Form of FocusShares Trust PFO/TREASURER SERVICES AGREEMENT
AGREEMENT made as of November 16, 2007 by and between FocusShares Trust, a Delaware statutory
trust, with its principal office and place of business at 000 Xxxxxx Xxxxxx, Xxxxx X-00, Xxxxxxxx,
XX 00000 (the “Fund”), and Foreside Management Services, LLC, a Delaware limited liability company
with its principal office and place of business at Two Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000
(“Foreside”).
WHEREAS, the Fund is, or will be, registered under the Investment Company Act of 1940, as
amended (the “1940 Act”), as an open-end management investment company; and
WHEREAS, the Fund desires that Foreside perform certain services and Foreside 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 Foreside hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The
Fund hereby appoints Foreside, and Foreside hereby agrees, to provide Xxxxx
X. Xxxxxxx to serve as the Fund’s Principal Financial Officer (“PFO”) and Treasurer, 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 Foreside copies of: (i) the Fund’s
Declaration of Trust 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 that may be 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) all policies, programs and procedures adopted by
the Fund with respect to the Funds, and shall promptly furnish Foreside with all amendments of or
supplements to the foregoing. The Fund shall deliver to Foreside a certified copy of the
resolution of the Board of Directors of the Fund (the “Board”) appointing Foreside hereunder and
authorizing the execution and delivery of this Agreement. In addition, the Fund shall deliver, or
cause to deliver, to Foreside upon Foreside’s reasonable request any other documents that would
enable Foreside to perform the services described in this Agreement.
SECTION 2. DUTIES OF FORESIDE
(a) Subject to the approval of the Board, Foreside shall make available Xxxxx X. Xxxxxxx who
is competent and knowledgeable regarding the management and internal controls of the Fund to serve
as the Fund’s PFO and Treasurer, who will have the authority normally incident to such office,
including the authority to execute documents required to be executed by the Fund’s “Principal
Financial Officer” and “Treasurer”.
(b) Foreside 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.
(c) Foreside shall maintain records relating to its services, such as policies and procedures,
relevant Board presentations, and other records, as are required to be maintained under the
relevant securities laws. 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 Foreside 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
Foreside’s normal business hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided promptly by Foreside to the Fund or the Fund’s authorized
representatives at the Fund’s expense.
(d) Nothing contained herein shall be construed to require Foreside to perform any service
that could cause Foreside 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 Foreside’s
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.
(e) In order for Foreside 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 Foreside as reasonably requested; and (ii) shall take reasonable steps to obtain the result that
Foreside has access to all records and documents maintained by the Fund or any service provider to
the Fund.
(f) Foreside shall provide the services as set forth on Appendix A.
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SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION
(a) Foreside shall be under no duty to take any action except as specifically set forth herein
or as may be specifically agreed to by Foreside in writing. Foreside shall use its best judgment
and efforts in rendering the services described in this Agreement. Foreside shall not be liable to
the Fund or any of the Fund’s stockholders for any action or inaction of Foreside relating to any
event whatsoever in the absence of bad faith, reckless disregard, negligence or willful misfeasance
in the performance of Foreside’s duties or obligations under this Agreement. Further, Foreside
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 Foreside 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
Foreside reasonably believes in good faith to be genuine.
(b) The Fund agrees to indemnify and hold harmless Foreside, its employees, agents, directors,
officers and managers and any person who controls Foreside within the meaning of section 15 of the
Securities Act or Section 20 of the Exchange Act (“Foreside 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 Foreside’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 “Foreside Claim”); provided, however, that nothing contained herein shall
entitle a Foreside Indemnitee to indemnification with respect to any Foreside claim arising from
Foreside’s own bad faith, reckless disregard, negligence or willful malfeasance, or breach of this
Agreement. For purposes of this Agreement, Foreside’s bad faith, willful malfeasance, or reckless
disregard shall not include any action taken or not taken by Foreside consistent with the last
sentence of Section 3(a). Further, the Fund shall not be required to indemnify any Foreside
Indemnitee if, prior to confessing any Foreside Claim against the Foreside Indemnitee, Foreside or
the Foreside Indemnitee does not give the Fund written notice of and reasonable opportunity to
defend against the Foreside claim in its own name or in the name of the Foreside Indemnitee.
(c) Foreside 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) Foreside’s 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 Foreside; or
(iii) any breach of Foreside’s representations set forth in Section 4 (a “Fund Claim”). Foreside
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
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Xxxxxxxx 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) Foreside shall not be liable for the errors of other service providers to the Fund or
their systems.
SECTION 4. REPRESENTATIONS AND WARRANTIES
| (a) | Foreside 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;
(v) It has access to the necessary facilities, equipment, and personnel to assist
the PFO/Treasurer 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 Foreside, enforceable against Foreside 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 report to the Board promptly if Foreside learns about PFO/Treasurer
malfeasance or in the event the PFO/Treasurer is terminated as an officer by another
Fund or terminated by Foreside;
(viii) It shall comply with all applicable laws;
(ix) It shall maintain policies of insurance reasonable and customary for its
business; and
(x) The individual designated by Foreside pursuant to this Agreement to serve as the
Trust’s PFO/Treasurer has such education and experience necessary to serve in such
capacity;
(xi) The individual designated by Foreside pursuant to this Agreement to serve as
the Trust’s PFO/Treasurer is not and has not been subject to any court,
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regulatory
agency or other organization order, sanction or ban that would (a) interfere with
his ability to serve in such capacity or (b) require disclosure in the Trust’s
registration statement with the SEC and
(xii) It has reviewed the officer questionnaire submitted by the designated
PFO/Treasurer to the Trust, which, to Foreside’s knowledge, is complete and correct.
| (b) | The Fund represents and warrants to Foreside that: |
(i) It is a statutory trust duly organized and existing and in good standing under
the laws of the State of Delaware and is in good standing under the laws of the
State of Delaware;
(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, or will be within a reasonable date, an open-end management investment
company registered under the 1940 Act;
(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;
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(vi) A registration statement under the Securities Act and the Exchange Act is or
will be effective and will remain effective and appropriate State securities law
filings will be or have been made and will continue to be made with respect the
Fund; and
(vii) The PFO/Treasurer shall be covered by the Fund’s Directors & Officers/Errors &
Omissions Policy (the “Policy”), and the Fund shall use reasonable efforts to ensure
that such coverage be (a) reinstated should the Policy be cancelled; (b) continued
after such officers ceases to serve as the Fund 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 Foreside with
proof of current coverage, including a copy of the Policy, and shall notify Foreside immediately should the Policy be cancelled or
terminated.
(viii) The PFO/Treasurer is a named officer in the Trust’s corporate resolutions and
subject to the provisions of the Trust’s Organizational Documents regarding
indemnification of its officers.
SECTION 5. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Foreside pursuant to this Agreement, the Fund
shall pay Foreside 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 Foreside 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 Foreside such compensation, as shall be
payable prior to the effective date of termination.
(b) Foreside may, with respect to questions of law relating to its services hereunder, apply
to and obtain the advice and opinion of Fund counsel, subject to coordination and pre-approval and
consent by appropriate representatives of the Fund’s investment adviser, which consent shall not be
reasonably withheld. The costs of any such advice or opinion shall be borne by the Fund.
(c) Foreside 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
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investment adviser
and the Fund; (iii) expenses of issue, repurchase and redemption of Fund Shares; (iv) interest
charges, taxes and brokerage fees and commissions and short sale fees; (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
therefore; (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 Foreside);
(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 Foreside
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 fifteen (15) days’ written notice to Foreside or (ii) by Foreside on thirty (30) days’
written notice to the Fund; provided that the provisions of this Agreement related to services
pursuant to Section 2, may be terminated at any time by the Board, effective upon written notice to
Foreside, without the payment of any penalty; the remaining portions of this Agreement shall be
considered severable and not affected.
(d) The provisions of Sections 2(e), 3, 6(d), 6(e), 7, 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 Foreside 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).
Foreside 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 Foreside 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 Foreside is advised by counsel
that it may be exposed to civil or criminal contempt proceedings for failure to release the
information (provided, however, that Foreside 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
Foreside 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 Foreside’s obligations hereunder are to oversee or monitor the activities
of third parties, Foreside shall not be liable for any failure or delay in the performance of
Foreside’s 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 Foreside.
SECTION 9. ACTIVITIES OF FORESIDE
(a) Except to the extent necessary to perform Foreside’s obligations under this Agreement,
nothing herein shall be deemed to limit or restrict Foreside’s right, or the right of any of
Foreside’s managers, officers or employees who also may be a director, officer or employee of the
Fund (including, without limitation, the PFO/Treasurer), 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 prior approval by the Fund, Foreside 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 Foreside who agree to comply with the terms of this Agreement; provided, that any such
subcontracting shall not relieve Foreside of its responsibilities hereunder. Foreside may pay
those persons for their services, but no such payment will increase Foreside’s compensation or
reimbursement of expenses from the Fund.
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SECTION 10. COOPERATION WITH INDEPENDENT PUBLIC ACCOUNTANTS
Foreside 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 TRUSTEE LIABILITY
The trustees of the Fund and the stockholders of the Fund shall not be liable for any
obligations of the Fund under this Agreement, and Foreside 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.
(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 Foreside, 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 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.
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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.
| FocusShares Trust | ||||
| By: | /s/ Xxxxxxx Xxxxxxx | |||
| Name: Xxxxxxx Xxxxxxx | ||||
| Title: President | ||||
| Foreside Management Services, LLC | ||||
| By: | /s/ Xxxxx Xxxxxxx
|
|||
| Name: Xxxxx Xxxxxxx | ||||
| Title: President | ||||
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Appendix A
November 16, 2007
(1) Named PFO/Treasurer
Recurring Monthly Fees* |
Per Month* | |
(i) Registrant/Advisor maintenance fee |
$3000 | |
(ii) BP fee on aggregate assets 0.48bp |
annual 0.4bp | |
(iii) Per Fund per month (single registrant, single advisor)
includes all compliance workflow system license fees |
$675 | |
(iv) Per appointed sub-advisor per month (assume one) |
$750 |
| * | Aggregate fee schedule for compliance, PFO/Treasurer and distributor services |
| • | Fees to be invoiced in 12 equal monthly payments | ||
| • | PFO/Treasurer services subject to a monthly minimum of $4,000 per month |
(2) Out-Of-Pocket and Related Expenses
The Fund shall reimburse Foreside for the following out-of-pocket and ancillary expenses, to the
extent such expenses do not exceed $500 with respect to each of the following items:
| (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 PFO incurred in connection with the responsibilities set out in this service agreement | ||
| (vi) | other expenses incurred in connection with providing the services described in this Agreement if approved by the Board |
The Fund shall reimburse Foreside for the following out-of-pocket and ancillary expenses, to the
extent such expenses do not exceed $1,000 with respect to each of the following items:
| (i) | reasonable travel expenses incurred in connection with travel requested by the Board |
(3) Services
| • | Attend and represent the funds at periodic board meetings as necessary; | ||
| • | Make all necessary representations and certifications including obtaining sub-certifications from various providers (i.e., Xxxxxxxx-Xxxxx certifications, conformity with GAAP principles, fraud certifications, SEC filings, management representation letters to fund auditors, etc.); | ||
| • | Review and sign as PFO/Treasurer on all shareholder communications and all SEC filings such as N-CSR/proxies/NP-X/N-Q/Registration statements; | ||
| • | Execute as signatory in the Trust’s disclosure control committees; | ||
| • | Undertake periodic risk-based reviews of the funds’ service provider operations to ensure compliance with fund policies and accounting statement requirements; | ||
| • | Design and authorize disclosure controls and procedures for financial statements including sign-off on design to ensure that all relevant fund financial information is properly disclosed to the executive officers and the board; | ||
| • | Ensure the fund administrator is in compliance with board policies, procedures, by-laws and resolutions as they pertain to expense management; | ||
| • | Undertake periodic risk-based reviews of the funds’ service provider operations to ensure compliance with fund policies and accounting statement requirements; | ||
| • | Oversee the budgeting process and authorize the procedures and authorities under which the fund administrator will make expense payments on behalf of the funds; | ||
| • | Review performance of investment adviser, independent accountant and other service providers as per certification requirements and coordinate contract renewal process regarding the same; | ||
| • | Approve the funds’ accounting policies; create and review policies with investment adviser, funds’ auditors and accountant and propose any required amendments for approval by the funds’ board; | ||
| • | Coordinate timing of financial statement preparation and filings; review as per certification requirements; | ||
| • | Support the Principal Executive Officer of the trust and President of the investment adviser to ensure that the goals of the trust are aligned with the investment adviser’s objectives; | ||
| • | Assist with the negotiation of contracts related to audit fees and fees for services with service providers and independent accountants; | ||
| • | Represent the funds as PFO/Treasurer at SEC examinations as required; | ||
| • | Present materials to the funds’ board, audit committees and senior management, as required or requested; | ||
| • | Periodic review of performance of each service provider against the funds’ policies, procedures and contracts in cooperation with the funds’ CCO and President. Review performance against industry peer benchmarks; and | ||
| • | Other attendant duties of PFO/Treasurer as required. |
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