MASTER SERVICES AGREEMENT
This Master Services Agreement ("Agreement") is made effective as of April
15, 2007 (the "Effective Date") between BISYS Fund Services Ohio, Inc.
("BISYS"), an Ohio corporation having a place of business at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000 and YieldQuest Funds Trust (the "Trust") a Delaware
business trust, having a place of business at 0000 Xxxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000.
WHEREAS, the Trust desires that BISYS perform administration, fund
accounting, and dividend disbursing and transfer agency services for the
investment portfolios of the Trust listed on Schedule A to this Agreement, as
well as such additional investment portfolios as hereafter may be established by
the Trust from time to time (collectively, the "Funds");
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in exchange for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the Trust and BISYS hereby
agree as follows:
1. Retention of BISYS.
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The Trust hereby retains BISYS to act as administrator, fund accountant,
transfer agent and dividend disbursing agent of the Trust and the Funds, and to
furnish the Trust and the Funds with administrative, fund accounting, and
transfer and dividend disbursing agency services as set forth in Sections 2(a)
through (d) below. BISYS will perform the services upon the terms set forth in
this Agreement and the Schedules to this Agreement.
BISYS shall, for all purposes herein, be deemed to be an independent
contractor and, except as otherwise expressly provided or authorized, shall have
no authority to act for or represent the Trust or Funds in any way.
2. Services.
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(a) Administration Services. BISYS shall perform the
administrative services set forth in Schedule B to this
Agreement and, on behalf of the Trust, shall investigate, and
conduct relations with, custodians, depositories,
underwriters, brokers and dealers, corporate fiduciaries,
insurers, banks and persons in any other capacity deemed to
be necessary or desirable for the Trust's operations. BISYS
shall provide the Board of Trustees of the Trust (the
"Board") with such reports regarding the Funds' investment
performance as it may reasonably request. BISYS shall perform
such other administration services, and furnish such reports,
for the Trust and each of the Funds that are mutually agreed
upon by the
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parties from time to time, for which the Trust will pay BISYS
the amounts agreed upon between them.
(b) Fund Accounting Services. BISYS shall perform for the Trust
the fund accounting services set forth in Schedule C to this
Agreement. BISYS shall also perform such special accounting
services, and furnish such reports, for the Trust and the
Funds to the extent agreed upon by the parties from time to
time, for which the Trust will pay BISYS the amounts agreed
upon between them.
(c) Transfer Agency Services. BISYS shall perform for the Trust
the dividend disbursing and transfer agency services set
forth in Schedule D to this Agreement. BISYS also agrees to
perform for the Trust such special transfer agency services,
and furnish such reports, for the Trust and the Funds to the
extent agreed upon by the parties from time to time, for
which the Trust will pay BISYS the amounts agreed upon
between them.
(d) Legal Administration Services. BISYS shall perform for the
Fund the legal administration services set forth in Schedule
E to this Agreement. BISYS also agrees to perform for the
Fund such special legal administration services to the extent
agreed upon by the parties from time to time, for which the
Fund will pay BISYS the amounts agreed upon between them.
BISYS shall provide the Trust with all necessary office space, equipment,
personnel and facilities (including facilities for shareholders' meetings) for
handling the affairs of the Trust and Funds and such other services as BISYS
shall, from time to time, reasonably determine to be necessary to perform its
obligations under this Agreement. In addition, at the request of the Board,
BISYS shall make reports to the Board concerning the performance of its
obligations hereunder.
BISYS shall perform such other services for the Trust or the Funds that
are mutually agreed upon by the parties from time to time, for which the Trust
will pay BISYS the amounts agreed upon between them, from time to time. Except
as explicitly set forth herein, BISYS shall only perform additional services as
are set forth in an amendment to this Agreement, in consideration of such fees
as the parties agree.
BISYS may use one or more third parties to perform some or all of its
obligations under this Agreement and is expressly permitted to use OfficeTiger,
Vanacorp and Xxxxxxxx Xxxx LLP; provided, however, that BISYS shall not utilize
any other third parties to perform some or all of BISYS' service obligations
under this Agreement unless such third parties have been approved by the Trust,
which approval shall not be unreasonably conditioned, withheld or delayed; and
further provided that without the approval of the Trust, BISYS shall not utilize
any third parties to communicate telephonically with investors or shareholders
of the Funds. BISYS shall be fully responsible for the acts of such third
parties and shall not be relieved of any of its
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responsibilities under this Agreement by virtue of the use of such third
parties. It is expressly understood and agreed, that the foregoing provisions
relating to the use of third parties to perform services do not relate to BISYS'
selection of its own vendors, by way of example and not by way of limitation,
such as for BISYS' systems, nor do the foregoing provisions relate to BISYS'
interactions with vendors, such as printing or duplication vendors.
3. Allocation of Charges and Expenses.
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BISYS shall furnish at its own expense the executive, supervisory and
clerical personnel necessary to perform its obligations under this Agreement.
BISYS shall pay all compensation, if any, of officers and trustees of the Trust
who are affiliated persons of BISYS or any affiliated entity of BISYS; provided,
however, that unless otherwise specifically provided, BISYS shall not be
obligated to pay the compensation of any employee or agent of the Trust (who is
not a BISYS employee) retained by the Board to perform services on behalf of the
Trust.
The Trust assumes and shall pay or cause to be paid all other expenses of
the Trust not otherwise allocated herein, including, without limitation,
organization costs, taxes, expenses for Trust 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 (as defined below), all expenses incurred
in connection with issuing and redeeming shares of beneficial interest in the
Funds ("Shares"), the cost of custodial services, the cost of initial and
ongoing registration of the Shares under Federal and state securities laws, fees
and out-of-pocket expenses of trustees who are not affiliated persons of BISYS
or any affiliate of BISYS (fees for other "interested trustees" may be paid by
parties other than the Trust), insurance, interest, brokerage costs, litigation
and other extraordinary or nonrecurring expenses, and all fees and charges of
the Funds' investment adviser.
4. Fees and Expenses.
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(a) The Trust shall pay BISYS for the services to be provided by
BISYS under this Agreement in accordance with, and in the
manner set forth in, Schedule F to this Agreement. Fees for
any additional services to be provided by BISYS pursuant to
an amendment to any of Schedules B, C or D shall be subject
to mutual agreement at the time such amendment is proposed.
(b) In addition to paying BISYS the fees set forth in Schedule F,
the Trust agrees to reimburse BISYS for all of its actual
out-of-pocket expenses reasonably incurred in providing
services hereunder, including without limitation those set
forth on Schedule F.
(c) In addition, BISYS shall be entitled to receive the
miscellaneous fees and charges as set forth in Schedule F.
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All rights of compensation under this Agreement for services performed and
for expense reimbursement and for payment of miscellaneous fees and charges
shall survive the termination of this Agreement.
5. Effective Date.
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This Agreement shall become effective as of the Effective Date.
6. Term; Liquidated Damages.
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(a) This Agreement shall continue in effect for an initial term of two
(2) years from the Effective Date (the "Initial Term"). Thereafter, unless
otherwise terminated pursuant to this Agreement, this Agreement shall continue
and may be terminated at the end of the Initial Term or at any time thereafter
by either party upon ninety (90) days advance written notice to the other party.
This Agreement may be terminated at any time, including during the Initial Term,
by: (i) mutual agreement of the parties, or (ii) for "cause," as defined below,
upon the provision of 30 days advance written notice by the party alleging
cause.
(b) For purposes of this Section 6, "cause" shall mean (i) a material
breach of this Agreement that has not been remedied within 30 days following
written notice of such breach from the non-breaching party; (ii) a final,
non-appealable judicial, regulatory or administrative ruling or order in which
the party to be terminated has been found guilty of criminal or unethical
behavior in the conduct of its business; (iii) 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 is 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; (iv) the sale or transfer of a controlling interest in, or the sale
or transfer of all or substantially all of the assets of BISYS or its parent
company, if such sale or transfer results, in the opinion of the Board, in a
diminution of services provided to the Trust (with the 30-day termination notice
described above to be provided within six months after the Trust receives notice
of such sale or transfer); or (v) the submission by BISYS of a "Xxxxx" statement
to the Securities and Exchange Commission (the "SEC") or the commencement of an
enforcement proceeding against BISYS by the SEC (with the 30 day termination
notice described above to be provided within 60 days after the terminating party
receives notice of the "Xxxxx" submission or the commencement of the enforcement
proceeding).
(c) Notwithstanding the foregoing termination provisions, 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 to this Agreement) with the consent of the Trust, the provisions of this
Agreement, including without limitation the provisions dealing with compensation
and indemnification, shall continue in full force and effect. Fees and
out-of-pocket expenses incurred by BISYS but unpaid by the Trust, upon such
termination shall be immediately due and payable upon and
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notwithstanding such termination. The Trust shall pay to BISYS, in addition to
the fees and expenses provided in Sections 3 and 4 of this Agreement, the amount
of all of BISYS' reasonable cash disbursements (such cash disbursements to
effect such termination not to exceed $30,000) in connection with BISYS'
activities in effecting such termination, including without limitation, the
delivery to the Trust, its investment adviser and/or other parties of the
Trust's property, records, instruments and documents, such amount to be paid on
or before the date of such termination.
(d) If, for any reason other than (i) non-renewal, (ii) mutual agreement
of the parties or (iii) "cause", the Trust terminates this Agreement, or the
Trust terminates BISYS' services, or BISYS is replaced as service provider to
the Trust or some or all of the Funds, then the Trust shall make a one-time cash
payment to BISYS, in consideration of the fee structure and services to be
provided under this Agreement, equal to (a) if the termination occurs during the
Initial Term, the balance of fees that would be due BISYS for its services under
this Agreement during the lesser of (x) the balance of the Initial Term or (y)12
months, or (b) if the Initial Term has expired, 90 days of fees; which amounts
shall include fees earned by BISYS during the period between notice of
termination and the effective date of termination and thereafter assuming for
purposes of the calculation of these amounts that the remaining fees that would
be earned by BISYS for each month would be based upon the average fees payable
to BISYS in the month prior to the event that triggers such payment.
(e) In the event that the Trust or any Fund is, in part or in whole,
liquidated, dissolved, merged into a third party, acquired by a third party, or
involved in any other transaction that materially reduces the assets and/or
accounts serviced by BISYS pursuant to this Agreement, the liquidated damages
provision set forth above shall be applicable. Notwithstanding the foregoing,
the liquidated damages provision set forth above shall not apply in the event
that a liquidation or dissolution is effectuated for legitimate economic or
regulatory reasons (and is evidenced by a resolution of the Board), rather than
pursuant to any express or tacit plan, understanding or arrangement whereby the
assets of the Funds are designed or intended to migrate, directly or indirectly,
to another investment company or other investment vehicle. If one of the events
described above is partial (e.g., a termination of BISYS as provider of some but
not all of the services set forth in this Agreement, or a liquidation of some
but not all of the Funds), the liquidated damages amount payable by the Trust
shall be appropriately adjusted on a pro rata basis.
(f) Any liquidated damages amount payable to BISYS shall be paid by the
Trust on or before the date of the event that triggers the payment obligation.
7. Standard of Care; Force Majeure; Limitation of Liability.
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(a) BISYS shall use reasonable professional diligence in the performance
of services under this Agreement, but shall not be liable to the Trust for any
action taken or omitted by BISYS in the absence of BISYS' refusal or failure to
comply with the terms of this Agreement, or from BISYS' willful misconduct,
negligence or lack of good faith in the performance of its duties under this
Agreement. The duties of BISYS shall be
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confined to those expressly set forth in this Agreement, and no implied duties
are assumed by or may be asserted against BISYS under this Agreement.
(b) BISYS 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 control, including, without
limitation, acts of God, earthquake, fires, floods, failure or fluctuations in
electrical power, wars, acts of terrorism, acts of civil or military
authorities, governmental actions, nonperformance by a third party or any
similar cause beyond the reasonable control of BISYS, or failures or
fluctuations in telecommunications or other equipment, which failure or delay
could not have been reasonably prevented by BISYS.
(c) BISYS shall provide the Trust, at such times as the Trust may
reasonably request, copies of reports rendered by independent auditors on the
internal controls and procedures of BISYS relating to the services provided by
BISYS under this Agreement.
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR RESPECTIVE
TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR
EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES,
INCLUDING LOST REVENUE, LOST PROFITS, AND LOST OR DAMAGED DATA, EACH OF WHICH IS
HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES, REGARDLESS OF WHETHER SUCH DAMAGES
WERE FORESEEABLE OR WHETHER A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
8. Instructions / Certain Procedures, etc.
---------------------------------------
(a) BISYS shall be protected in acting upon any document reasonably
believed by BISYS to be genuine and reasonably believed to have been properly
made, 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 the Trust until receipt of actual notice thereof from an individual
reasonably believed to be an officer or other authorized agent of the Trust or
unless BISYS has notice thereof through its presence at the Board meeting at
which such change occurred.
(b) Subject to Section 22(b) of this Agreement, whenever BISYS is
requested or authorized to take action hereunder pursuant to instructions from a
shareholder, or a properly authorized agent of a shareholder ("shareholder's
agent"), concerning an account in a Fund, BISYS shall be entitled to rely upon
any certificate, letter or other instrument or communication (including
electronic mail), reasonably believed by BISYS to be genuine and to have been
properly made, signed or authorized by an officer or other authorized agent of
the Trust or by the shareholder or shareholder's agent, as the case may be, and
shall be entitled to receive as conclusive proof of any fact or matter required
to be ascertained by it hereunder a certificate signed by an officer of the
Trust or any
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other person authorized by the Board or by the shareholder or shareholder's
agent, as the case may be.
(c) As to the services to be provided hereunder, BISYS may rely
conclusively upon the terms of the relevant then-current Prospectus and
Statement of Additional Information of the Funds, to the extent that such
services are described therein unless BISYS receives written instructions to the
contrary in a timely manner from the Trust.
(d) The parties 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 reasonably assume that any special procedure which
has been approved by an executive officer of the Trust (other than an officer or
employee of BISYS or its affiliates) does not conflict with or violate any
requirements of the Trust's Charter, By-Laws or then-current Prospectus.
(e) The Trust acknowledges receipt of a copy of BISYS' policy related to
the acceptance of trades for prior day processing (the "BISYS As-of Trading
Policy"). BISYS may amend the BISYS As-of Trading Policy from time to time in
its sole discretion, but will provide prompt notice to the Trust of such
amendment. BISYS may apply the BISYS As-of Trading Policy whenever applicable,
unless BISYS agrees in writing to process trades according to such other as-of
trading policy as may be adopted by the Trust and furnished to BISYS by the
Trust.
(f) The Trust acknowledges and agrees that deviations from BISYS' written
transfer agent compliance procedures may involve a substantial risk of loss. In
the event an authorized representative of the Trust (other than an officer or
employee of BISYS or its affiliates) requests that an exception be made from any
written compliance or transfer agency procedures adopted by BISYS, or any
requirements of the AML Program (as defined in Section 15 of this Agreement),
BISYS may in its sole discretion determine whether to permit such exception. In
the event BISYS determines to permit such exception, the same shall become
effective when set forth in a written instrument executed by an authorized
representative of the Trust (other than an officer or employee of BISYS or its
affiliates) and delivered to BISYS (an "Exception"); provided that an Exception
concerning the requirements of the Trust's AML Program shall also be authorized
by the Trust's AML Compliance Officer (as defined in Section 15 of this
Agreement). An Exception shall be deemed to remain effective until the relevant
instrument expires according to its terms (or if no expiration date is stated,
until BISYS receives written notice from the Trust that such instrument has been
terminated and the Exception is no longer in effect). Notwithstanding any
provision in this Agreement that expressly or by implication provides to the
contrary, as long as BISYS acts in good faith, BISYS shall have no liability for
any loss, liability, expenses or damages to the Trust resulting from the
Exception, and the Trust shall indemnify BISYS and hold BISYS harmless from any
loss, liability, expenses (including reasonable attorneys fees) and damages
resulting to BISYS therefrom.
(g) To the extent applicable, the Trust instructs and authorizes BISYS to
provide information pertaining to the Funds' investments to Fair Value
Information
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Vendors (as defined in Schedule C) in connection with the fair value
determinations made under the Trust's Valuation Procedures (as defined in
Schedule C) and other legitimate purposes related to the services to be provided
hereunder. The Trust acknowledges that while BISYS' services related to fair
value pricing are intended to assist the Trust and its Board in its obligations
to price and monitor pricing of Fund investments, BISYS does not assume
responsibility for the accuracy or appropriateness of pricing information or
methodologies provided by a third party, including, to the extent applicable,
any fair value pricing information or adjustment factors; provided, however,
that the foregoing shall not limit any liability or responsibility of BISYS to
the extent of its own bad faith, willful misfeasance, or negligence in the
performance of its duties under this Agreement.
9. Indemnification.
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(a) The Trust shall indemnify and hold harmless BISYS and its affiliates,
subsidiaries and parents, and their employees, agents, directors, officers and
nominees from and against any claims, demands, actions, suits, judgments,
liabilities, losses, damages, costs, charges, fees and other expenses including
reasonable investigation expenses and reasonable attorneys' fees (collectively,
"Losses") resulting directly and proximately from BISYS' performance of services
under this Agreement or based, if applicable, upon BISYS' reasonable reliance on
information, records, instructions or requests pertaining to services hereunder,
that are given or furnished to BISYS by the Trust, the Funds' investment
adviser, or other authorized agents of the Trust in the course of BISYS'
performance of services under this Agreement; provided that this indemnification
shall not apply to actions or omissions of BISYS involving its refusal or
failure to comply with the terms of this Agreement, or from BISYS' willful
misconduct, negligence or lack of good faith in the performance of its duties or
obligations under this Agreement.
(b) BISYS shall indemnify, defend, and hold the Trust and its affiliates,
subsidiaries and parents, its trustees, officers, agents and nominees, and each
of the Funds harmless from and against Losses resulting directly and proximately
from BISYS' refusal or failure to comply with the terms of this Agreement, or
from BISYS' willful misconduct, negligence or lack of good faith in the
performance of its duties under this Agreement; provided that this
indemnification shall not apply to actions or omissions of the Trust involving
its bad faith, willful misfeasance, negligence or reckless disregard of its
duties and obligations under this Agreement.
(c) In order that the indemnification provisions contained herein shall
apply, if in any case a party may be asked to indemnify or hold the other party
harmless, the other party shall fully and promptly advise the indemnifying party
in writing of all pertinent facts concerning the situation in question. The
party seeking indemnification will use all reasonable care to identify and
notify the indemnifying party in writing 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
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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.
(d) The indemnifying party shall be entitled to participate in at its own
expense or, if it so elects, to assume the defense of any claim or suit subject
to this indemnity provision. If the indemnifying party elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
it and reasonably satisfactory to the indemnified party. In the event that the
indemnifying party elects to assume the defense of any suit and retain counsel,
the indemnified party shall bear the fees and expenses of any additional counsel
retained by it. An indemnifying party shall not effect any settlement without
the consent of the indemnified party (which shall not be withheld or delayed
unreasonably by the indemnified party) unless such settlement imposes no
liability, responsibility or other obligation upon the indemnified party and
relieves it of all fault. If the indemnifying party does not elect to assume the
defense of suit, it will reimburse the indemnified party for the reasonable fees
and expenses of counsel retained by the indemnified party and reasonably
satisfactory to the indemnifying party. The indemnity and defense provisions set
forth herein shall survive the termination of this Agreement.
(e) The provisions of this Section 9 are subject to the provisions of
Section 8 of this Agreement.
10. Record Retention and Confidentiality.
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BISYS shall keep and maintain on behalf of the Trust all books and records
which are customary or which are required to be kept in connection with BISYS'
services pursuant to applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the Investment Trust Act of 1940,
as amended (the "1940 Act"). BISYS further agrees that all such books and
records shall be the property of the Trust and to make such books and records
available for inspection by the Trust at reasonable times or by the SEC
promptly.
BISYS shall otherwise keep confidential all books and records relating to
the Fund 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, (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 and a legal right to such information at such time
consistent with the Trust's Charter, Prospectus and applicable law, or (v) as
requested or authorized by the Trust (including pursuant to its policies and
procedures). BISYS shall provide the Trust with reasonable advance notice of
disclosure pursuant to items (i) - (iii) of the previous sentence, to the extent
reasonably practicable. The provisions of this Section 10 are subject to the
provisions of Section 22(b) of this Agreement (Anti-Money Laundering
Provisions).
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11. Reports.
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BISYS shall furnish to the Trust and to its properly-authorized auditors,
investment adviser, examiners, distributors, broker-dealers, underwriters,
salesmen, insurance companies and others designated by the Trust in writing,
such reports at such times as are prescribed pursuant to this Agreement (or
schedules to this Agreement), or as subsequently agreed upon by the parties
pursuant to an amendment to this Agreement (or schedules to this Agreement). The
Trust agrees to examine each such report or copy provided to it promptly and
will report or cause to be reported to BISYS any errors or discrepancies
therein.
12. Rights of Ownership.
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All computer programs, systems and procedures employed or developed by
BISYS, or on behalf of BISYS by system providers or vendors used by BISYS, to
perform services required to be provided by BISYS under this Agreement are the
property of BISYS. All records and other data maintained hereunder, excepting
such computer programs, systems and procedures, are the exclusive property of
the Trust. All such records and other data which is the property of the Trust
shall be furnished to the Trust in appropriate form as soon as practicable after
termination of this Agreement for any reason.
13. Return of Records.
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BISYS shall promptly upon the Trust's demand, turn over to the Trust 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 the Trust, such documents and records shall be retained by BISYS, at the
expense of the Trust, for six (6) years from the date of creation. At the end of
such six-year period, such records and documents shall be turned over to the
Trust unless the Trust authorizes in writing the destruction of such records and
documents.
14. Bank Accounts.
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BISYS is hereby granted such power and authority as may be necessary to
establish one or more bank accounts for the Trust with such bank or banks as are
acceptable to the Trust, as may be necessary or appropriate from time to time in
connection with the transfer agency services to be performed hereunder. The
Trust shall be deemed to be the customer of such bank or banks for purposes of
such accounts. To the extent that the performance of such services hereunder
shall require BISYS to disburse amounts from such accounts in payment of
dividends, redemption proceeds or for other purposes hereunder, the Trust shall
provide such bank or banks with all instructions and authorizations necessary
for BISYS to effect such disbursements.
15. Representations and Warranties of the Trust.
--------------------------------------------
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The Trust represents and warrants to BISYS that:
(a) It is a business trust duly incorporated and validly existing
under the laws of Delaware, and has full capacity and
authority to enter into this Agreement and to carry out its
obligations hereunder;
(b) It has all necessary authorizations, licenses and permits to
carry out its business as currently conducted;
(c) It is in compliance in all material respects with all laws and
regulations applicable to its business and operations;
(d) This Agreement has been duly authorized by the Trust and, when
executed and delivered by the Trust, will constitute a legal,
valid and binding obligation of the Trust, enforceable
against the Trust 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;
(e) By virtue of the Charter, shares of each Fund which are
redeemed by the Trust may be resold by the Trust; and
(f) (i) The Trust has adopted a written anti-money laundering
program, which has been provided to BISYS pursuant to Section
18 of this Agreement (the "AML Program"), and has appointed
an officer of the Trust as the Trust's anti-money laundering
compliance officer ("AML Compliance Officer"), (ii) the AML
Program and the designation of the AML Officer have been
approved by the Board, (iii) the delegation of certain
services thereunder to BISYS, as provided in Section 22 of
this Agreement, has been approved by the Board, and (iv) the
Trust will submit any material amendments to the AML Program
to BISYS for BISYS' review and consent prior to adoption, in
accordance with Section 20 of this Agreement; and
(g) The Trust has entered into a confidentiality agreement, in
accordance with U.S. Department of the Treasury, Financial
Crimes Enforcement Network ("FinCEN") release FIN-2006- G013,
dated October 4, 2006, with the Funds' investment adviser,
and the Trust hereby authorizes BISYS, acting in its capacity
as transfer agent, to provide the investment adviser with
information related to shareholder Suspicious Activity
Reports, upon request.
16. Representations and Warranties of BISYS.
----------------------------------------
BISYS represents and warrants to the Trust that:
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(a) It is a corporation duly incorporated and validly existing
under the laws of the state of Ohio, and has full capacity
and authority to enter into this Agreement and to carry out
its obligations hereunder;
(b) It has all necessary authorizations, licenses and permits to
carry out its business as currently conducted;
(c) It is, and shall continue to be, in compliance in all material
respects with all provisions of law applicable to it in
connection with its services hereunder, including but not
limited to Section 17A(c) of the Securities Exchange Act of
1934, as amended (the "Exchange Act");
(d) 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 the Trust and BISYS' equipment,
facilities, and other property used in the performance of its
obligations hereunder are reasonable and 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
(e) 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.
(f) BISYS shall maintain adequate and reliable computer and other
equipment necessary or appropriate to carry out its
obligations under this Agreement. Upon the Trust'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. Such disaster recovery and business continuity
plan is reasonably designed to enable BISYS to continue to
carry out its obligations under this Agreement.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, ALL REPRESENTATIONS AND
WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING
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
12
PROVIDED UNDER THIS AGREEMENT BY BISYS ARE COMPLETELY DISCLAIMED.
17. 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 each placed with an insurance carrier with an A.M.
best rating greater than A-. Recoveries under the above-referenced bond and
policy shall be used to reimburse the Trust for damages incurred by the Trust or
any of the Funds for which BISYS has liability under this Agreement. Upon the
request of the Trust, BISYS shall provide evidence that coverage is in place.
BISYS shall notify the Trust promptly should its insurance coverage with respect
to professional liability or errors and omissions coverage be reduced or
canceled. Such notification shall include the date of cancellation or reduction
and the reasons therefore. BISYS shall notify the Trust promptly 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 the Trust
promptly should the total outstanding claims made by BISYS under its insurance
coverage materially impair, or threaten to materially impair, the adequacy of
its coverage.
18. Information to be Furnished by the Trust and Funds.
---------------------------------------------------
The Trust agrees to furnish to BISYS the following, upon BISYS' request,
each as amended and current as of the Effective Date:
(a) A copy of the Charter and any amendments thereto;
(b) A copy of the Trust's By-laws and any amendments thereto;
(c) A copy of the resolutions of the Board regarding (i) approval
of this Agreement and authorization of a specified officer of
the Trust to execute and deliver this Agreement and
authorization for specified officers of the Trust to instruct
BISYS hereunder; and (ii) authorization of BISYS to act as
administrator, fund accountant and transfer agent for the
Trust;
(d) A certified list of all officers of the Trust, with the
Trust's AML Compliance Officer included among the officers
therein, and any other persons (who may be associated with
the Trust or its investment advisor), 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;
13
(e) Copies of each of the following documents employed by the
Trust:
(i) Prospectuses and Statement of Additional Information;
(ii) Distribution Agreement; and
(iii) All other forms commonly used by the Trust or its distributor
with regard to their relationships and transactions with shareholders
of the Funds.
(f) A certificate as to shares of the Trust authorized, issued,
and outstanding as of the Effective Date and as to receipt of
full consideration by the Trust for all shares outstanding;
(g) Contact information for the Trust's financing agent, if
share-class financing is applicable;
(h) A copy of the Trust's written AML Program, including any
related policies and procedures;
(i) A copy of the disclosure controls and procedures of the Funds
("Fund DCPs") as contemplated by Schedule B; and
(j) The Trust's Valuation Procedures as defined in Schedule C.
19. Information Furnished by BISYS.
-------------------------------
BISYS agrees to furnish to the Trust, upon its request, 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;
(b) Authorization of BISYS to act as Transfer Agent, Fund
Accountant and Administrator for the Trust;
(c) The current BISYS As-of Trading Policy; and
(d) The current version of BISYS' written polices and procedures
with respect to its provision on AML Services (as defined in
Section 22 below).
Upon request, BISYS shall furnish a copy of the relevant provisions of its
internal policies on service of employees as executive officers of funds ("BISYS
Policies"), and any material amendments thereto, to the Trust.
20. Amendments to Documents.
------------------------
14
The Trust will provide BISYS with advance notice of any material
amendments to the items set forth in Section 18 of this Agreement. BISYS will
not be responsible for changing or conforming its services to any such
amendments until BISYS has reviewed and accepted responsibility for the relevant
changes in services. BISYS will consider such changes in good faith. In the
event that any such amendment, or change in laws applicable to the Trust would
require BISYS to make specific changes to its service model, BISYS will use
reasonable good faith efforts to inform the Trust of the changes that would be
necessary, and set out the estimated costs and estimated implementation
timetable for any additional services. The parties shall then in good faith
agree to mutually agreeable terms applicable to such additional service.
21. Reliance on Amendments.
-----------------------
BISYS may rely on any amendments to or changes in any of the documents and
other items to be provided by the Trust pursuant to Sections 18 and 20 of this
Agreement and the indemnification provisions of Section 9 hereof are applicable
to BISYS' 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 18 and 20 of
this Agreement, 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 except as provided in
Section 20 of this Agreement or as otherwise agreed upon in writing.
22. Compliance with Laws.
---------------------
(a) Prospectus and Public Offering. Except for information which is the
obligation of BISYS as expressly set forth in this Agreement, and except as
provided in the services listed in the schedules to this Agreement which call
for information to be provided by BISYS for inclusion in the Prospectus, the
Trust assumes full responsibility for the preparation, contents, and
distribution of each Prospectus of the Trust in 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. Subject to its obligations herein with respect to "blue
sky" filings, BISYS shall have no obligation to take cognizance hereunder of
laws relating to the sale of the Funds' shares. The Trust represents and
warrants that all shares of the Funds that are offered to the public are covered
by an effective registration statement under the 1933 Act and the 1940 Act.
(b) Anti-Money Laundering Provisions. The Trust acknowledges that it is
a financial institution subject to the law entitled Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism ("USA PATRIOT") Act of 2001 and the Bank Secrecy Act (collectively,
the "AML Acts") and shall comply with the AML Acts and applicable regulations
adopted thereunder (collectively, the "Applicable AML Laws") in all relevant
respects, subject to the delegation of certain responsibilities to BISYS, as
provided in the next paragraph below.
15
The Trust hereby delegates to BISYS the performance, on behalf of the
Trust, of the anti-money laundering services set forth under Item 6 of Schedule
D (the "AML Services") with respect to the shareholder accounts maintained by
BISYS pursuant to this Agreement, and BISYS agrees to the foregoing delegation
and agrees to perform such services in accordance with the Trust's AML Program
for the fee set forth on Schedule F to this Agreement. In connection therewith,
BISYS agrees to maintain policies and procedures, and related internal controls,
that are consistent with the Trust's AML Program and the requirement that the
Trust employ procedures reasonably designed to achieve compliance with the
Applicable AML Laws. BISYS' obligations under this delegation shall be subject
to Sections 18 and 20 of this Agreement, which require that the AML Program and
any material amendments thereto be submitted to BISYS for its review and consent
prior to adoption.
The Trust agrees and acknowledges that, notwithstanding the delegation
provided for in the foregoing paragraph, the Trust maintains full responsibility
for ensuring that its AML Program is, and shall continue to be, reasonably
designed to ensure compliance with the Applicable AML Laws, in light of the
particular business of the Trust, taking into account factors such as its size,
location, activities and risks or vulnerabilities to money laundering. BISYS
represents that its Anti-Money Laundering and Fraud Program is reasonably
designed to ensure compliance with the Applicable AML Laws related to its
Transfer Agency Services to the Trust and, specifically, those detailed in
section 6 of Schedule D.
In connection with the foregoing delegation, the Trust also acknowledges
that the performance of the AML Services involves the exercise of discretion
which in certain circumstances may result in consequences to the Trust and its
shareholders (such as in the case of the reporting of suspicious activities and
the freezing of shareholder accounts). In this regard, (i) under circumstances
in which the AML Program authorizes the taking of certain actions, BISYS is
granted the discretion to take any such action as may be authorized under the
AML Program, and consultation with Trust shall not be required in connection
therewith unless specifically required under the AML Program, and (ii) the Trust
instructs BISYS that it may avail the Trust of any safe harbor from civil
liability that may be available under Applicable AML Laws for making a
disclosure or filing a report thereunder.
As concerns Networked Level III accounts and omnibus accounts, the AML
Services performed by BISYS are subject to a more limited scope, as discussed in
the Release concerning the final rule of the Department of the Treasury, 31 CFR
103 and of the XXX, 00 XXX 000, entitled Customer Identification Programs for
Mutual Funds issued on May 9, 2003 and subsequent guidance issued jointly by
such agencies entitled Question and Answer Regarding the Mutual Fund Customer
Identification Program Rule (31 CFR 103.131) issued on August 11, 2003.
23. 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
16
address, or at such other address as such party may from time to time specify in
writing to the other party pursuant to this Section 23:
If to the Trust:
YieldQuest Funds Trust
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxx, CCO, Treasurer and Secretary
with a copy to:
Xxxxxxxx Xxxxxx LLP
One XX Xxxx Xxxxx
Xx. Xxxxx, XX 00000
Attn: Dee Xxxx Xxxxxxx, Esq.
If to BISYS:
BISYS Fund Services Ohio, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: President
with a copy to:
The BISYS Group, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
24. Assignment.
-----------
This Agreement and the rights and duties hereunder shall not be assignable
by either party without the prior written consent of the other party; provided,
however, that either party may assign this Agreement to an affiliate of such
party without the need for such consent. This Section 24 shall not limit or in
any way affect BISYS' right to use a third party to perform obligations pursuant
to Section 2 of this Agreement. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties and their respective successors and
permitted assigns.
25. Governing Law.
--------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to New York's conflicts of laws
principles, and the applicable provisions of the 1940 Act. To the extent that
the laws of the State of New York conflict with the applicable provisions of the
1940 Act, the applicable provisions of
17
1940 Act shall control. The parties agree to and hereby waive all rights to
trial by jury of any dispute between them arising out of or relating to this
Agreement or its performance.
26. Activities of BISYS.
--------------------
The services of BISYS rendered to the Trust 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 the Funds 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 the Trust and/or Funds, and that BISYS may be or become interested in the
Trust and/or Funds as a shareholder or otherwise.
27. Privacy.
--------
Nonpublic personal financial information relating to consumers or
customers of the Trust provided by, or at the direction of the Trust to BISYS,
or collected or retained by BISYS in the course of performing its duties as
transfer agent, 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 involved in servicing the Trust except at
the direction of the Trust or as required or permitted by law (including
Applicable AML Laws). 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 the Trust. The Trust represents to BISYS that it has
adopted a Statement of its privacy policies and practices as required by the
SEC's Regulation S-P and agrees to provide BISYS with a copy of that statement
annually.
28. Miscellaneous.
--------------
(a) Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or
interpret this Agreement.
(b) This Agreement constitutes the complete agreement of the
parties 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.
18
(e) 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 this Agreement
did not contain such part, term or provision.
[Signature page follows.]
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed all as of the date first above written.
YIELDQUEST FUNDS TRUST
By: /s/ Xxx X. Xxxxxxx
-------------------------
Name: Xxx X. Xxxxxxx
Title: Chairman and President
Date: 4/7/07
BISYS FUND SERVICES OHIO, INC.
By: /s/ Xxxx Xxxxxxx
-------------------------
Name: Xxxx Xxxxxxx
Title: President
20
SCHEDULE A
TO THE MASTER SERVICES AGREEMENT BETWEEN
BISYS FUND SERVICES OHIO, INC. AND YIELDQUEST FUNDS TRUST
FUNDS
-----
YIELDQUEST CORE EQUITY FUND
YIELDQUEST TOTAL RETURN BOND FUND
YIELDQUEST TAX-EXEMPT BOND FUND
YIELDQUEST FLEXIBLE INCOME FUND
YIELDQUEST LOW DURATION BOND FUND
YIELDQUEST LOW DURATION TAX-EXEMPT BOND FUND
21
SCHEDULE B
TO THE MASTER SERVICES AGREEMENT BETWEEN
BISYS FUND SERVICES OHIO, INC. AND YIELDQUEST FUNDS TRUST
ADMINISTRATION SERVICES
-----------------------
1. Calculate contractual expenses of each Fund and make and control all
disbursements for the Funds, subject to review and approval of an
officer of the Trust or other authorized person (designated on the
list of authorized persons approved by the Board), including
administration of trustee and vendor fees and compensation on behalf
of the Trust, and as appropriate;
2. Coordinate and prepare, with the assistance and approval of the
Funds' investment adviser, counsel and officers, drafts of the
annual report to Shareholders; prepare drafts of the certified
semi-annual report for each Fund; prepare and file the final
certified versions thereof on Form N-CSR;
3. Prepare and file the Fund's Form N-SAR; and file all required notices
pursuant to Rule 24f-2;
4. Coordinate with the Trust's transfer agent with respect to the
payment of dividends and other distributions to shareholders of
record of the Funds ("Shareholders");
5. Calculate performance data of the Funds for dissemination to up to 15
information services covering the investment company industry or to
other parties, as requested by the Funds from time to time;
6. Prepare and provide draft financial statements, trial balances and
schedules for use by the Trust's auditors in connection with their
audit of the Trusts' financial statements, and prepare tax returns
for review and filing by the Trust's auditors, and provide
supporting schedules to facilitate the auditor's review;
7. Assist with the layout and printing of prospectuses and assist with
and coordinate layout and printing of the Funds' semi-annual and
annual reports to Shareholders;
8. Make available appropriate individuals to serve as officers of the
Trust (to serve only in ministerial or administrative capacities
relevant to BISYS' services hereunder, except as otherwise provided
in this Agreement), upon designation as such by the Board;
22
9. Monitor and advise the Trust and its Funds on their regulated
investment company status under the Internal Revenue Code of 1986,
as amended. In connection with the foregoing, prepare and send
quarterly reminder letters related to such status, and prepare
quarterly compliance checklist for use by the Funds' investment
adviser, if requested;
10. Subject to timely notification (within one week of security purchase)
of BISYS of a purchase in new non-traditional* securities position,
and prompt delivery to BISYS of prospectuses or other offering
memoranda including tax disclosures, assist the Trust in developing
portfolio compliance procedures for each Fund, and provide daily and
periodic compliance monitoring services incorporating certain of
those procedures, which will include, among other matters,
compliance with investment restrictions imposed by the 1940 Act,
each Fund's investment objective, defined investment policies, and
restrictions, tax diversification and other IRS rules and
regulations, and distribution and income requirements, provided such
are determinable based upon the Fund's accounting records. In
connection with the foregoing, review quarterly compliance reports
that are prepared by the investment adviser(s), if any, and notify
appropriate Trust officers and advisor of xxxx-to-market issues
pursuant to Board-approved procedures, if applicable. BISYS will
also provide the Board with quarterly results of compliance reviews;
11. Subject to timely notification (within one week of security purchase)
of BISYS of a purchase in new non-traditional* securities position,
and prompt delivery to BISYS of prospectuses or other offering
memoranda including tax disclosures, monitor, not more frequently
than monthly, the Funds' portfolio investments for compliance with
IRS rules and regulations, including but not limited to, those
applicable to tax-exempt funds (such as 50% RIC test) and the
diversification and income requirements of Subchapter M.
12. Assist the Trust and provide on-site personnel in responding to and
providing documents for routine regulatory examinations or
investigations; and coordinating with and taking instructions from
counsel to the Trust in response to such routine or non-routine
regulatory matters. The assistance to be provided with respect to
SEC inspections includes (i) rendering advice regarding proposed
responses (ii) compiling data and other information in response to
SEC requests for information and (iii) communicating with Trust
management and portfolio managers to provide status updates. In
addition, BISYS will provide appropriate assistance
----------------------------
* Non-traditional security positions include partnerships (whether or not
publicly traded), grantor trusts, swaps, commodities, commodity based
derivatives or structured notes, derivatives of any type, and passive foreign
investment companies.
23
with respect to audits conducted by the Funds' independent auditors
including compiling data and other information as necessary;
13. Furnish advice and recommendations with respect to other aspects of
the business and affairs of the Funds as the Trust shall request and
the parties shall agree in writing;
14. Assist the Trust in connection with its obligations under Sections
302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002 and Rules 30a-2 and
Rule 30a-3 under the 1940 Act (collectively, with such other related
regulatory provisions applicable to the Trust, "Xxxxxxxx-Xxxxx"),
BISYS will internally establish and maintain controls and procedures
("BISYS internal controls") designed to ensure that information
recorded, processed, summarized, or reported by BISYS and its
affiliates on behalf of the Trust and included in financial
information certified by the Trust's Chief Executive Officer and
Chief Financial Officer ("Certifying Officers") on Form N-CSR and
Form N-Q ("Reports") is (a) recorded, processed, summarized, and
reported by BISYS within the time periods specified in the SEC rules
and forms and corresponding disclosure controls and procedures of
the Funds ("Fund DCPs"), and (b) accumulated and communicated to the
relevant Certifying Officers consistent with the Fund DCPs. For each
fiscal period during which BISYS serves or served as financial
administrator, BISYS will provide a sub-certification to the
Certifying Officers consistent with the requirements of
Xxxxxxxx-Xxxxx pertaining to BISYS' services, solely for the purpose
of providing a basis of support (as to information which has been
prepared, processed and reported by BISYS, and as to BISYS internal
controls) for the Certifying Officers to render the certifications
required by Xxxxxxxx-Xxxxx (or, if applicable with respect to a
Report, inform the Certifying Officers of the reasons why the
statements in such a certification would not be accurate). In
rendering such sub-certifications concerning Trust Reports, BISYS
may (a) limit its representations to information prepared, processed
and reported by BISYS; (b) rely upon and assume the accuracy of the
information provided by officers and other authorized agents of the
Trust, including all Other Service Providers to the Trust, and
compliance by such officers and agents with the Fund DCPs, including
but not limited to, the Trust's investment adviser(s) and custodian;
and (c) assume that the Trust has selected the appropriate
accounting policies for the Fund(s).
The Trust shall assist and cooperate with BISYS (and shall use its
best efforts to cause its officers, investment adviser and other
service providers to assist and cooperate with BISYS) to facilitate
the delivery of information requested by BISYS in connection with
the preparation of the Trust's Form N-CSR and Form N-Q, including
Trust financial statements. The Certifying Officers and the Chief
Legal Officer (if any) of the Trust shall be deemed to constitute
the Trust's Disclosure Controls and
24
Procedures Committee ("Fund DCP Committee") in cases in which no
other Fund DCP Committee has been designated or is operative. In
connection with its review and evaluations, the Fund DCP Committee
shall establish a schedule to ensure that all required disclosures
in Form N-CSR and in the financial statements for each Fund are
identified and prepared in a timeframe sufficient to allow review by
the Fund DCP Committee before the date the relevant report is to be
filed. At the request of the Trust or its Certifying Officers, BISYS
shall provide reasonable administrative assistance to the Trust in
connection with obtaining service provider sub-certifications,
SAS-70 reports on internal controls, and any applicable
representations to bring such certifications current to the end of
the reporting period, and in preparing summaries of issues raised in
such documents.
The Trust shall, in its own capacity, take all reasonably necessary
and appropriate measures to comply with its obligations under
Xxxxxxxx-Xxxxx. Without limitation of the foregoing, except for
those obligations which are expressly delegated to or assumed by
BISYS in this Agreement, the Trust shall maintain responsibility
for, and shall support and facilitate the role of each Certifying
Officer and the Fund DCP Committee in, designing and maintaining the
Trust's disclosure policy and procedures in accordance with
applicable laws, including (a) ensuring that the Fund DCP Committee
and/or Certifying Officers obtain and review sub-certifications and
reports on internal controls from the Trust's investment adviser(s)
and other service providers, if any, sufficiently in advance of the
date upon which the relevant financial statements must be finalized
by BISYS (in order to print, distribute and/or file the same
hereunder), (b) evaluating of the effectiveness of the design and
operation of the Trust's disclosure policy and procedure, under the
supervision, and with the participation of, the Certifying Officers,
within the requisite timeframe prior to the filing of each Report,
and (c) ensuring that its Certifying Officers render the requisite
certifications or take such other actions as may be permitted or
required under applicable laws;
15. Provide survey-related data, in an automated manner, to Morningstar
(and S&P until merged with Morningstar), ICI and Lipper, no more
frequently than monthly.
16. Prepare and file holdings reports on Form N-Q as required at the end
of the first and third fiscal quarters of each year;
17. Prepare quarterly brokerage allocation compliance checklist and
supporting documentation for use by the Funds' investment adviser;
18. Oversee/coordinate Trustee compensation and preparation and mailing
of 1099 tax documents;
25
19. Monitor wash sales, not more frequently than two times per year;
20. Calculate "Acquired Fund Fees and Expenses" to be included in the
Funds' prospectus fee table according to guidelines established by
the SEC;
21. Prepare annual expense budget and provide quarterly expense budget
analysis; and
22. Provide non-custom, system-generated reports (using FundLink and
batch reports that do not require any new build), as may be
requested by the Trust or its Board.
26
SCHEDULE C
TO THE MASTER SERVICES AGREEMENT BETWEEN
BISYS FUND SERVICES OHIO, INC. AND YIELDQUEST FUNDS TRUST
FUND ACCOUNTING SERVICES
------------------------
(a) BISYS will keep and maintain the following books and records of each Fund
pursuant to Rule 31a-1 (the "Rule") under the 1940 Act:
1. Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and
disbursements of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
2. General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, including
interest accrued and interest received, as required by
subsection (b)(2)(i) of the Rule;
3. Separate ledger accounts required by subsection (b)(2)(ii) and
(iii) of the Rule; and
4. A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the
Rule.
(b) In addition to the maintenance of the books and records specified above,
BISYS shall perform the following accounting services for each Fund:
1. Allocate income and expense and calculate the net asset value
per share ("NAV") of each class of shares offered by each
Fund in accordance with the relevant provisions of the
applicable Prospectus of each Fund and applicable regulations
under the 1940 Act;
2. Apply securities pricing information as required or authorized
under the terms of the valuation policies and procedures of
the Trust ("Valuation Procedures"), including (A) pricing
information from independent pricing services, with respect
to securities for which market quotations are readily
available, (B) if applicable to a particular Fund or Funds,
fair value pricing information or adjustment factors from
independent fair value pricing services or other vendors
approved by the Trust (collectively, "Fair Value Information
Vendors") with respect to securities for which market
quotations are not readily available, for which a significant
event
27
has occurred following the close of the relevant market but
prior to the Fund's pricing time, or which are otherwise
required to be made subject to a fair value determination
under the Valuation Procedures, and (C) prices obtained from
each Fund's investment adviser or other designee, as approved
by the Board;
3. To the extent applicable, coordinate the preparation of
reports that are prepared or provided by Fair Value
Information Vendors which help the Trust to monitor and
evaluate its use of fair value pricing information under its
Valuation Procedures;
4. Verify and reconcile with the Funds' custodian all daily trade
activity;
5. Compute, as appropriate, each Fund's net income and capital
gains, dividend payables, dividend factors, 7-day yields,
7-day effective yields, 30-day yields, and weighted average
portfolio maturity; (and other yields or standard or
non-standard performance information as mutually agreed);
6. Review daily the net asset value calculation and dividend
factor (if any) for each Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations, and
distribute net asset values and yields to NASDAQ; and as
agreed, in certain cases, to newspapers;
7. If applicable, report to the Trust the periodic market pricing
of securities in any money market funds, with the comparison
to the amortized cost basis;
8. Determine and report unrealized appreciation and depreciation
on securities held in variable net asset value funds;
9. Amortize premiums and accrete discounts on fixed income
securities purchased at a price other than face value, if
requested by the Trust;
10. Update fund accounting system to reflect rate changes, as
received from a Fund's investment adviser, on variable
interest rate instruments;
11. Post Fund transactions to appropriate categories;
12. Accrue expenses of each Fund according to instructions
received from the Trust's Administrator, and submit changes
to accruals and expense items to authorized officers of the
Trust (who are not BISYS employees) for review and approval;
28
13. Determine the outstanding receivables and payables for all (1)
security trades, (2) Fund share transactions and (3) income
and expense accounts;
14. Provide accounting reports in connection with and coordinate
with independent auditors concerning the Trust's regular
annual audit, and other audits and examinations by regulatory
agencies (including the SEC);
15. Provide such periodic reports as the parties shall agree upon,
as set forth in a separate schedule;
16. Provide a representative (in a non-voting capacity) for the
Trust's Pricing Committee, if any;
17. Assist the Trust in identifying instances where market prices
are not readily available, or are unreliable, within
parameters set forth in the Trust's Valuation Procedures;
18. Perform weekly reconciliation of securities movements among
each Fund's custodial, brokerage and special collateral
accounts; and
19. Maintain expense caps and accrue expense reimbursements owed
by the Funds to their investment adviser.
(c) BISYS shall also perform the following additional accounting services for
each Fund:
1. Provide monthly a hard copy of the unaudited financial
statements described below, upon request of the Trust. The
unaudited financial statements will include the following
items:
A. Unaudited Statement of Assets and Liabilities,
B. Unaudited Statement of Operations,
C. Unaudited Statement of Changes in Net Assets, and
D. Unaudited Condensed Financial Information
2. Provide accounting information for the following: (in
compliance with Reg. S-X as applicable):
A. federal and state income tax returns and federal excise
tax returns;
B. the Trust's semi-annual reports with the SEC on Form
N-SAR and Form N-CSR;
C. the Trust's schedules of investments for filing with the
SEC on Form N-Q;
29
D. the Trust's annual and semi-annual shareholder reports
and quarterly Board meetings;
E. registration statements on Form N-1A and other filings
relating to the registration of shares;
F. BISYS' monitoring of each Fund's status as a regulated
investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended;
3. Calculate turnover and expense ratio.
4. Prepare schedule of Capital Gains and Losses.
5. Provide daily cash report.
6. Maintain and report security positions and transactions in
accounting system.
7. Prepare Broker Commission Report.
8. Monitor expense limitations and reimbursements owed by the
Funds to their investment adviser.
9. Maintain list of failed trades.
10. Provide unrealized gain/loss report.
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SCHEDULE D
TO THE MASTER SERVICES AGREEMENT BETWEEN
BISYS FUND SERVICES OHIO, INC. AND YIELDQUEST FUNDS TRUST
TRANSFER AGENCY SERVICES
------------------------
1. Shareholder Transactions
(a) Process shareholder purchase and redemption orders.
(b) Set up account information, including address, dividend
option, taxpayer identification numbers and wire instructions.
(c) Issue confirmations in compliance with Rule 10b-10 under the
Securities Exchange Act of 1934, as amended.
(d) Issue periodic statements for shareholders.
(e) Process transfers and exchanges.
(f) Calculate, distribute and process dividend payments, including
the purchase of new shares, through dividend reimbursement.
2. Shareholder Information Services
(a) Produce detailed history of transactions through duplicate or
special order statements upon request.
(b) Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements or marketing material to
current shareholders, upon request.
(c) Provide reporting and cash movement as instructed by the Trust
and the financing agent in the case of share-class financing.
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3. Compliance Reporting
(a) Provide reports to the SEC, the National Association of
Securities Dealers, Inc. and the states in which the Funds are
registered.
(b) Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and
capital gains.
(c) Issue tax withholding reports to the Internal Revenue Service.
4. Dealer/Load Processing (if applicable)
(a) Where appropriate information is available, provide reports
for tracking rights of accumulation and purchases made under
a Letter of Intent.
(b) Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
(c) Provide for payment of commission on direct shareholder
purchases in a load fund.
5. Shareholder Account Maintenance
(a) Maintain all shareholder records for each account in the
Trust.
(b) Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
(c) Record shareholder account information changes.
(d) Maintain account documentation files for each shareholder.
(e) Follow appropriate state escheatment procedures for
shareholder checks that are returned to the Trust and deemed
to be undeliverable.
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6. Anti-Money Laundering Services
(a) Where appropriate and information is available, verify
shareholder identity upon opening new accounts.
(b) Monitor, identify and report shareholder transactions and
identify and report suspicious activities that are required
to be so identified and reported, and provide other required
reports to the SEC, the U.S. Treasury Department, the
Internal Revenue Service or each agency's designated agent,
in each case consistent with the Trust's AML Program.
(c) Place holds on transactions in shareholder accounts or freeze
assets in shareholder accounts, as provided in the Trust's
AML Program.
(d) Create documentation to provide a basis for law enforcement
authorities to trace illicit funds.
(e) Maintain all records or other documentation related to
shareholder accounts and transactions therein that are
required to be prepared and maintained pursuant to the
Trust's AML Program, and make the same available for
inspection by (i) the Trust's AML Compliance Officer, (ii)
any auditor of the Trust's AML Program or related procedures,
policies or controls that has been designated by the Trust in
writing, or (iii) regulatory or law enforcement authorities,
and otherwise make said records or other documents available
at the direction of the Trust's AML Compliance Officer.
7. Blue Sky Services
Prepare such reports, applications and documents (including reports
regarding the sale and redemption of shares in the Trust as may be
required in order to comply with Federal and state securities laws) as
may be necessary or desirable to register the shares in the Trust
("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 Trust and the Shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the registration of the
Trust and the Shares with state securities authorities to enable the
Trust to make a continuous offering of its Shares. State securities
("Blue Sky") exemption services are made available at an additional
standard fee which is earned by BISYS based on exemptions obtained by the
Trust, including an annual minimum.
33
TRANSFER AGENCY REPRESENTATION
------------------------------
Following each quarterly period, BISYS will provide a representation to
the following effect pertaining to the AML Services rendered by BISYS hereunder
during such quarterly period:
1. Performance of good order review for all new and reregistered
accounts;
2. Performance of acceptance review for all monetary instruments
received;
3. Administration of signature guarantee policy in accordance with
prospectus requirements;
4. If applicable, administration of escrow hold policy in accordance
with prospectus requirements;
5. Verification of customer address changes;
6. Verification of customer identification for all new accounts and all
name changes on existing accounts;
7. Monitoring of all purchase transactions made with cash equivalents
totaling in excess of $10,000. The number of Form 8300 reports filed
during the period will be reported;
8. Monitoring of all accounts for suspicious activity. The number of
Form SAR reports filed during the period will be reported;
9. Review of shareholder names against lists of suspected terrorist and
terrorist organizations supplied by various governmental
organizations, such as the Office of Foreign Asset Control. The
number of accounts frozen and otherwise reported to authorities
during the period will be reported;
10. Creation of the documentation necessary to provide a basis for law
enforcement authorities to trace illicit funds; and
11. Maintenance all records and other documentation related to
shareholder accounts and transactions required to be prepared and
maintained pursuant to the Trust's AML program for all BISYS transfer
agent services.
12. Performance of the required due diligence on any new correspondent
accounts opened during the period.
The following will be provided in such representation if the Trust falls
under the related USA PATRIOT Act of 2001 provisions:
13. Performance of the required due diligence to help prevent the opening
of any accounts for foreign shell banks during the period either
directly or through correspondent accounts.
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SCHEDULE E
TO THE MASTER SERVICES AGREEMENT BETWEEN
BISYS FUND SERVICES OHIO, INC. AND YIELDQUEST FUNDS TRUST
LEGAL ADMINISTRATIVE SERVICES
-----------------------------
BISYS shall perform the following services to assist the Fund with
corporate governance and corporate and regulatory filings:
1. Manage the preparation for Board meetings by (i) coordinating Board
book preparation, production and delivery of Board books to Trustees
(delivery targeted to be at least 10 days in advance of each Board
Meeting), (ii) subject to review and approval by the Trust and its
counsel, preparing Board agendas, resolutions and minutes (draft
minutes targeted to be provided to counsel for the Trust by no later
than 45 days after the meeting date), (iii) preparing the relevant
reports and other sections of the Board materials required to be
prepared by BISYS, (iv) assisting to gather and coordinate special
materials related to annual contract renewals and approval of Rule
12b-1 Plans and related matters for and as directed by the trustees
or Trust legal counsel, (v) providing a representative to attend in
person each Board meeting (no more frequently than quarterly) to
record the minutes, and (vi) performing such other Board meeting
functions as shall be agreed by the parties in writing;
2. Prepare, subject to review by counsel to the Trust: (i) the annual
update to the Trust's registration statement on Form N-1A, and (ii)
supplements to its Prospectus and Statement of Additional
Information; and file any of the foregoing with the SEC upon the
request of the Trust and counsel to the Trust;
3. Provide assistance and guidance to the Trust with respect to matters
governed by or related to IRS, SEC and NASD regulatory requirements
and developments including: monitoring regulatory and legislative
developments which may affect the Trust;
4. Coordinate the distribution of prospectuses, supplements and proxy
materials; and coordinate the solicitation and tabulation of proxies
(including the annual meeting of Shareholders each year, if one is
held and any special meetings of Shareholders); and attend the
annual meeting of Shareholders (telephonically) and record the
minutes of the meetings;
5. Obtain and maintain fidelity bonds and directors and officers/errors
and omissions insurance policies for the Trust and other named
insured in accordance with Rules 17g-1 and 17d-1 under this 1940 Act
at the expense (except as otherwise provided in this Agreement) of
the Trust and Funds and file the fidelity bonds and any notices with
the as required under the 1940 Act, to the extent such bonds and
policies are approved by the Board;
35
6. Coordinate formulating and filing of the Funds' proxy voting records
(as approved by the investment adviser) on Form N-PX.
7. Prepare and distribute Trustee/Officer Questionnaires, review
completed Questionnaires, and resolve issues concerning the
information with the Trust and its legal counsel.
8. Maintain corporate records on behalf of the Trust, including, but not
limited to, executed Trust agreements, final Board books, final
minutes, the Declaration of Trust of the Trust and By-Laws for the
Trust;
9. Assist with updating Trust compliance policies and procedures.
36
SCHEDULE F
TO THE MASTER SERVICES AGREEMENT BETWEEN
BISYS FUND SERVICES OHIO, INC. AND YIELDQUEST FUNDS TRUST
FEES
----
The Trust shall pay BISYS, on the first business day of each month or as
otherwise set forth below, the administration, fund accounting, transfer agency
legal administrative services and other service fees. Fees for any additional
services to be provided by BISYS pursuant to an amendment to any of Schedules B,
C, D or E shall be subject to mutual agreement at the time such amendment is
proposed.
ADMINISTRATION AND FUND ACCOUNTING SERVICES FEES:
-------------------------------------------------
Annual Asset Based Fee:
-----------------------
2.5 basis points (.025%) of the aggregate daily net assets of the Funds.
This Asset-Based Fee is subject to an annual minimum fee equal to the
number of Funds times $50,000.
Annual Additional Class Fee:
----------------------------
$5,000 per class per Fund in excess of one class per Fund.
TRANSFER AGENCY SERVICES FEE:
-----------------------------
Annual Per CUSIP Fee:
---------------------
$15,000 per CUSIP per year
Annual Per-Account Fees (applied to each shareholder account, open or
-----------------------
closed, on BISYS' transfer agency system):
Per direct account (in excess of 1250 accounts) $20 per investor account
Per NSCC account (in excess of 1250 accounts) $15 per investor account
Per Closed Account $2 per investor account
For these purposes, the following categories constitute an open account on
the BISYS system in any one month: open account with balance, open account with
zero balance, or open account with negative balance and closed account with
activity. Closed
37
accounts with no activity in the month are considered a closed account for
billing purposes.
LEGAL ADMINISTRATIVE SERVICES FEE:
----------------------------------
$25,000 annually
AML FEES
--------
Annual Fees
-----------
Early Warning annual fee: $575.00
Early Warning per record cost: $0.22
Early Warning searches for all accounts except Networked Level III
accounts are conducted and fees applied every three weeks.
Equifax - per request cost: $5.00
FAIR VALUE SUPPORT SERVICES (IF APPLICABLE)
-------------------------------------------
As compensation for Fair Value Support Services (the services set forth in
subsections (b)2 and (b)3 (as they relate to fair value determinations) of
Schedule C to this Agreement), to the extent such services are required, BISYS
shall receive the following annual servicing fee for each Fund that the Trust
designates as being subject to fair value determinations and for which Fair
Value Support Services are to be provided by BISYS hereunder, as follows:
Annual Fee for Fair Value Support Services to be provided by BISYS:
For each Fund with less than 200 securities: $5,000
For each Fund with at least 200 securities: $7,500
(The Annual Fee is to be billed in equal monthly installments)
The foregoing BISYS fee(s) do not include out of pocket costs. To the extent
applicable, BISYS will also be reimbursed by the Trust for the actual costs
charged by Fair Value Information Vendors, which vendors are approved in advance
by the Trust with respect to the provision of fair value pricing information to
BISYS for use in valuing the portfolio holdings of a specific Fund or Funds.
ANNUAL FEE ADJUSTMENT
---------------------
Commencing on the two-year anniversary of the Effective Date, BISYS may annually
increase the fixed fees and other fees expressed as stated dollar amounts in
this
38
Agreement by up to an amount equal to the most recent annual percentage increase
in consumer prices for services as measured by the United States Consumer Price
Index entitled "All Services Less Rent of Shelter" or a similar index should
such index no longer be published.
OUT OF POCKET EXPENSES AND MISCELLANEOUS CHARGES
------------------------------------------------
The out of pocket expenses and miscellaneous services fees and charges provided
for under this Agreement are not included in the above fees and shall also be
payable to BISYS in accordance with the provisions of this Agreement. BISYS will
endeavor to provide the Trust with advance notice before charging the Trust for
any single, non-recurring, non-routine out of pocket expense in excess of
$1,000. The Trust agrees to reimburse BISYS for its actual out-of-pocket
expenses reasonably incurred, as set forth below:
ACTUAL, OUT OF POCKET EXPENSES:
1. All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred in communication with the
Trust or the Trust's investment adviser or custodian, broker-dealers,
shareholders or others as required for BISYS to perform the services
to be provided hereunder;
2. The cost of microfilm or microfiche of records or other electronic
storage of Trust records and other materials;
3. All freight and other delivery and bonding charges incurred in
delivering materials to and from the Trust, its investment advisers
and custodian;
4. All printing, production (including graphics support, copying, and
binding) and distribution expenses incurred in relation to Board
meeting materials, tax forms, statements of average cost, daily
confirmations, periodic statements, new account letters and
maintenance letters;
5. Check and payment processing fees;
6. XXX custody and other related fees;
7. NSCC and related costs;
8. Sales taxes;
9. Costs of shareholder correspondence;
10. Costs of tax data services;
39
11. Costs of rating agency services; and
12. Any expenses incurred at the written direction of an authorized
officer of the Trust; provided however, that such officer is not an
officer or employee of BISYS or its affiliates.
The Trust agrees to pay BISYS the miscellaneous services fees and
charges as set forth below. BISYS agree to give the Trust advance
notice prior to the effectiveness of any increase in miscellaneous
service fees.
MISCELLANEOUS FEES AND CHARGES:
1. Ad hoc reporting fees billed, when mutually agreed upon, according to
applicable rate schedules;
2. Fees for pricing information used in connection with pricing the
securities and other investments of each Fund, provided that the
Fund shall not be charged an amount greater than the amount the Fund
would be charged if it obtained the information directly from the
relevant vendor or vendors, including, to the extent applicable,
costs incurred by BISYS to Fair Value Information Vendors (as
defined in Schedule C) with respect to the provision of fair value
pricing information to BISYS for use in valuing the portfolio
holdings of a specific Fund or Funds that the Trust designates as
being subject to fair value determinations and for which services
are to be provided by BISYS hereunder (such costs shall be incurred
at the discounted group rate made available to BISYS clients, if
applicable);
3. Fees for programming in connection with creating or changing the
forms of statements, billed at a mutually agreed upon rate; and
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;
4. Fees and expenses associated with providing the "AML Services," as
defined in Section 23 of this Agreement, and as set forth in further
detail in this Schedule F;
5. System development fees, billed at a mutually agreed upon rate as
approved by the Trust, and all systems-related expenses, as agreed
upon in advance, associated with the provision of special reports
and services;
6. Fees for development of any custom interfaces, billed at a mutually
agreed upon rate;
40
7. Interactive Voice Response System fees, charged according to BISYS'
standard rate schedule, and applicable to the level of service
(e.g., basic, transaction, premium) selected;
8. In the event that BISYS is requested or authorized by the Trust to
produce documents or personnel with respect to services provided by
BISYS to the Trust or any Fund, the Trust will, so long as BISYS is
not the subject of the investigation or proceeding in which the
information is sought, reimburse BISYS for its out-of-pocket
expenses (including reasonable attorneys fees) incurred in
responding to such requests or requirements; provided however, that
BISYS will cooperate with any routine regulatory examination of the
Trust or its Funds without charge (but not any audit by or with
respect to the Trust's or the Funds' investment adviser); and
21. Blue sky processing and payment fees.
41
