GOVERNANCE AND REGULATORY OVERSIGHT SERVICES AGREEMENT
Exhibit (h)(6)
GOVERNANCE AND REGULATORY OVERSIGHT SERVICES
AGREEMENT
AGREEMENT
AGREEMENT effective as of the 1st day of November, 2009, between Asset Management Fund (the
“Trust”), a Delaware statutory trust having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and Beacon Hill Fund Services, Inc. (“Beacon Hill”), an
Ohio corporation having its principal place of business at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Trust is a registered investment company, and is subject to the requirements of
the Investment Company Act of 1940, as amended, (the “1940 Act”), which requires each registered
investment company to, among other things, adopt policies and procedures that are reasonably
designed to prevent it from violating the Securities Act of 1933, the Securities Exchange Act of
1934, the Sarbanes Oxley Act of 2002 (“Sarbanes Oxley”), the 1940 Act, the Investment Advisers Act
of 1940, Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, any rules adopted by the Securities and Exchange
Commission (the “SEC”) under any of these statutes, the Bank Secrecy Act as it applies to
registered investment companies, and any rules adopted thereunder by the Commission or the
Department of the Treasury (collectively, the “Federal Securities Laws”). These policies and
procedures include policies and procedures that provide for the oversight of compliance by each
investment adviser, principal underwriter, administrator, and transfer agent of the Trust
(collectively, the “Service Providers”);
WHEREAS, Beacon Hill offers fund governance and regulatory oversight services;
WHEREAS, the Trust desires to retain the services of Beacon Hill to assist in its compliance
with Federal Securities Laws;
WHEREAS, Beacon Hill and the Trust wish to enter into this Agreement in order to set forth the
terms under which Beacon Hill will perform the services enumerated herein on behalf of the Trust
and each of its investment portfolios as now in existence or as hereafter may be established from
time to time (each a “Fund”), however, Beacon Hill is authorized at its own expense to contract
with other service providers to perform any or all of the services described herein,
NOW, THEREFORE, in consideration of the covenants herein contained, the Trust and Beacon Hill
hereby agree as follows:
1. Fund Governance and Regulatory Oversight Services.
Beacon Hill will serve as administrator to the Trust and will provide or arrange for the
provision of the Fund governance and regulatory oversight services outlined in Schedule A.
2. Cooperation and Compliance.
The Trust shall use reasonable efforts to request the cooperation of the Service Providers
to the Trust, as well as Trust counsel, independent Trustee counsel and the Trust’s
independent accountants, and assist Beacon Hill in fulfilling its obligations under this
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Agreement. In addition, the Trust shall provide Beacon Hill with appropriate access to the
executive officers and the Board, and to representatives of and to any records, files and other
documentation prepared by, Service Providers, which are or may be necessary to fulfill Beacon
Hill’s obligations under this Agreement.
Except as expressly provided herein, the Trust assumes full responsibility for the preparation,
contents and distribution of its prospectuses and financial reports in compliance with all
applicable laws, rules and regulations of governmental authorities having jurisdiction and for
managing its funds, distributing its shares and otherwise operating in compliance with all
applicable laws, including but not limited to, the Federal Securities Laws.
3. Fees and Expenses.
Beacon Hill shall be entitled to receive from the Trust fees and out-of-pocket expenses set
forth on Schedule B hereto, reflecting the amounts charged by Beacon Hill for the performance of
services under this Agreement. All rights of compensation under this Agreement for services
performed up to the termination date and for expense reimbursement of expenses incurred up to the
termination date shall survive the termination of this Agreement. In the event of termination of
this Agreement pursuant to Section 5, the Trust shall reimburse Beacon Hill for reasonable
expenses related to its activities in effecting such termination, including without limitation,
the delivery to the Trust and/or its distributor, investment adviser and/or other parties of the
Trust’s property, records, instruments and documents.
Trust shall be responsible for paying expenses of the Trust not otherwise allocated herein,
including without limitation, organization costs, taxes, expenses for legal and auditing services,
the expenses of preparing (including typesetting), printing and mailing reports, prospectuses,
statements of additional information, proxy solicitation material and notices to existing
shareholders, all expenses incurred in connection with issuing and redeeming shares, the costs of
custodial services, the cost of initial and ongoing registration of the shares under Federal and
state securities laws, fees and out-of-pocket expenses of Trustees, insurance, interest, brokerage
costs, litigation and other extraordinary or nonrecurring expenses, and all fees and charges of
investment advisers.
4. Information to be Furnished by the Trust and Record Keeping.
(a) The Trust has furnished or shall promptly furnish to Beacon Hill copies of the Trust’s
organizational documents, including but not limited to, the Declaration of Trust, the Bylaws,
various policies and procedures of the Trust that have been adopted, the current prospectuses,
statement of additional information, the most recent annual and semi-annual reports and any
amendments to these documents herein (hereinafter “Trust Documents”). The Trust shall also furnish
a list of officers and persons authorized to act on behalf of the Trust.
(b) The Trust shall furnish Beacon Hill written copies of any amendments to, or changes in, any of
the items referred to in Section 4, upon such amendments or changes
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becoming effective which will have the effect of changing the procedures employed by Beacon Hill
in providing the services or performing its duties under this Agreement.
(c) Beacon Hill 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 Section 4, and shall be
entitled to indemnification in accordance with Section 9 below with regard to such reliance.
(d) Beacon Hill shall maintain records in connection with its duties as specified in this
Agreement. Any records required to be maintained and preserved shall be the property of the
Trust and will be surrendered promptly to the Trust on request, and made available for inspection
by the Trust or by applicable regulators at reasonable times. In case of any request for the
inspection of such records by another party, Beacon Hill shall notify the Trust and follow the
Trust’s instructions as to permitting or refusing such inspection; provided that Beacon Hill may
share such records in any case as outlined in Section 10.
5. Term and Termination.
The governance and regulatory oversight services to be rendered by Beacon Hill under this
Agreement shall commence upon the date of this Agreement and shall continue in effect for an
initial two (2) year-period from that date, unless earlier terminated pursuant to the terms of
this Agreement. The Agreement will remain in full force from year to year thereafter, subject to
annual approval by Beacon Hill and the Board. The Agreement may be terminated by either party by
providing the other party with ninety (90) days’ written notice of termination. In the event that
the Agreement is terminated by the Trust prior to the end of the initial term of the Agreement,
Trust agrees to pay Beacon Hill the remainder of the unpaid minimum fees due pursuant to Schedule
B.
In addition, both parties agree that this Agreement may be terminated for “cause.” For purposes of
this Agreement, cause shall mean (a) a material breach of this Agreement that has not been
remedied for thirty (30) days following written notice of such breach from the non-breaching
party; (b) a final, unappealable judicial, regulatory or administrative ruling or order in which
the party to be terminated has been found guilty of criminal or unethical behavior in the conduct
of its business; or (c) financial difficulties on the part of the party to be terminated which are
reasonably evidenced.
6. Notice.
Any notice provided hereunder shall be sufficiently given when sent by registered or certified
mail or via another commercially available method which allows for tracking or delivery and
receipt to the party required to be served with such notice at the following address: if to the
Trust, to the address listed at the signature block below and if to Beacon Hill, at ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, 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.
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7. Governing Law and Matters Relating to the Trust as a Delaware Statutory Trust.
This Agreement shall be construed in accordance with the laws of the State of Ohio and the Federal
Securities Laws. To the extent that the applicable laws of the State of Ohio, or any of the
provisions herein, conflict with the applicable provisions of Federal Securities Laws, 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 Board, 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.
(a) 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. Each party agrees to adhere to all applicable Federal Securities
Laws.
(b) The Trust represents that it is duly organized and validly. The Trust warrants that it will
take all necessary steps to ensure that it remains in good-standing.
(c) Beacon Hill represents that it is a services company duly organized and in good standing under
applicable law. Beacon Hill is a wholly-owned subsidiary of a publicly-held company, as described
in Schedule C, and hereby notifies the Trust of such affiliation so that Trust can review and
restrict applicable portfolio trading policies as may be necessary under the 1940 Act. Beacon Hill
shall maintain a fidelity bond and an insurance policy with respect to errors and omissions
coverage in amounts that are appropriate in light of its duties and responsibilities hereunder.
9. Indemnification.
(a) Each party (an “Indemnitor”) shall indemnify and hold harmless the other party, each of such
other party’s control persons, and the directors, officers, employees and agents of such other
party (“Indemnified Parties”), against any and all losses, damages, or liabilities or any pending
or completed actions, claims, suits complaints or investigations (including all reasonable
expenses of litigation or arbitration), judgments, fines or amounts paid in any settlement
consented by the Indemnitor to which any Indemnified Party may become subject to as a result or
arising out of or relating to: (1) any negligent acts, omissions, bad faith or willful misconduct
in the performance of Indemnitor’s duties and obligations hereunder; (2) any breach of the
Indemnitor’s representations or warranties contained in this Agreement; (3) Indemnitor’s failure
to comply with any
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terms of this Agreement; or (4) any action of an Indemnified Party, upon instructions believed in
good faith by the Indemnified Party to have been executed by a duly authorized officer or
representative of the Indemnitor.
(b) The indemnifying party shall be entitled to participate at its own expense or, if it
acknowledges its responsibility to indemnify the other party, it may elect 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 the indemnifying party and satisfactory to the indemnified party, whose approval shall
not be unreasonably withheld. 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. If the indemnifying party does not elect to assume the defense
of a suit, it will reimburse the indemnified party for the reasonable fees and expenses of any
counsel retained by the indemnified party.
10. Confidentiality.
Without the prior consent of the other party, no party shall disclose Confidential Information (as
defined below) of any other party received in connection with the services provided under this
Agreement. The receiving party shall use the same degree of care as it uses to protect its own
confidential information of like nature, but no less than a reasonable degree of care, to maintain
in confidence the Confidential Information of the disclosing party. The foregoing provisions shall
not apply to any information that (i) is, at the time of disclosure, or thereafter becomes, part
of the public domain through a source other than the receiving party, (ii) is subsequently learned
from a third party that, to the knowledge of the receiving party, is not under an obligation of
confidentiality to the disclosing party, (iii) was known to the receiving party at the time of
disclosure, or (iv) is generated independently by the receiving party, or (v) is disclosed
pursuant to applicable law, subpoena, applicable professional standards, request of a governmental
or regulatory agency, or other process after reasonable notice to the other party. 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.
For the purpose of this Agreement, Confidential Information shall mean NPPI (as defined below),
any information identified by either party as “Confidential” and/or “Proprietary” or which, under
all of the circumstances, ought reasonably to be treated as confidential and/or proprietary, or
any nonpublic information obtained hereunder concerning the other party.
Nonpublic personal financial information relating to shareholders and/or potential shareholders
(i.e., customers and/or consumers) of the Trust (“NPPI”) provided by, or at the direction of, the
Trust to Beacon Hill, or collected or retained by Beacon Hill in the course of performing its
duties and responsibilities under this Agreement shall remain the sole property of the Trust.
Beacon Hill shall not give, sell or in any way transfer such
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Confidential Information to any person or entity, other than affiliates of Beacon Hill except in
connection with the performance of Beacon Hill’s duties and responsibilities under this Agreement,
at the direction of the Trust or as required or permitted by law (including applicable anti-money
laundering laws). Beacon Hill represents, warrants and agrees that it has in place and will
maintain physical, electronic and procedural safeguards reasonably designed to protect the
security, confidentiality and integrity of, and to prevent unauthorized access to or use of
records and information relating to consumers or customers of the Trust. The Trust represents to
Beacon Hill that it has adopted a statement of its privacy policies and practices as required by
Regulation S-P and agrees to provide Beacon Hill with a copy of that statement annually.
The provisions of this Section shall survive the termination of this Agreement.
11. Intellectual Property.
The parties acknowledge each other’s right, title, and interest in their respective trademarks,
copyrights, advertising, artwork, reports, manuals, memoranda, audit plans, checklists,
presentations, training materials, policies and procedures, and logos (“Intellectual Property”)
and agree not to use each other’s Intellectual Property in any advertising, sales literature or
related materials or packaging, including customer lists, without the prior written approval of
the other party. The Trust agrees that Beacon Hill may identify the Trust as a client on its
client list, which may be posted to Beacon Hill’s website, or distributed to prospective clients.
In no event will Beacon Hill disclose the nature of the relationship with the Trust, including but
not limited to, the terms of this Agreement without prior written approval of the Trust, unless
the disclosure is contained in documentation which is mandated through regulation, litigation or
arbitration.
Beacon Hill retains all rights to materials, software, copyrights, trademarks, questionnaires,
scoring methodology, proprietary analysis and other information that Beacon Hill provides to the
Trust in connection with this Agreement, provided, however, that Beacon Hill acknowledges that any
materials and reports prepared at the request of the Trust that comprise the Trust’s policies and
procedures and are considered Trust records are the proprietary information of the Trust. The Trust
acknowledges that Beacon Hill may provide the Trust and its representatives with proprietary,
copyrighted or trademarked information and shall not disclose Beacon Hill’s work-product, including
but not limited to procedures, software, spreadsheets, checklists, audit programs, reports,
proposals, questionnaires, scoring methodology, analysis and other documents or information, to any
third-party without the prior written approval of Beacon Hill. Each party agrees that in the event
that it is required to produce Intellectual Property of the other party to a regulatory authority
or court, it will make all reasonable efforts to protect the Intellectual Property, including but
not limited to, requesting confidential treatment under U.S. Freedom of Information Act and other
applicable laws. Each party agrees to notify the other party in the event it must disclose such
party’s Intellectual Property to any regulatory authority or in any court proceeding and will keep
the other party apprised of its efforts to protect the Intellectual Property.
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12. Certain Records.
Beacon Hill shall maintain customary records in connection with its duties as specified in this
Agreement. Any records required to be maintained and preserved pursuant to Rules 31a-1 and 31a-2
under the 1940 Act which are prepared or maintained by Beacon Hill on behalf of the Trust shall be
the property of the Trust and will be surrendered promptly to the Trust on request, and made
available for inspection by the Trust or by the Commission at reasonable times.
13. Miscellaneous.
(a) No amendment, modification to or assignment of this Agreement shall be valid unless made in
writing and executed by both parties hereto. Upon approval by the Board of Trustees of the Trust,
Beacon Hill may subcontract with any entity or person concerning the provision of the services
contemplated under this Agreement (“Sub- Administrator”). Subcontracting of services does not
relieve Beacon Hill of its obligations under this Agreement.
(b) Each of the parties acknowledges and agrees that this Agreement and the arrangements described
in this Agreement are intended to be non-exclusive and that Beacon Hill is free to enter into
similar agreements and arrangements with other entities.
(c) No party to this Agreement will be responsible for delays resulting from acts beyond the
reasonable control of such party, provided that the nonperforming uses commercially reasonable
efforts to avoid or remove such causes of nonperformance and continues performance hereunder as
soon as practicable as soon as such causes are avoided, rectified or removed.
(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.
(f) This Agreement, together with the schedules, sets forth the entire understanding of the parties
and supersedes any and all prior discussions, representations and understandings between the
parties related to the subject matter of this 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.
| BEACON HILL FUND SERVICES, INC. | ||
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
Title: President
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Title: President | |
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ |
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SCHEDULE A
FUND GOVERNANCE AND REGULATORY OVERSIGHT SERVICES
Beacon Hill will provide the
following services during the term of this Agreement:
Beacon Hill shall perform and coordinate Fund governance and regulatory oversight services either
directly or through working with the Trust’s service providers. Beacon Hill shall also review and
provide comment during the preparation of Trust Documents.
Beacon Hill shall also oversee the performance by other service providers to the Trust in
connection with the operations of the Trust, and, on behalf of the Trust, shall conduct relations
with service providers, including but not limited to, custodians, depositories, transfer agents,
fund accountants, accountants, auditors, legal counsel, underwriters, brokers-dealers, corporate
fiduciaries, insurers, banks and persons in any other capacity deemed to be necessary or desirable
for the Trust’s operations, but shall have no responsibility for supervising the performance by any
investment adviser or sub-adviser of its responsibilities. In conjunction with this function,
Beacon Hill shall administer contracts on behalf of the Trust with, among others, the Trust’s
investment adviser, distributor, custodian, transfer agent and fund accountant.
Beacon Hill shall provide the Board of Trustees of the Trust (hereafter referred to as the
“Board”) with such reports as it may reasonably request.
Without limiting the generality of the foregoing, Beacon Hill shall:
| • | Coordinate and monitor activities of the third party service providers to the Funds. | ||
| • | Manage the process of filing amendments to the Funds registration statement and other reports to shareholders. | ||
| • | Coordinate the filing process for regulatory reports including the preparation, coordination of comments and filing of regulatory filings of the Trust including Forms N-CSR, N-SAR, N-Q, N-PX and 24f-2. | ||
| • | Coordinate the preparation and filing of proxy material, review tabulations and conduct shareholder meetings as required. | ||
| • | Maintain compliance calendar for Board meetings. | ||
| • | Coordinate the Board book preparation process including preparation, compilation and distribution of material for all Board meetings, attendance at meetings and drafting of minutes. | ||
| • | Provide support for new funds, mergers, conversions, and reorganizations. | ||
| • | Coordinate the-monitoring of compliance portfolio compliance and limitations, compliance with IRS diversification requirements, maintain compliance checklists and related Board reporting. |
| • | Maintain all books and records of each fund as is required by the Federal Securities Laws. | ||
| • | Prepare and file registrations and exemptions to affect the sale of Fund shares in various states and jurisdictions. |
Beacon Hill shall perform such other services for the Trust that are mutually agreed upon by the
parties from time to time for which the Trust will pay such fees as may be mutually agreed upon,
including Beacon Hill’s out-of-pocket expenses.
* * * * *
SCHEDULE B
SERVICE FEES
Dated November 1, 2009
1. Fund Governance and Regulatory Oversight Services Fee provided under this
Agreement: 0.02% (2 basis points) of average daily assets of the Trust for the first $1 billion;
0.015% (1 and 1/2 basis points) of average daily assets of the Trust for assets in excess of $1
billion; with a minimum annual fee of $150,000. The minimum annual fee shall apply under this
Agreement for a period of time equal to the earlier of the one year anniversary of this Agreement
or the date at which the total average daily assets of the Trust exceed $1.5 billion for any
monthly period.
The Trust shall pay the annual fee, in monthly installments, within ten (10) days after the end
of each month. If this Agreement is terminated other than on the last day of a calendar month,
such amount shall be pro rated through the termination date.
2. Out-of-Pocket Expenses, including but not limited to the following:
(a) The out-of-pocket expenses incurred in connection with Beacon Hill’s provision of
services to the fund officers and to the Trust including but not limited to, travel costs
for attending Board meetings and conducting due diligence of Service Providers, printing
and postage, storage costs in connection with record retention, and Federal and State
regulatory and filing fees and related administrative expenses to obtain and maintain such
filings, including but not limited to Blue Sky permit fees and expenses; and
(b) Any other expenses approved by the Board.
For out-of-pocket expenses, Beacon Hill will invoice the Trust and the Trust will remit payment
within 15 days of receipt of invoice.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
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Title: President |
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BEACON HILL FUND SERVICES, INC. |
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
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Title: President |
SCHEDULE C
BEACON HILL CORPORATE STRUCTURE
As referenced in Section 8(b), Beacon Hill is a wholly-owned subsidiary of Diamond Hill
Investment Group, Inc. Diamond Hill Investment Group, Inc. is a public company trading under the
NASDAQ symbol DHIL and may be included in certain market capitalization-based equity indices used
for tracking the stock market. For more information on Diamond Hill, visit
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