and procedures of the Adviser relating to the services
provided by the Adviser under this Agreement.
7. 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, at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx
000, Xxxxx, Xxxxxxxxx 00000; Attn: President; and if to the Adviser, at 0000
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxxx 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.
8. 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
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act. To
the extent that the applicable laws of the Commonwealth of Massachusetts, or any
of the provisions herein, conflict with the applicable provisions of the 1940
Act, 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.
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9. Binding Effect
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.
10. Severability
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
11. Miscellaneous
(a) This Agreement constitutes the complete agreement of the parties
hereto as to the subject matter covered by this Agreement and supersedes all
prior negotiations, understandings and agreements bearing upon the subject
matter covered herein.
(b) No amendment or modification to this Agreement shall be valid
unless made in writing and executed by both parties hereto.
(c) Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(d) 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.
XXXXXXX MULTIFUND TRUST
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
XXXXXXX CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
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SCHEDULE A
TO COMPLIANCE SERVICES AGREEMENT
BETWEEN XXXXXXX MULTIFUND TRUST AND XXXXXXX CAPITAL MANAGEMENT, INC.
Compliance Services of Chief Compliance Officer
The Chief Compliance Officer and his or her designees will perform the duties
and responsibilities set forth in this Schedule and in accordance with Rule
38a-1 under the Investment Company Act of 1940, as amended (the "1940 Act"). The
Chief Compliance Officer will assume his or her duties upon approval by the
Trust's Board of Trustees.
The Chief Compliance Officer will, among other things, oversee an annual review
of the policies and procedures of the Trust and its service providers (as
defined under Rule 38a-1 of the 0000 Xxx)(xxx "Service Providers") and will
provide a summary report of his or her findings to the Board of Trustees for
their approval.
The Chief Compliance Officer will provide a written report to the Board of
Trustees at least annually. The report will address:
(1) The operation of the policies and procedures of the Trust and each
Service Provider since the last report;
(2) Any material changes to the policies and procedures since the last
report;
(3) Any recommendations for material changes to the policies and
procedures as a result of the annual review; and
(4) Any material compliance matters since the date of the last report.
In addition, the Chief Compliance Officer will keep the Board apprised of any
material compliance events that are brought to his or her attention whether
those events occur at the Trust or its Service Providers.
Any material compliance matters of which the Chief Compliance Officer becomes
aware will be reported to the Board promptly.
The Chief Compliance Officer will be responsible for ensuring that copies are
maintained of all policies and procedures that are in effect or were in effect
for a period of six years; keep any records documenting the annual review; and
maintain materials provided to the Board of Trustees in connection with its
approval of the policies and procedures of the Trust and its Service Providers
and the annual written reports provided by the Chief Compliance Officer.
Written Deliverables, Including Reports
Upon appointment by the Board of Trustees, the Chief Compliance Officer will:
o Communicate with the Trust's management and the management of the
Trust's Service Providers regarding the Trust's Compliance Program
requirements;
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o Visit Trust management and the Trust's Service Providers and Other
Providers (as defined in the Agreement);
o Meet separately, no less frequently than annually, with the Trustees
of the Trust that are not "interested persons" as defined under the
1940 Act;
o Obtain and review copies of policies and procedures from the Trust
and its Service Providers;
o Prepare a summary of the policies and procedures of the Trust and
its Service Providers that will be provided to the Board for review
and approval
o Establish and maintain a recordkeeping system to meet the
requirements of the Rule.
During the course of the Chief Compliance Officer's duties, opportunities for
economies in or improvements in the policies and procedures of the Trust and its
Service Providers may be observed. If so, the Chief Compliance Officer will
communicate them either orally or in writing, at the Board's discretion.
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SCHEDULE B
TO COMPLIANCE SERVICES AGREEMENT
BETWEEN XXXXXXX MULTIFUND TRUST AND XXXXXXX CAPITAL MANAGEMENT, INC.
Dated October 4, 2004
Compensation of the Chief Compliance Officer
Xx. Xxxxxxx shall receive the fees described below:
$15,000 one-time fee for her assistance in preparing the Trust's
compliance policies and procedures
$40,000 annual fee per year for serving as the Trust's Chief
Compliance Officer
The fees set forth shall be paid by the Adviser. The Adviser will be reimbursed
by the Trust for such costs.
Out of Pocket Expenses
Out of pocket expenses are not included in the above fees and shall also be
reimbursed by the Trust in accordance with the provisions of Section 2 of this
Agreement.
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