SUB-ADMINISTRATION SERVICES AGREEMENT
AGREEMENT made as of this 1st day of July, 2005, between HSBC Investments
(USA) Inc. ("HSBC"), a New York corporation having its principal place of
business at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and BISYS
Fund Services Ohio, Inc. ("BISYS"), an Ohio corporation having its principal
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, XX 00000.
WHEREAS, HSBC is the investment adviser for the HSBC Investor Funds, HSBC
Advisor Funds Trust and HSBC Investor Portfolios (each, the "Company" and
collectively, the "Companies");
WHEREAS, pursuant to that certain Administration Agreement (the
"Administration Agreement") dated July 1, 2005 between HSBC and the Companies,
HSBC acts as administrator for the Companies and each investment portfolio of
the Companies, as now in existence and listed on Schedule A hereto, or as
hereafter may be established from time to time (individually referred to herein
as the "Fund" and collectively as the "Funds");
WHEREAS, HSBC desires that BISYS perform certain administration services
for the Companies and the Funds; and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the covenants hereinafter contained,
HSBC and BISYS hereby agree as follows:
1. Retention of BISYS
HSBC hereby retains BISYS, subject to the supervision, direction and
control of the Company's board of trustees (the "Board"), to act as
sub-administrator of HSBC and each of the Funds and to furnish HSBC and each of
the Funds with the administration services set forth in Section 2(a) below.
BISYS and HSBC hereby agree that BISYS will perform the services upon the terms
set forth in this Agreement.
BISYS shall, for all purposes herein, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent HSBC or the Funds in any way, and shall not be
deemed an agent of HSBC or the Funds.
HSBC hereby represents and warrants to BISYS that this Agreement has been
disclosed to the Board, and that HSBC has provided all such information to the
Board as may be appropriate (or as has been requested by the Board) in
connection with the Board's review or approval of the arrangements contemplated
under this Agreement, including amounts expended by the HSBC under this
Agreement.
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2. Services
(a) Administration Services. BISYS shall perform or, subject to Section
2(c) hereof, supervise the performance by others, of the administration services
set forth on Schedule B with respect to the Funds. BISYS shall perform such
other administration services for HSBC and each of the Funds that are mutually
agreed upon by the parties from time to time, for which HSBC will pay BISYS the
amounts agreed upon between them.
(b) Additional Services. Except as explicitly set forth herein, BISYS shall
only perform additional services as are provided on an amendment to Schedule B,
in consideration of such fees as the parties hereto agree.
(c) Sub-Agents. BISYS may, with prior notice to HSBC, appoint in writing
other parties qualified to perform specific services reasonably acceptable to
HSBC (individually, a "Sub-Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that the Sub-Agent shall be the agent of BISYS and not the agent of HSBC or such
Fund, and that BISYS shall be fully responsible for the acts of such Sub-Agent,
shall not be relieved of any of its responsibilities hereunder by the
appointment of such Sub-Agent and shall be obligated to provide such information
regarding the relationship with the Sub-Agent as HSBC may reasonably request.
3. Allocation of Charges and Expenses.
(a) BISYS. BISYS shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. BISYS shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of the Funds who are affiliated persons of BISYS or any affiliated
corporation of BISYS; provided, however, that unless otherwise specifically
provided, BISYS shall not be obligated to pay the compensation of any employee
of the Funds retained by the Board to perform services on behalf of the Funds.
(b) HSBC. HSBC assumes and shall pay or cause to be paid all other expenses
of the Funds 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 transfer agency, fund accounting and
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 who are not affiliated persons of BISYS or any affiliated corporation
of BISYS (fees for other "interested Trustees" may be paid by parties other than
HSBC), insurance, interest, brokerage costs, litigation and other extraordinary
or nonrecurring expenses, and all fees and charges of investment advisers.
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4. Fees and Expenses
HSBC shall pay BISYS (and/or at the direction of BISYS or a Sub-Agent) for
the services to be provided by BISYS under this Agreement in accordance with,
and in the manner set forth in, Schedule C to this Agreement. Fees for any
additional services to be provided by BISYS pursuant to an amendment to Schedule
B shall be subject to mutual agreement at the time such amendment is proposed.
HSBC shall also reimburse BISYS (and/or at the direction of BISYS, its
Sub-Agent) for its reasonable out-of-pocket expenses as set forth in Schedule C.
All rights of compensation under this Agreement for services performed as of the
termination date shall survive the termination of this Agreement.
5. Effective Date
This Agreement shall become effective as of the date first written above
(the "Effective Date").
6. Term
This Agreement shall continue in effect until March 31, 2006 (the "Initial
Term"). Thereafter, unless otherwise terminated as provided herein, this
Agreement shall continue in effect unless and until it is terminated as set
forth in this paragraph. This Agreement may be terminated without penalty (i) by
provision of advance written notice of non-renewal to the other party at least
60 days prior to the end of the Initial Term, (ii) by mutual agreement of the
parties, (iii) for "cause," as defined below, upon the provision of 60 days'
advance written notice by the party alleging cause, or (iv) by provision of 60
days' advance written notice to the other party following the Initial Term.
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 administration 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; (c) financial difficulties on the part of the party to
be terminated which are evidenced by the authorization or commencement of, or
involvement by way of pleading, answer, consent or acquiescence in, a voluntary
or involuntary case under Title 11 of the United States Code, as from time to
time in effect, or any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors or (d) a decision by the
Board to terminate the Fund because it is not economically feasible. BISYS shall
not terminate this Agreement pursuant to clause (a) above based solely upon
HSBC's failure to pay an amount to BISYS which is the subject of a good faith
dispute, if (i) HSBC is attempting in good faith to resolve such dispute with as
much expediency as may be possible under the circumstances, and (ii) HSBC
continues to perform its obligations hereunder in all other material respects
(including paying all fees and expenses not subject to reasonable dispute
hereunder).
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Notwithstanding the foregoing, following any such termination, in the event
that BISYS in fact continues to perform any one or more of the services
contemplated by this Agreement (or any Schedule or exhibit hereto) with the
consent of HSBC, the provisions of this Agreement, including without limitation
the provisions dealing with indemnification, shall continue in full force and
effect. Fees and out-of-pocket expenses incurred by BISYS but unpaid by HSBC
upon such termination shall be immediately due and payable upon and
notwithstanding such termination. BISYS shall be entitled to collect from HSBC,
in addition to the fees and expenses provided in Schedule C, the amount of all
of BISYS' reasonable cash disbursements in connection with BISYS' activities in
effecting such termination, including without limitation, the delivery to HSBC
and/or the Funds and/or other parties of the Funds' property, records,
instruments and documents.
If, during the Initial Term, for any reason other than (i) mutual agreement
of the parties or (ii) "cause" for termination of BISYS hereunder, BISYS'
services are terminated hereunder, BISYS is replaced as sub-administrator, or if
a third party is added to perform all or a part of the services provided by
BISYS under this Agreement (excluding any Sub-Agent appointed as provided in
Section 1(e) hereof), then HSBC shall make a one-time cash payment, in
consideration of the fee structure and services to be provided under this
Agreement, and not as a penalty, to BISYS equal to the balance that would be due
BISYS under this Agreement for the terminated services during the lesser of (x)
the next six months or (y) the number of months remaining in the then-current
term of this Agreement, assuming for purposes of the calculation of the one-time
payment that the fees that would be earned by BISYS for each month shall be
based upon the average assets, number of shareholder accounts and fees payable
to BISYS monthly during the 12 months prior to the date that services terminate,
BISYS is replaced or a third party is added.
In the event that the Company or any Fund is merged into another legal
entity in part or in whole pursuant to any form of business reorganization or is
liquidated in part or in whole (other than as permitted above) prior to the
expiration of the Initial Term of this Agreement, the parties acknowledge and
agree that the liquidated damages provision set forth above shall be applicable
in those instances in which BISYS is not retained to provide services consistent
with this Agreement, including the number of funds, classes, accounts and net
assets subject to such services. The one-time cash payment referenced above
shall be due and payable on the day prior to the first day in which services are
terminated, BISYS is replaced or a third party is added.
The parties further acknowledge and agree that, in the event services are
terminated, BISYS is replaced, or a third party is added, as set forth above,
(i) a determination of actual damages incurred by BISYS would be extremely
difficult, and (ii) the liquidated damages provision contained herein is
intended to adequately compensate BISYS for damages incurred and is not intended
to constitute any form of penalty.
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7. Standard of Care; Uncontrollable Events; Limitation of Liability
BISYS shall use reasonable professional diligence to ensure the accuracy of
all services performed under this Agreement, but shall not be liable to HSBC for
any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or reckless disregard by it of its obligations and
duties. The duties of BISYS shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against BISYS
hereunder.
BISYS shall maintain adequate and reliable computer and other equipment
necessary or appropriate to carry out its obligations under this Agreement. Upon
HSBC's reasonable request, BISYS 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, BISYS 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 BISYS' 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, BISYS shall
follow applicable procedures in its disaster recovery and business continuity
plan and use all commercially reasonable efforts to minimize any service
interruption.
BISYS shall provide HSBC, at such times as HSBC may reasonably require,
copies of reports rendered by independent public accountants on the internal
controls and procedures of BISYS relating to the services provided by BISYS
under this Agreement.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL BISYS, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR EXEMPLARY, PUNITIVE, SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS, EACH OF WHICH IS
HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER SUCH DAMAGES
WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
8. Legal Advice
BISYS may apply to HSBC at any time for instructions and may consult with
counsel for HSBC and/or counsel for the Companies and with accountants and other
experts with respect to any matter arising in connection with BISYS' duties, and
BISYS shall not be liable nor accountable for any action taken or omitted by it
in good faith in accordance with such instruction or with the opinion of such
counsel, accountants or other experts. BISYS shall notify HSBC at any time BISYS
believes that it is in need of the advice of counsel (other than counsel in the
regular employ of BISYS or any
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affiliated companies) with regard to BISYS' responsibilities and duties pursuant
to this Agreement. After so notifying HSBC, BISYS, at its discretion, shall be
entitled to seek, receive and act upon advice of legal counsel of its choosing,
such advice to be at the expense of HSBC unless relating to a matter involving
BISYS' willful misfeasance, bad faith, gross negligence or reckless disregard of
BISYS' responsibilities and duties hereunder, and BISYS shall in no event be
liable to HSBC or any Fund or any shareholder or beneficial owner of HSBC for
any action reasonably taken pursuant to such advice.
9. Instructions / Certain Procedures, etc.
BISYS shall be protected in acting upon any document that it reasonably
believes to be genuine and to have been signed or presented by the proper person
or persons. BISYS will not be held to have notice of any change of authority of
any officers, employees or agents of HSBC until receipt of written notice
thereof from HSBC.
As to the services to be provided hereunder, BISYS may rely conclusively
upon the terms of the prospectuses and statements of additional information of
HSBC relating to the relevant Funds to the extent that such services are
described therein unless BISYS receives written instructions to the contrary in
a timely manner from HSBC.
The parties hereto may amend any procedures adopted, approved or set forth
herein by written agreement as may be appropriate or practical under the
circumstances, and BISYS may conclusively assume that any special procedure
which has been approved by an executive officer of HSBC or a Company (other than
an officer or employee of BISYS or its Sub-Agent) does not conflict with or
violate any requirements of the Companies' Declarations of Trust, by-laws or
then-current prospectuses, or any rule, regulation or requirement of any
regulatory body.
10. Indemnification
HSBC agrees to indemnify and hold harmless BISYS, its employees, agents,
directors, officers and nominees from and against any and all 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") arising out of or in any way
relating to BISYS' actions taken or omissions with respect to the performance of
services under this Agreement or based, if applicable, upon reasonable reliance
on information, records, instructions or requests given or made to BISYS by
HSBC, transfer agent, fund accountant, investment adviser, or custodian thereof;
provided that this indemnification shall not apply to actions or omissions of
BISYS in cases of its own bad faith, willful misfeasance, negligence or reckless
disregard by it of its obligations and duties.
BISYS shall indemnify, defend, and hold HSBC, its employees, agents,
directors, officers and nominees harmless from and against any and all Losses
arising out of or in any way relating to BISYS' willful misfeasance, bad faith
or negligence in the
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performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder.
The indemnification rights under this Section 10 are subject to the
limitations of liability in Section 7 of this Agreement.
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.
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. The indemnifying party shall not effect any
settlement without the consent of the indemnified party unless such settlement
imposes no liability, responsibility or other obligation upon the indemnified
party and relieves the indemnified party 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.
11. Record Retention and Confidentiality
BISYS shall keep and maintain on behalf of HSBC all books and records that
are customary or that HSBC or BISYS is, or may be, required to keep and maintain
pursuant to any applicable statutes, rules and regulations, including without
limitation Rules 31a-1 and 31a-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees that
all such books and records shall be the property of HSBC and to make such books
and records available for inspection by HSBC or by the Securities and Exchange
Commission (the "Commission") at reasonable times.
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BISYS shall otherwise keep confidential all books and records relating to
HSBC and its shareholders, except when (i) disclosure is required by law, (ii)
BISYS is advised by counsel that it may incur liability for failure to make a
disclosure, (iii) BISYS is requested to divulge such information by
duly-constituted authorities or court process, or (iv) BISYS is requested to
make a disclosure by a shareholder or shareholder's agent with respect to
information concerning an account as to which such shareholder has either a
legal or beneficial interest or when requested by HSBC or the dealer of record
as to such account. BISYS shall provide HSBC with reasonable advance notice of
disclosure pursuant to items (i) - (iii) of the previous sentence, to the extent
reasonably practicable, so that HSBC may seek a protective order or other
appropriate remedy. The provisions of this Section 11 are subject to the
provisions of Section 23.
12. Reports
BISYS shall furnish to HSBC and to its properly-authorized transfer agents,
fund accountants, auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
HSBC in writing, such reports at such times as are prescribed pursuant to this
Agreement, or as subsequently agreed upon by the parties pursuant to an
amendment to this Agreement. HSBC agrees to examine each such report or copy
promptly and will report or cause to be reported any errors or discrepancies
therein. In the event that errors or discrepancies, except such errors and
discrepancies as may not reasonably be expected to be discovered by the
recipient after a diligent examination, are not so reported promptly, a report
will for all purposes be accepted by and binding upon HSBC and any other
recipient, and BISYS shall have no liability for errors or discrepancies therein
and shall have no further responsibility with respect to such report except to
perform reasonable corrections of such errors and discrepancies within a
reasonable time after requested to do so by HSBC.
13. Rights of Ownership
All computer programs and procedures employed or developed by or on behalf
of BISYS to perform services required to be provided by BISYS under this
Agreement are the property of BISYS. All records and other data except such
computer programs and procedures are the exclusive property of HSBC and all such
other records and data shall be furnished to HSBC in appropriate form as soon as
practicable after termination of this Agreement for any reason.
14. Return of Records
BISYS may at its option at any time, and shall promptly upon HSBC's demand,
turn over to HSBC and cease to retain BISYS' files, records and documents
created and maintained by BISYS pursuant to this Agreement which are no longer
needed by BISYS in the performance of its services or for its legal protection.
If not so turned over to HSBC, such documents and records shall be retained by
BISYS for six years from the year of creation. At the end of such six-year
period, such records and documents shall be turned over to HSBC unless HSBC
authorizes in writing the destruction of such records and documents.
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15. Bank Accounts
BISYS is hereby granted such power and authority as may be necessary to
establish one or more bank accounts for HSBC with such bank or banks as are
selected or approved by HSBC, as may be necessary or appropriate from time to
time in connection with the services required to be performed hereunder. HSBC
shall be deemed to be the customer of such Bank or Banks for all purposes in
connection with such accounts. To the extent that the performance of such
services hereunder shall require BISYS to disburse amounts from such accounts,
HSBC shall provide such bank or banks with all instructions and authorizations
necessary for BISYS to effect such disbursements.
16. Representations and Warranties of HSBC
(a) HSBC represents and warrants to BISYS that:
(i) It is duly organized and validly existing under the laws of the
jurisdiction of its formation, and has full capacity and authority to
enter into this agreement and to carry out its obligations hereunder;
(ii) It has all necessary authorizations, licenses and permits to carry out
its business as currently conducted;
(iii) It has been in, and shall continue to be in compliance in all
material respects with all laws and regulations applicable to its
business and operations;
(iv) this Agreement has been duly authorized by HSBC and, when executed and
delivered by HSBC, will constitute a legal, valid and binding
obligation of HSBC, enforceable against HSBC in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the right and remedies
of creditors and secured parties;
(v) as of the close of business on the Effective Date, each Fund that is
in existence as of the Effective Date has authorized unlimited shares;
and
(vi) shares of each Fund which are redeemed by the Company may be sold by
the Company from its treasury.
17. Representations and Warranties of BISYS
(a) BISYS represents and warrants to HSBC that:
(i) It is a company duly incorporated and validly existing under the laws
of the jurisdiction of its formation, and has full capacity and
authority to enter into this agreement and to carry out its
obligations hereunder;
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(ii) It has all necessary authorizations, licenses and permits to carry out
its business as currently conducted;
(iii) It has been in, and shall continue to be in compliance in all
material respects with all provisions of law required in connection
with the performance of its duties under this Agreement;
(iv) The various procedures and systems which it has implemented with
regard to safekeeping from loss or damage attributable to fire, theft
or any other cause of the blank checks, records, and other data of
HSBC and BISYS' records, data, equipment, facilities and other
property used in the performance of its obligations hereunder
(including its disaster recovery and business continuity plan) are
adequate and that it will make such changes therein from time to time
as are reasonably required for the secure performance of its
obligations hereunder; and
(v) This Agreement has been duly authorized by BISYS and, when executed
and delivered by BISYS, will constitute a legal, valid and binding
obligation of BISYS, enforceable against BISYS in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the right and remedies
of creditors and secured parties.
(b) EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL REPRESENTATIONS AND
WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY,
SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE
(IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) CONCERNING THE
SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO THE SERVICES PROVIDED UNDER THIS
AGREEMENT BY BISYS ARE COMPLETELY DISCLAIMED.
18. Insurance
BISYS shall maintain a fidelity bond covering larceny and embezzlement and
an insurance policy with respect to directors and officers errors and omissions
coverage in amounts that are appropriate in light of its duties and
responsibilities hereunder. Upon the request of HSBC, BISYS shall provide
evidence that coverage is in place. BISYS shall notify HSBC should its insurance
coverage with respect to professional liability or errors and omissions coverage
be canceled. Such notification shall include the date of cancellation and the
reasons therefore. BISYS shall notify HSBC of any material claims against it
with respect to services performed under this Agreement, whether or not they may
be covered by insurance, and shall notify HSBC should the total outstanding
claims made by BISYS under its insurance coverage materially impair, or threaten
to materially impair, the adequacy of its coverage.
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19. Information to be Furnished by HSBC and Funds
HSBC has furnished to BISYS the following, as amended and current as of the
Effective Date:
(a) A copy of the Declaration of Trust of each Company and of any
amendments thereto, certified by the proper official of the state in which such
document has been filed.
(b) Copies of:
(i) each Company's by-laws and any amendments thereto;
(ii) resolutions of the Board regarding (A) approval of this Agreement and
authorization of officers of HSBC to execute and deliver this
Agreement and authorization for specified officers of HSBC to instruct
BISYS hereunder; and (B) authorization of BISYS to act for HSBC in the
capacities designated herein.
(c) A list of all officers of each Company, with each Company's AML
Compliance Officer included among the officers therein, and any other persons
(who may be associated with HSBC or its investment adviser), together with
specimen signatures of those officers and other persons who (except as otherwise
provided herein to the contrary) shall be authorized to instruct BISYS in all
matters.
(d) Two copies of the following (if such documents are employed by the
Company):
(i) Prospectuses and statements of additional information;
(ii) Distribution agreement; and
(iii) All other forms commonly used by each Company or its Distributor with
regard to their relationships and transactions with shareholders of
the Funds.
(e) A copy of each Company's written AML Program, including related
Policies and Procedures.
20. Information Furnished by BISYS
BISYS has furnished to HSBC evidence of the following:
(a) Approval of this Agreement by BISYS, and authorization of a specified
officer of BISYS to execute and deliver this Agreement; and
(b) Authorization of BISYS to act for HSBC in the capacity designated
herein.
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21. Amendments to Documents
HSBC shall furnish BISYS written copies of any amendments to, or changes
in, any of the items referred to in Section 19 hereof forthwith upon such
amendments or changes becoming effective. In addition, HSBC agrees that no
amendments will be made to the prospectuses or statement of additional
information of HSBC 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 HSBC first obtains
BISYS' approval of such amendments or changes, which approval shall not be
withheld unreasonably.
22. Reliance on Amendments
BISYS may rely on any amendments to or changes in any of the documents and
other items to be provided by HSBC pursuant to Sections 19 and 21 of this
Agreement and, subject to the provisions of Section 7 hereof, HSBC hereby
indemnifies and holds harmless BISYS from and against any and all Losses which
may result from actions or omissions on the part of BISYS in reasonable reliance
upon such amendments and/or changes. Although BISYS is authorized to rely on the
above-mentioned amendments to and changes in the documents and other items to be
provided pursuant to Sections 19 and 21 hereof, in the event the same relate to
services provided by BISYS hereunder, BISYS shall have no liability for failure
to comply with or take any action in conformity with such amendments or changes
unless HSBC first obtains BISYS' written approval of such amendments or changes.
23. Compliance with Laws
Except for the obligations of BISYS set forth in Section 11 hereof, HSBC
assumes full responsibility for the preparation, contents, and distribution of
each prospectus of each Company as to compliance with all applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"), the
1940 Act, and any other laws, rules and regulations of governmental authorities
having jurisdiction. HSBC represents and warrants that all shares of each
Company that are offered to the public are covered by an effective registration
statement under the 1933 Act and the 1940 Act.
24. Notices
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 HSBC, to it c/o HSBC Investments (USA) Inc., 000
0xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx X. Xxxxxxxx; and
if to BISYS, to it at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attn: President,
with a copy to The BISYS Group, Inc., 00 Xxxx Xxx., 00xx xxxxx, Xxx Xxxx, XX
00000, Attn: General Counsel, 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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25. Assignment
This Agreement and the rights and duties hereunder shall not be assignable
by either of the parties hereto except by the specific written consent of the
other party. This Section 25 shall not limit or in any way affect BISYS' right
to appoint a Sub-Agent pursuant to Section 2(d) hereof. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
26. Governing Law.
This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of New York and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable provisions
of the 1940 Act, the latter shall control.
27. Activities of BISYS
The services of BISYS rendered to HSBC hereunder are not to be deemed to be
exclusive. BISYS is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of HSBC are or may be or become interested in BISYS, as
officers, employees or otherwise and that partners, officers and employees of
BISYS and its counsel are or may be or become similarly interested in HSBC, and
that BISYS may be or become interested in HSBC as a Shareholder or otherwise
28. Privacy
Nonpublic personal financial information relating to consumers or customers
of HSBC provided by, or at the direction of HSBC to BISYS, or collected or
retained by BISYS in the course of performing its duties, shall be considered
confidential information. BISYS shall not give, sell or in any way transfer such
confidential information to any person or entity, other than affiliates of BISYS
except at the direction of HSBC or as required or permitted by law. BISYS
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 HSBC.
HSBC represents to BISYS that each Company has adopted a statement of its
privacy policies and practices as required by the Commission's Regulation S-P
and agrees to provide BISYS with a copy of that statement annually.
29. Miscellaneous
(a) Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
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(b) 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.
(c) 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.
(d) No amendment to this Agreement shall be valid unless made in writing
and executed by both parties hereto.
* * * * *
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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.
BISYS FUND SERVICES OHIO, INC.
By:
------------------------------------
Name: Xxxx Xxxxxxx
Title: President
HSBC INVESTMENTS (USA) INC.
By:
------------------------------------
Name:
Title:
15
SCHEDULE A
TO THE SUB-ADMINISTRATION SERVICES AGREEMENT
Dated as of July 1, 2005
Funds
HSBC Investor Portfolios
HSBC Investor Fixed Income Portfolio
HSBC Investor Growth Portfolio
HSBC Investor High Yield Fixed Income Portfolio
HSBC Investor International Equity Portfolio
HSBC Investor Limited Maturity Portfolio
HSBC Investor Small Cap Equity Portfolio
HSBC Investor Value Portfolio
HSBC Advisor Funds Trust
HSBC Investor Fixed Income Fund
HSBC Investor International Equity Fund
HSBC Investor Small Cap Equity Fund
HSBC Investor Funds
HSBC Investor Aggressive Growth Strategy Fund HSBC Investor Bond Fund
HSBC Investor California Tax-Free Money Market Fund
HSBC Investor Conservative Growth Strategy Fund
HSBC Investor Conservative Income Strategy Fund
HSBC Investor Growth and Income Fund
HSBC Investor Growth Fund
HSBC Investor Growth Strategy Fund
HSBC Investor High Yield Fixed Income Fund
HSBC Investor Limited Maturity Fund
HSBC Investor Mid-Cap Fund
HSBC Investor Moderate Growth Strategy Fund
HSBC Investor Money Market Fund
HSBC Investor New York Tax-Free Bond Fund
HSBC Investor New York Tax-Free Money Market Fund
HSBC Investor Opportunity Fund
HSBC Investor Overseas Equity Fund
HSBC Investor Tax-Free Money Market Fund
HSBC Investor U.S. Government Money Market Fund
HSBC Investor U.S. Treasury Money Market Fund
HSBC Investor Value Fund
HSBC Investor Cash Management Money Market Fund
16
SCHEDULE B
TO THE SUB-ADMINISTRATION SERVICES AGREEMENT
Dated as of July 1, 2005
Sub-Administration Services
1. Calculate contractual Company expenses and control all disbursements for
the Companies, including administration of trustee compensation and vendor
fees on behalf of each Company and annual reporting of such on IRS Forms
1099-MISC and 1096, as applicable;
2. Prepare an annual projection of the Funds' non-asset based expense accruals
prior to the beginning of each fiscal year of each Fund and monitor actual
and accrued expenses;
3. Compute, as appropriate, each Fund's dividend payables and dividend
factors;
4. As appropriate compute the Funds' yields, total return, expense ratios,
portfolio turnover rate and, if required, portfolio average dollar-weighted
maturity;
5. Prepare such reports, applications and documents (including reports
regarding the sale and redemption of shares of beneficial interest in the
Funds as may be required in order to comply with Federal and state
securities laws) as may be necessary or desirable to register the shares of
beneficial interest in the Funds ("Shares") with state securities
authorities, monitor the sale of Shares for compliance with state
securities laws, and file with the appropriate state securities authorities
the registration statements and reports for the Funds and the Shares and
all amendments thereto, as may be necessary or convenient to register and
keep effective the registration of the Companies and the Shares with state
securities authorities to enable each Company to make a continuous offering
of its Shares;
6. Coordinate and prepare, with the assistance of the Funds' investment
adviser and officers, communications to shareholders of record of the Funds
("Shareholders"), including the annual report to Shareholders; prepare and
file with the SEC the semi-annual report for the Funds on Form N-SAR and
N-CSR and all required notices pursuant to Rule 24f-2, and quarterly
schedules of portfolio holdings on Form N-Q;
7. Provide appropriate assistance with respect to audits conducted by the
Companies' independent auditors including compiling data and other
information, as necessary;
8. Supervise the Funds' transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
9. Calculate performance data of the Funds for dissemination to up to six
information services covering the investment company industry;
17
10. Coordinate and supervise the preparation and filing of the Funds' tax
returns;
11. Make available appropriate individuals to serve as officers of the
Companies, upon designation as such by the Board, to serve in ministerial
capacities related to services provided by BISYS as determined by the
Board, or to serve in executive capacities subject to the provisions of
Addendum B-1 to this Agreement and the BISYS polices referred to in such
Addendum B-1;
12. Monitor and advise HSBC and the Funds on their regulated investment company
status under the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder;
13. Assist in developing compliance procedures for each Fund to monitor
compliance with the 1940 Act, NASD rules and other relevant regulations,
and policies adopted by the Fund's Board, and provide compliance monitoring
services incorporating certain of those procedures, which will include,
among other matters, compliance with each Fund's investment objective,
defined investment policies, restrictions, and tax diversification,
distribution and income requirements, as are determinable based upon the
Fund's accounting records;
14. Monitor services provided under Shareholder Service Plans adopted by the
Board and financial institutions that serve, or propose to serve, as
shareholder services agents thereunder ("Shareholder Service Agents");
coordinate the services to be rendered by Shareholder Service Agents
pursuant to Shareholder Service Agreements under Shareholder Service Plans,
and review the qualifications of Shareholder Service Agents to serve as
such under the relevant Shareholder Service Plan; coordinate and assist in
HSBC's execution and delivery of Shareholder Service Agreements; report to
the Board regarding amounts paid under Shareholder Service Agreements and
the nature of Services provided by the Shareholder Service Agents
thereunder; and maintain appropriate records in connection with the
foregoing; and
15. Upon HSBC's request, BISYS will assist HSBC with the following: (a)
semi-annual reviews of financial reports, (b) revisions to policies,
procedures and code of ethics, (c) preparation of responses for regulatory
examinations and inquiries, and (d) layout and printing of prospectuses and
semi-annual and annual reports to shareholders.
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ADDENDUM B-1
BISYS' provision of one or more individuals to serve as executive officers
(including Chief Legal Officer) (any such person, a "BISYS EO") is subject to
and conditioned upon the provisions of this Addendum B-1.
BISYS has and will maintain policies applicable to the activities of any
BISYS employee serving as a BISYS EO ("BISYS Policies"). BISYS shall select, and
may replace, the specific employee that it makes available to serve in any BISYS
EO position in BISYS' reasonable discretion, taking into account such person's
responsibilities concerning, and familiarity with, each Company's operations.
In the event any BISYS EO serves as the Company's principal executive
and/or financial officer (each a "Certifying Officer"), the DCPs shall contain
(or the Company and BISYS shall otherwise establish) mutually agreeable
procedures governing the certification of any reports as required under the
Sarbanes Oxley Act of 2002 and Rule 30a-2 under the 1940 Act (collectively, the
"SO Laws"), and the parties shall comply with such procedures in all material
respects. Among other things, the DCPs shall provide as follows:
1. The Company shall establish a committee (the "DCP Committee") to
evaluate each Company's disclosure controls and procedures (the "DCPs") in
accordance with Rule 30a-3 under the 1940 Act. The DCP Committee shall
include each Company's principal executive and financial officers and Chief
Legal Officer, but shall not be made up entirely of BISYS personnel. The
DCP Committee shall also contain such other individuals as may be
reasonably necessary or appropriate to enable the DCP Committee obtain the
cooperation of, and to oversee, each Company's agents that records,
processes, summarizes, or reports information contained in any Fund N-CSR
or N-Q report (or other information from which such information is
derived), including the investment adviser and custodian (each such agent,
a "Service Provider").
2. The Company shall require sub-certifications on internal controls
reasonably acceptable to the Certifying Officers be provided by Service
Providers and consistent with the SO Laws upon which the Certifying
Officers may rely in certifying a Fund's N-CSR or N-Q report, and that such
sub-certifications are delivered to the DCP Committee and the Certifying
Officers sufficiently in advance of the DCP Committee meeting described in
Item 3 below.
3. The DCP Committee shall (i) establish a schedule to ensure that all
required disclosures in Form N-CSR and Form N-Q, including the financial
statements, for the Fund are identified and prepared in a timeframe
sufficient to allow review, (ii) meet before the filing date of each Fund
N-CSR and N-Q report to review the accuracy and completeness of the such
report, and (iii) record its considerations and conclusions in a written
memorandum sufficient to support
19
conclusions pertaining to DCPs as required by the instructions to Form
N-CSR and Form M-Q. In conducting its review and evaluations, the DCP
Committee shall:
(a) review SAS 70 Reports pertaining to Service Providers, if applicable,
or in the absence of any such reports, consider the adequacy of a
sub-certification of the Service Provider. In cases where the SAS 70
report is dated more than 90 days prior to the issuance of the
relevant N-CSR report, the DCP Committee shall request a written
certification from the Service Provider regarding the continued
application and effectiveness of internal controls described in the
report, or descriptions of any changes in internal control structure,
as of the date of such certification;
(b) consider whether there are any significant deficiencies or material
weaknesses in the design or operation of the Companies' internal
control over financial reporting which are reasonably likely to
adversely affect a Fund's ability to record, process, summarize, and
report financial information, and in the event that any such
weaknesses or deficiencies are identified, disclose them to the
Certifying Officers, the Fund's audit committee and its auditors;
(c) consider whether, to the knowledge of any member of the DCP Committee,
there has been or may have been any fraud, whether or not material,
that involves management or other employees of any Service Provider
who have a significant role in the internal control over financial
reporting of the Companies, and in the event that any such occurrence
is identified, ensure that this has been disclosed to the Certifying
Officers and Chief Legal Officer, so that the such officers may inform
the Fund's audit committee and its auditors; and
(d) determine whether there was any change in internal controls over
financial reporting that occurred during the Fund's most recent fiscal
half-year (the Fund's second fiscal half-year in the case of an annual
report) (for Reports on Form N-CSR) or during the Fund's most recent
fiscal quarter (for Reports on Form N-Q) that has materially affected
or is reasonably likely to materially affect, the Fund's internal
control over financial reporting.
Any BISYS EO that serves as a Certifying Officer shall have the full
discretion to decline to certify a particular N-CSR or N-Q report that fails to
meet the standards set forth in the certification, to report matters involving
fraud or other failure to meet the standards of applicable law to the audit
committee of the Board, or in appropriate circumstances, and 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) a violation of Xxxxxxxx-Xxxxx or other applicable laws, or (c) a material
deviation by the Company from the terms of this Agreement governing the services
of such Certifying Officer that is not caused by such Certifying Officer or
BISYS. In the event a BISYS EO resigns as described in the immediately preceding
sentence, BISYS shall not be required to provide someone to fill such position
until such
20
time as BISYS has received reasonable assurances and evidence from the Company
that the circumstance causing the BISYS EO to resign had been remedied.
Each Company's governing documents (such as its Declaration of Trust and
by-laws) and/or resolutions of its Board shall contain mandatory indemnification
provisions applicable to each BISYS EO and that are intended to have the effect
of fully indemnifying such person and holding such person harmless with respect
to any claims, liabilities and costs arising out of or relating to his or her
service as an officer of the Company in good faith in a manner reasonably
believed to be in the best interests of the Company, except to the extent he or
she would otherwise be liable to the Company by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office, within the meaning of Section 17(h) of the 1940 Act.
The Company shall provide coverage to each BISYS EO under its directors and
officers liability policy that is appropriate to the BISYS EO's role and title,
and that is consistent with coverage applicable to other executive
management-level officers.
Each BISYS EO that serves as a Certifying Officer may, and the Company
shall, promptly notify BISYS of any issue, matter or event that would be
reasonably likely to result in any claim by the Fund, the Fund's shareholders or
any third party which involves an allegation that any N-CSR or N-Q report failed
to meet the standards of applicable laws or that any of the Company's Certifying
Officers failed to exercise their obligations to the Fund in a manner consistent
with the SO Laws and any other applicable laws.
Notwithstanding any provision of this Agreement that expressly or by
implication provides to the contrary, (a) it is expressly agreed and
acknowledged that BISYS cannot ensure that the Company complies with the SO
Laws, and (b) so long as any BISYS EO acts in good faith and in a manner
reasonably believed to be in the best interests of the Company (and would not
otherwise be liable to the Company 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 Company shall indemnify such BISYS EO and BISYS and hold
them both harmless from any loss, liability, expenses (including reasonable
attorneys fees) and damages incurred by them arising out of or resulting from
the service of such BISYS EO as a Certifying Officer or other executive officer
of the Company.
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SCHEDULE C
TO THE SUB-ADMINISTRATION SERVICES AGREEMENT
Dated as of July 1, 2005
Fees and Expenses
Fees
HSBC shall pay to BISYS on the first business day of each month, or at such
times as BISYS shall request, fees for the services provided under this
Agreement as follows:
On incremental net assets of Basis points
----------------------------- ------------
$0 - $8 billion 5.5
> $8 billion - $9.25 billion 5.0
> $9.25 billion - $12 billion 3.0
> $12 billion 1.0
Net assets shall be aggregated across all Companies to determine a total fee for
all Companies, and each Company shall be charged its pro rata share of such fee
based on the ratio of its net assets to the aggregate net assets of all
Companies. Assets in any Fund (a "Feeder Fund") that invests in another Fund (a
"Master Fund") shall be counted (and a fee charged thereon) in either the Feeder
Fund or the Master Fund, but not both, provided that fees on such assets may be
apportioned between the Feeder Fund and the Master Fund. For purposes of
determining the fees payable for administrative services, the value of each
Company's net assets shall be computed in the manner described in such Company's
governing documents (e.g., Memorandum and Articles of Association, Declaration
of Trust, etc.) or in its offering documents (e.g., Prospectus or Statement of
Additional Information, Offering Memorandum, etc.) as from time to time in
effect for the computation of the value of such net assets in connection with
the purchase and redemption of shares.
22
Expenses
In addition to the fees set forth above, each Company agrees to reimburse BISYS
for BISYS' reasonable out-of-pocket expenses in providing services under this
Agreement on behalf of such Company, including without limitation, the
following:
(i) All freight and other delivery and bonding charges incurred by BISYS
in delivering materials to and from the Company and in delivering all
materials to shareholders;
(ii) Costs for postage, couriers, stock computer paper, computer disks,
statements, labels, envelopes, checks, reports, letters, tax forms,
proxies, notices or other forms of printed material (including the
costs of preparing and printing all printed materials) which shall be
required for the performance of the services to be provided hereunder;
(iii) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by BISYS in communication
with the Company, the Company's investment adviser or custodian,
dealers, shareholders or others as required to perform the services to
be provided hereunder;
(iv) Sales taxes paid on behalf of the Company;
(v) The cost of microfilm or microfiche or other electronic retention of
records or other materials;
(vi) Records retention / storage fees;
(vii) Fulfillment;
(viii) Costs of all other shareholder correspondence;
(ix) Post office boxes;
(x) Any expenses BISYS shall incur at the written direction of an officer
of the Company; and
(xii) Ad hoc reporting fees, billed at a mutually agreed upon rate.
23
