SOUND SHORE FUND, INC.
COMPLIANCE SERVICES AGREEMENT
AGREEMENT made as of the 1st of October 2004, by and between Sound
Shore Fund, Inc., a Maryland corporation, with its principal office and place of
business at Two Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000 (the "Fund"), and Forum
Fund Services, LLC, a Delaware limited liability company with its principal
office and place of business at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000
("FFS").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and issues its shares of common stock, $0.001 par value (the "Shares"); and
WHEREAS, the Fund desires that FFS perform certain compliance services
and FFS is willing to provide those services on the terms and conditions set
forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund and FFS hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Fund hereby appoints FFS, and FFS hereby agrees, to provide a
Chief Compliance Officer ("CCO"), as described in Rule 38a-1 of the 1940 Act
("Rule 38a-1"), to the Fund for the period and on the terms and conditions set
forth in this Agreement.
(b) In connection therewith, the Fund has delivered to FFS copies of:
(i) the Fund's Articles of Incorporation and Bylaws (collectively, as amended
from time to time, "Organizational Documents"); (ii) the Fund's current
Registration Statement, as amended or supplemented, filed with the U.S.
Securities and Exchange Commission ("SEC") pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the 1940 Act (the "Registration
Statement"); (iii) the Fund's current Prospectus and Statement of Additional
Information (collectively, as currently in effect and as amended or
supplemented, the "Prospectus" or "SAI", as the case may be, or the "Disclosure
Documents"); (iv) each plan of distribution or similar document adopted by the
Fund under Rule 12b-1 under the 1940 Act ("Plan") and each current shareholder
service plan or similar document adopted by the Fund ("Service Plan"); (v)
copies of the Fund's current annual and semi-annual reports to shareholders; and
(vi) all policies, programs and procedures adopted by the Fund with respect to
the Funds (e.g., repurchase agreement procedures), and shall promptly furnish
FFS with all amendments of or supplements to the foregoing. The Fund shall
deliver to FFS a certified copy of the resolution of the Board of Directors of
the Fund (the "Board") appointing FFS hereunder and authorizing the execution
and delivery of this Agreement.
SECTION 2. DUTIES OF FFS
(a) Subject to the approval of the Board, FFS shall make available a
qualified person to act as the Fund's CCO who is competent and knowledgeable
regarding the federal securities laws. FFS' responsibility for the activities of
the CCO are limited to the extent that the Board shall make all decisions
regarding the designation, termination and level of compensation of the CCO as
provided by Rule 38a-1.
(b) With respect to the Fund, the CCO shall:
(i) Report directly to the Board;
(ii) Review and administer the Fund's compliance program
policies and procedures including those policies and
procedures of the Fund's adviser, administrator, principal
underwriter and transfer agent (collectively, Service
Providers") that relate to the Fund;
(iii) Conduct periodic reviews of the Fund's compliance
program to incorporate any new or changed regulations, best
practice recommendations or other guidelines that may be
appropriate;
(iv) Review no less frequently than annually, the adequacy of
the policies and procedures of the Fund and its Service
Providers and the effectiveness of their implementation;
(v) Apprise the Board of significant compliance events at the
Fund or its Services Providers;
(vi) Design testing methods for the Fund's compliance program
policies and procedures;
(vii) Perform and document periodic testing of certain key
control procedures (as appropriate to the circumstances),
including reviewing reports, investigating exceptions, and
making inquiries of Fund management and Service Providers;
(viii) Conduct periodic site visits to advisers and other
Service Providers as necessary;
(ix) Provide training and deliver updates to the Fund or its
Service Providers, as necessary;
(x) Establish a quarterly reporting process to the Board,
including both written and oral reports. The CCO will attend
regularly scheduled board meetings as well as special meetings
on an as-needed basis.
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(xi) Prepare a written annual report for the Board. Such
report shall, at a minimum, address (A) the operation of the
Fund's and its Service Providers' policies and procedures
since the last report to the Board; (B) any material changes
to such policies and procedures since the last report; (C) any
recommendations for material changes to the policies and
procedures as a result of the periodic or annual reviews
referred to in Sections 2(b)(iii) and (iv) above; and (D) any
"material compliance matters" (as defined in Rule 38a-1) since
the date of the last report; and
(xii) No less than annually, the CCO shall meet separately
with the Fund's independent Directors.
(c) With respect to the Fund, FFS shall
(i) Provide compliance support for intermediary agreements
that pertain to the Fund, such as shareholder service and
similar service agreements, other than those agreements for
which FFS is required to provide the services pursuant to the
Distribution Agreement between the Fund and FFS dated May 1,
1999 ("Distribution Agreement");
(ii) Review and approve communications with the public
including quarterly financial statements not otherwise
required to be reviewed by FFS pursuant to the Distribution
Agreement, for the Fund's compliance with applicable law;
(iii) Assist the Fund with compliance matters as requested.
(d) FFS shall provide such other services and assistance relating to
the affairs of the Fund as the Fund may, from time to time, reasonably request
pursuant to mutually acceptable compensation and implementation agreements.
(e) FFS shall maintain records relating to its services, such as
compliance policies and procedures, relevant Board presentations, annual
reviews, and other records, as are required to be maintained under the 1940 Act
and Rule 38a-1 thereunder. Such reports shall be maintained in the manner and
for the periods as are required under the applicable rule or regulation. The
books and records pertaining to the Fund that are in the possession of FFS shall
be the property of the Fund. The Fund, or the Fund's authorized representatives,
shall have access to such books and records at all times during FFS' normal
business hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided promptly by FFS to the Fund or the Fund's
authorized representatives at the Fund's expense.
(f) Nothing contained herein shall be construed to require FFS to
perform any service that could cause FFS to be deemed an investment adviser for
purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended, or
that could cause the Fund to act in contravention of the Fund's Prospectus or
any provision of the 1940 Act. Except with respect to
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FFS' duties as set forth in this Section 2 and except as otherwise specifically
provided herein, the Fund assumes all responsibility for ensuring that the Fund
complies with all applicable requirements of the Securities Act, the Exchange
Act, the 1940 Act and any laws, rules and regulations of governmental
authorities with jurisdiction over the Fund. All references to any law in this
Agreement shall be deemed to include reference to the applicable rules and
regulations promulgated under authority of the law and all official
interpretations of such law or rules or regulations.
(g) In order for FFS to perform the services required by this Section
2, the Fund (i) shall take reasonable steps to encourage all Service Providers
to furnish any and all information to FFS as reasonably requested by FFS, and
assist FFS as may be required and (ii) shall take reasonable steps to obtain the
result that FFS has access to all records and documents maintained by the Fund
or any service provider to the Fund.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION
(a) FFS shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by FFS in
writing. FFS shall use its best judgment and efforts in rendering the services
described in this Agreement. FFS shall not be liable to the Fund or any of the
Fund's stockholders for any action or inaction of FFS relating to any event
whatsoever in the absence of bad faith, reckless disregard, gross negligence or
willful misfeasance in the performance of FFS' duties or obligations under this
Agreement. Further, FFS shall not liable to the Fund or any of the Fund's
stockholders for any action taken or failure to act in good faith reliance upon:
(i) the advice and opinion of Fund counsel; and
(ii) any certified copy of any resolution of the Board;
and FFS shall not be under any duty or obligation to inquire into the validity
or invalidity or authority or lack thereof of any statement, oral or written
instruction, resolution, signature, request, letter of transmittal, certificate,
opinion of counsel, instrument, report, notice, consent, order, or any other
document or instrument which FFS reasonably believes in good faith to be
genuine.
(b) The Fund agrees to indemnify and hold harmless FFS, its employees,
agents, directors, officers and managers and any person who controls FFS within
the meaning of section 15 of the Securities Act or Section 20 of the Exchange
Act ("FFS Indemnitees"), against and from any and all claims, demands, actions,
suits, judgments, administrative proceedings or investigations, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to FFS's actions
taken or failures to act with respect to the Fund in connection with the
performance of any duties or obligations under this Agreement (a "FFS Claim");
provided, however, that nothing contained herein shall entitle a FFS Indemnitee
to indemnification with respect to any FFS Claim arising
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from FFS' own bad faith, reckless disregard, negligence or willful malfeasance,
or breach of this Agreement. For purposes of this Agreement, FFS' bad faith,
willful malfeasance, or reckless disregard shall not include any action taken or
not taken by FFS consistent with the last sentence of Section 3(a). Further, the
Fund shall not be required to indemnify any FFS Indemnitee if, prior to
confessing any FFS Claim against the FFS Indemnitee, FFS or the FFS Indemnitee
does not give the Fund written notice of and reasonable opportunity to defend
against the FFS Claim in its own name or in the name of the FFS Indemnitee.
(c) FFS agrees to indemnify and hold harmless the Fund, its employees,
agents, directors, officers and managers ("Fund Indemnitees"), against and from
any and all claims, demands, actions, suits, judgments, administrative
proceedings and investigations, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way related to (i) FFS' actions taken or failures to act with
respect to the Fund that are not consistent with Section 3(a); (ii) any breach
of this Agreement with FFS; or (iii) any breach of FFS' representations set
forth in Section 4 (a "Fund Claim"). FFS shall not be required to indemnify any
Fund Indemnitee if, prior to confessing any Fund Claim against the Fund
Indemnitee, the Fund or the Fund Indemnitee does not give FFS written notice of
and reasonable opportunity to defend against the Fund Claim in its own name or
in the name of the Fund Indemnitee.
(d) FFS shall not be liable for the errors of other service providers
to the Fund or their systems.
(e) The Fund, and not FFS, shall be solely responsible for approval of
the designation and compensation of the Fund CCO, as well as for removing the
CCO from his or her responsibilities related to the Fund in accordance with Rule
38a-1. Therefore, notwithstanding the provisions of this section 3, the Fund
shall supervise the activities of the Fund CCO with regard to such activities.
SECTION 4. REPRESENTATIONS AND WARRANTIES
(a) FFS represents and warrants to the Fund that:
(i) It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware;
(ii) It is duly qualified to carry on its business in the State of
Maine;
(iii) It is empowered under applicable laws and by its Operating
Agreement to enter into this Agreement and perform its duties under
this Agreement;
(iv) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement;
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(v) It has access to the necessary facilities, equipment, and
personnel to assist the CCO in the performance of his or her duties
and obligations under this Agreement;
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of FFS, enforceable against FFS 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;
(vii) It shall make available a person who is competent and
knowledgeable regarding the federal securities laws and is otherwise
reasonably qualified to act as a CCO and who will, in the exercise of
his or her duties to the Fund, act in good faith and in a manner
reasonably believed by him or her to be in the best interests of the
Fund;
(viii) It shall compensate the CCO fairly, subject to the Board's
right under any applicable regulation (e.g., Rule 38a-1) to approve
the designation, termination and level of compensation of the CCO. In
addition, it shall not retaliate against the CCO should the CCO inform
the Board of a compliance failure or take aggressive action to ensure
compliance with the federal securities laws by the Fund or a Service
Provider;
(ix) It shall report to the Board promptly if FFS learns about CCO
malfeasance or in the event the CCO is terminated as a CCO by another
Fund; and
(x) It shall report to the Board if at any time the CCO is subject to
the "bad boy" disqualifications as set forth in Section 15(b)(4) of
the Exchange Act or Section 9 of the 0000 Xxx.
(b) The Fund represents and warrants to FFS that:
(i) It is a corporation duly organized and existing and in good
standing under the laws of the State of Maryland and is qualified to
do business and is in good standing under the laws of the State of
Maryland;
(ii) It is empowered under applicable laws and by its Fund Documents
to enter into this Agreement and perform its duties under this
Agreement;
(iii) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement;
(iv) It is an open-end management investment company registered under
the 1940 Act;
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(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Fund, enforceable against
the Fund 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;
(vi) A registration statement under the Securities Act and the
Exchange Act is currently effective and will remain effective and
appropriate State securities law filings have been made and will
continue to be made with respect the Fund; and
(vii) The CCO shall be covered by the Fund's Directors &
Officers/Errors & Omissions Policy (the "Policy"), and the Fund shall
use reasonable efforts to ensure that the CCO's coverage be (a)
reinstated should the Policy be cancelled; (b) continued after the CCO
ceases to serve as the Fund's CCO on substantially the same terms as
such coverage is provided for the Fund officers after such persons are
no longer officers of the Fund; or (c) continued in the event the Fund
merges or terminates, on substantially the same terms as such coverage
is provided for the Fund officers (but for a period no less than six
years). The Fund shall provide FFS with proof of current coverage,
including a copy of the Policy, and shall notify FFS immediately
should the Policy be cancelled or terminated.
SECTION 5. COMPENSATION AND EXPENSES
(a) In consideration of the compliance services provided by FFS
pursuant to this Agreement, the Fund shall pay FFS the fees set forth in
Appendix A hereto.
All fees payable hereunder shall be accrued daily by the Fund. The fees
payable for the services listed in Appendix A hereto shall be payable monthly in
arrears on the first business day of each calendar month for services performed
during the prior calendar month. Any out-of-pocket charges incurred by FFS as
set forth in Appendix A shall be paid as incurred. If fees begin to accrue in
the middle of a month or if this Agreement terminates before the end of any
month, all fees for the period from that date to the end of that month or from
the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. Upon the termination of
this Agreement, the Fund shall pay to FFS such compensation, as shall be payable
prior to the effective date of termination.
(b) FFS may, with respect to questions of law relating to its services
hereunder, apply to and obtain the advice and opinion of Fund counsel. The costs
of any such advice or opinion shall be borne by the Fund.
(c) FFS shall not be responsible for and will not assume the obligation
for payment of the expenses of the Fund, including, without limitation: (i) the
fee payable under this Agreement; (ii) the fees payable to the investment
adviser under an agreement between the investment adviser and the Fund; (iii)
expenses of issue, repurchase and redemption of Fund Shares; (iv)
7
interest charges, taxes and brokerage fees and commissions; (v) premiums of
insurance for the Fund, the directors and officers and fidelity bond premiums;
(vi) fees, interest charges and expenses of third parties, including Fund
counsel, counsel to the Fund's independent directors, independent public
accountants, compliance audit firms, custodians, transfer agents, dividend
disbursing agents and Fund accountants; (vii) fees of pricing, interest,
dividend, credit and other reporting services; (viii) costs of membership in
trade associations; (ix) telecommunications expenses; (x) transmission expenses;
(xi) costs of maintaining the Fund's existence; (xii) costs of preparing, filing
and printing the Fund's Prospectus, subscription application forms and
stockholder reports and other communications and delivering them to existing
stockholders, whether of record or beneficial; (xiii) expenses of meetings of
stockholders and proxy solicitations therefor; (xiv) costs of maintaining books
of original entry for portfolio and Fund accounting and other required books and
accounts and of calculating the net asset value of Shares; (xv) costs of
stationery, supplies and postage; (xvi) fees and expenses of the Fund's
directors and officers (except those incurred by officers affiliated with FFS);
(xvii) costs of other personnel performing services for the Fund; (xviii) costs
of Board, Board committee, and other corporate meetings; (xix) SEC registration
fees and related expenses; and (xx) state, territory or foreign securities laws
registration fees and related expenses.
SECTION 6. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective on the date indicated above
or such time FFS commences providing services under this Agreement, whichever is
later. Upon effectiveness of this Agreement, this Agreement shall constitute the
entire agreement between the parties and shall supersede all previous agreements
between the parties, whether oral or written relating to the Fund.
(b) This Agreement shall continue in effect until terminated.
(c) This Agreement may be terminated at any time, without the payment
of any penalty (i) by the Board on sixty (60) days' written notice to FFS or
(ii) by FFS on sixty (60) days' written notice to the Fund; provided that the
provisions of this Agreement related to CCO services, including Sections 2(a)
and 2(b), may be terminated at any time by the Board, effective upon written
notice to the CCO, without the payment of any penalty.
(d) The provisions of Sections 2(d), 3, 6(d), 6(e), 7, 8, 10, 11, and
12 shall survive any termination of this Agreement.
(e) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either FFS or the Fund except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
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SECTION 7. CONFIDENTIALITY
Each Party shall comply with the laws and regulations applicable to it
in connection with its use of Confidential Information, including, without
limitation, Regulation S-P (if applicable). FFS agrees to treat all records and
other information related to the Fund as proprietary information of the Fund
and, on behalf of itself and its employees, to keep confidential all such
information, except that FFS may
(a) Release such other information (i) as approved in writing by the
Fund, which approval shall not be unreasonably withheld and may not be withheld
where FFS is advised by counsel that it may be exposed to civil or criminal
contempt proceedings for failure to release the information (provided, however,
that FFS shall seek the approval of the Fund as promptly as possible so as to
enable the Fund to pursue such legal or other action as it may desire to prevent
the release of such information) or (ii) when so requested by the Fund.
SECTION 8. FORCE MAJEURE
FFS shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
system or power supply. In addition, to the extent FFS' obligations hereunder
are to oversee or monitor the activities of third parties, FFS shall not be
liable for any failure or delay in the performance of FFS' duties caused,
directly or indirectly, by the failure or delay of such third parties in
performing their respective duties or cooperating reasonably and in a timely
manner with FFS.
SECTION 9. ACTIVITIES OF FFS
(a) Except to the extent necessary to perform FFS' obligations under
this Agreement, nothing herein shall be deemed to limit or restrict FFS' right,
or the right of any of FFS' managers, officers or employees who also may be a
director, officer or employee of the Fund, or who are otherwise affiliated
persons of the Fund, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
(b) Upon notice to the Fund, FFS may subcontract any or all of its
functions or responsibilities pursuant to this Agreement to one or more persons,
which may be affiliated persons of FFS, who agree to comply with the terms of
this Agreement; provided, that any such subcontracting shall not relieve FFS of
its responsibilities hereunder. FFS may pay those persons for their services,
but no such payment will increase FFS' compensation or reimbursement of expenses
from the Fund.
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SECTION 10. COOPERATION WITH INDEPENDENT PUBLIC ACCOUNTANTS
FFS shall cooperate with the Fund's independent public accountants and
shall take reasonable action to make all necessary information available to the
accountants for the performance of the accountants' duties.
SECTION 11. LIMITATION OF STOCKHOLDER AND DIRECTOR LIABILITY
The directors of the Fund and the stockholders of the Fund shall not be
liable for any obligations of the Fund under this Agreement, and FFS agrees
that, in asserting any rights or claims under this Agreement, it shall look only
to the assets and property of the Fund.
SECTION 12. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential, special or indirect damages under any provision of this
Agreement.
(b) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(c) This Agreement may be executed by the parties hereto in any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid. This Agreement shall be construed as if drafted jointly by both FFS and
Fund and no presumptions shall arise favoring any party by virtue of authorship
of any provision of this Agreement.
(e) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(f) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(g) Nothing contained in this Agreement is intended to or shall require
FFS, in any capacity hereunder, to perform any functions or duties on any day
other than a Fund business day. Functions or duties normally scheduled to be
performed on any day which is not a Fund business
10
day shall be performed on, and as of, the next Fund business day, unless
otherwise required by law.
(h) The term "affiliate" and all forms thereof used herein shall have
the meanings ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
SOUND SHORE FUND, INC.
By:
---------------------------------------
Name: ________________________
Title: _________________________
FORUM FUND SERVICES, LLC
By:
---------------------------------------
Xxxx X. Xxxxxx
President
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SOUND SHORE FUND, INC.
COMPLIANCE SERVICES AGREEMENT
APPENDIX A
AS OF OCTOBER 1, 2004
(1) COMPLIANCE OFFICER SERVICES
(a) Standard Annual Fee:
$40,000
(2) OTHER COMPLIANCE SERVICES
(a) Basis Point Fee (% of Fund Annual Average Daily Net Assets):
0.0045%
(3) OUT-OF-POCKET AND RELATED EXPENSES
The Fund shall reimburse FFS for the following out-of-pocket and ancillary
expenses:
(i) communications
(ii) postage and delivery services
(iii) record storage and retention (imaging, microfilm and shareholder
record storage)
(iv) reproduction
(v) reasonable travel expenses for the CCO incurred in connection with
his oversight of the compliance programs of the Service Providers
(vi) reasonable travel expenses incurred in connection with travel
requested by the Board
(vii) other expenses incurred in connection with providing the
services described in this Agreement if approved by the Administrator
A-1
