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EXHIBIT 99.23(h)(4)
SUB-ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of December, 1999, by and
between OLD KENT SECURITIES CORPORATION ("Old Kent"), a Michigan corporation,
and BISYS FUND SERVICES OHIO, INC. ("BISYS"), an Ohio corporation.
WHEREAS, Old Kent has entered into an Administration Agreement, dated
December 1, 1999 (the "Administration Agreement"), with The Kent Funds (the
"Company"), a Massachusetts business trust registered with the Securities and
Exchange Commission (the "Commission"), concerning the provision of various
services, including but not limited to administration services, for the
investment portfolios of the Company, all as now or hereafter may be established
from time to time (individually referred to herein as a "Portfolio" and
collectively as the "Portfolios");
WHEREAS, Old Kent desires to retain BISYS to assist it in performing
certain administration services for the Portfolio; and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
hereinafter contained, the Administrator and BISYS hereby agree as follows:
1. Retention of BISYS.
Old Kent hereby appoints BISYS, subject to the supervision,
direction and control of the Company's Board of Trustees, to furnish the
Portfolios with the services that are more particularly set forth in Schedule A
hereto. BISYS agrees to perform the services described herein in accordance with
the service standards set forth in Schedule B hereto. BISYS also agrees to
perform such special services incidental to the performance of the services
enumerated herein as agreed to by the parties from time to time. BISYS shall
perform such additional services as are provided on an amendment to this
Agreement, in consideration of such fees as the parties hereto may agree.
Notwithstanding the foregoing, BISYS agrees to provide reasonable assistance to
Old Kent (including but not limited to consultation, employee training, and the
performance of certain agreed upon tasks) in connection with Old Kent's
performance of its duties and responsibilities under the Administration
Agreement. In performing its duties under this Agreement, BISYS will act in
conformity with the Company's Declaration of Trust, By-Laws, Prospectuses and
Statements of Additional Information as in effect from time to time and will
conform to and comply with the requirements of the Investment Company Act of
1940 (the "1940 Act") and all other applicable federal and state laws and
regulations. BISYS shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent Old Kent or the Company in any
way and shall not be deemed an agent of Old Kent or the Company.
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2. Allocation of Charges and Expenses.
(A) BISYS. BISYS shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. BISYS shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of the Company as well as all Trustees of the Company who are
affiliated persons of BISYS or any affiliated company of BISYS; provided,
however, that unless otherwise specifically provided, BISYS shall not be
obligated to pay the compensation of any employee of the Company retained by the
Trustees of the Company to perform services on behalf of the Company.
(B) Old Kent. Old Kent hereby represents that the Company has
undertaken to pay or cause to be paid all other expenses of the Company not
otherwise allocated herein, including, without limitation, organization costs,
taxes, expenses for legal and auditing services, the expenses of preparing
(including typesetting), printing and mailing reports, prospectuses, statements
of additional information, proxy solicitation material and notices to existing
shareholders, all expenses incurred in connection with issuing and redeeming
shares, the costs of custodial services, the cost of initial and ongoing
registration of the shares under Federal and state securities laws, fees and
out-of-pocket expenses of Trustees who are not affiliated persons of Old Kent or
the Investment Adviser to the Company or any affiliated corporation of Old Kent
or the Investment Adviser, insurance, interest, brokerage costs, litigation and
other extraordinary or nonrecurring expenses, and all fees and charges of
investment advisers to the Company.
3. Compensation of BISYS.
(A) Sub-Administration Fee. Old Kent shall pay BISYS for the
services to be provided by BISYS under this Agreement in accordance with, and in
the manner set forth in, the Omnibus Fee Agreement between Old Kent and BISYS
dated as of December 1, 1999. Old Kent shall also reimburse BISYS for reasonable
travel and lodging expenses incurred by officers and employees of BISYS in
connection with attendance at Board meetings.
(B) Survival of Compensation Rights. All rights of compensation
under this Agreement for services performed as of the termination date shall
survive the termination of this Agreement.
4. Limitation of Liability of BISYS.
The duties of BISYS shall be confined to those expressly set
forth herein, and no implied duties are assumed by or may be asserted against
BISYS hereunder. BISYS shall not be liable for any error of judgment or mistake
of law or for any loss arising out of any act or omission in carrying out its
duties hereunder, except a loss resulting from willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and
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duties hereunder, except as may otherwise be provided under provisions of
applicable law which cannot be waived or modified hereby. (As used in this
Section 4, the term "BISYS" shall include directors, officers, employees and
other agents of BISYS as well as BISYS itself.) Any person, even though also an
officer, director, employee or agent of BISYS, who may be or become an officer,
Trustee, employee or agent of the Company, shall be deemed, when rendering
services to the Company or to any Portfolio, or acting on any business of the
Company or of any Portfolio (other than services or business in connection with
BISYS' duties hereunder) to be rendering such services to or acting solely for
the Company or the Portfolio and not as an officer, director, employee or agent
or one under the control or direction of BISYS even though paid by BISYS.
So long as BISYS acts in good faith and with due diligence and
without negligence, Old Kent assumes full responsibility and shall indemnify
BISYS and hold it harmless from and against any and all actions, suits and
claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of BISYS' actions taken or nonactions with
respect to the performance of services hereunder.
Except for actions, suits or claims brought or threatened
against BISYS by (i) the Company, (ii) Old Kent, or (iii) one or more
shareholders of the Company, the rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any pending or
threatened litigation with respect to which indemnification hereunder may
ultimately be merited. In order that the indemnification provision contained
herein shall apply, however, it is understood that if in any case Old Kent may
be asked to indemnify or hold BISYS harmless, Old Kent shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that BISYS will use all reasonable care to identify
and notify Old Kent promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
Old Kent, but failure to do so in good faith shall not affect the rights
hereunder.
Old Kent shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If Old Kent elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
Old Kent and satisfactory to BISYS, whose approval shall not be unreasonably
withheld. In the event that Old Kent elects to assume the defense of any suit
and retain counsel, BISYS shall bear the fees and expenses of any additional
counsel retained by it. If Old Kent does not elect to assume the defense of a
suit, it will reimburse BISYS for the reasonable fees and expenses of any
counsel retained by BISYS.
BISYS may apply to Old Kent at any time for instructions and
may consult counsel for Old Kent or its own counsel and with accountants and
other experts with respect to any matter arising in connection with BISYS'
duties, and BISYS shall not be liable or accountable for any
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reasonable action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, BISYS shall be protected in acting in good faith upon
any document which it reasonably believes to be genuine and to have been signed
or presented by the proper person or persons. BISYS will not be held to have
notice of any change of authority of any officers, employees or agents of Old
Kent until receipt of written notice thereof from Old Kent.
5. Activities of BISYS.
The services of BISYS rendered 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. To the extent BISYS renders services to another
investment company which are similar to the services BISYS is obligated to
perform under this Agreement, BISYS will take reasonable precautions to avoid
any conflict of interest between its obligations under this Agreement and its
obligations to any such other investment company. It is understood that
Trustees, officers, employees and shareholders of the Company are or may be or
become interested in BISYS, as officers, employees or otherwise and that
directors, officers and employees of BISYS and its counsel are or may be or
become similarly interested in the Company, and that BISYS may be or become
interested in the Company as a shareholder or otherwise.
6. Duration of this Agreement.
This Agreement shall become effective as of the date first
written above or, if a particular Portfolio is not in existence on that date, on
the date such Portfolio commences operation (the "Effective Date"). The Term of
this Agreement shall be as specified in the Omnibus Fee Agreement between Old
Kent and BISYS dated as of December 1, 1999.
7. Assignment.
This Agreement shall not be assignable by either party without
the written consent of the other party; provided, however, that BISYS may, with
the prior consent of Old Kent, at its expense, subcontract with any entity or
person concerning the provision of the services contemplated hereunder. BISYS
shall not, however, be relieved of any of its obligations under this Agreement
by the appointment of such subcontractor and provided further, that BISYS shall
be responsible, to the extent provided in Section 4 hereof, for all acts of such
subcontractor as if such acts were its own. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
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8. Amendments.
No provision of this Agreement may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the
parties hereto.
9. Certain Records.
BISYS shall maintain customary records in connection with its
duties as specified in this Agreement. Any records required to be maintained and
preserved pursuant to Rules 31a-1 and 31a-2 under the 1940 Act which are
prepared or maintained by BISYS on behalf of the Company shall be prepared and
maintained at the expense of BISYS, but shall be the property of the Company and
will be made available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such
records by another party, BISYS shall notify Old Kent and follow Old Kent's
instructions as to permitting or refusing such inspection; provided that BISYS
may exhibit such records to any person in any case where it is advised by its
counsel that it may be held liable for failure to do so, unless (in cases
involving potential exposure only to civil liability) Old Kent or the Company
has agreed to indemnify BISYS against such liability.
10. Definitions of Certain Terms.
The terms "interested person" and "affiliated person," when
used in this Agreement, shall have the respective meanings specified in the 1940
Act and the rules and regulations thereunder, subject to such exemptions as may
be granted by the Commission.
11. Notice.
Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
following address: if to Old Kent, at 000 Xxxxxx Xxxxxx, X.X. Xxxxx Xxxxxx,
Xxxxxxxx 00000, facsimile number (000) 000-0000, ATTENTION: XXXXX XXXX; and if
to BISYS, at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, facsimile number (614)
470-8715, ATTENTION: XXXXXXX X. XXXXX; or at such other address as such party
may from time to time specify in writing to the other party pursuant to this
Section.
12. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of Ohio and the applicable provisions of the 1940 Act. To the
extent that the applicable laws of the State of
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Ohio, or any of the provisions herein, conflict with the applicable provisions
of the 1940 Act, the latter shall control.
13. Multiple Originals.
This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
14. Confidentiality.
BISYS agrees on behalf of itself and its employees to treat
confidentially and as the proprietary information of the Company, all records
and other information relative to the Company and prior, present or potential
shareholders, and not to use such records and information for any purpose other
than performance of its responsibilities and duties hereunder, except, after
prior notification to and approval in writing by Old Kent or the Company, which
approval shall not be unreasonably withheld and may not be withheld where BISYS
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by Old Kent or the Company.
15. Matters Relating to the Company as a Massachusetts Business
Trust.
The names "The Kent Funds" and "Trustees of The Kent Funds"
refer respectively to the business trust created and the Trustees, as trustees
but not individually or personally, acting from time to time under a Declaration
of Trust dated as of May 9, 1986 to which reference is hereby made and a copy of
which is on file at the office of the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of "The Kent Funds" entered
into in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Company
personally, but bind only the assets of the Company, and all persons dealing
with any Portfolio must look solely to the assets of the Company belonging to
such Portfolio for the enforcement of any claims against the Company.
16. Year 2000 Readiness.
BISYS has performed comprehensive date testing on the systems
it utilizes to provide the services hereunder to simulate the actual turning of
the century and leap year. These tests were intended to identify any operational
issues regarding the accurate process of date/time data from, into and between
the Twentieth and Twenty-First Century, including leap year calculations. BISYS
agrees to use all commercially reasonable efforts to implement all necessary
updates and
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changes for such systems, if any, to accommodate the turn of the century and
leap year if not making such updates or changes would have a material or
significant adverse affect on the services to be performed by BISYS hereunder.
BISYS agrees to provide the Company updates on the status of its Year 2000
readiness project and to make its personnel reasonably available to address any
questions or concerns.
If, at any time prior to December 31, 1999, the Company or Old
Kent reasonably determines that any of the systems BISYS utilizes to perform the
services hereunder will not be Year 2000 ready, and that such lack of readiness
will have a material or significant adverse effect on the services to be
performed by BISYS hereunder, Old Kent shall have the right to terminate this
Agreement upon providing written notice to BISYS describing, in reasonable
detail, the basis for its termination; provided, however, that BISYS shall have
sixty (60) days following receipt of any such notice to cure any deficiencies to
Old Kent's reasonable satisfaction. Promptly upon becoming aware of such, BISYS
agrees to use all commercially reasonable efforts to cure any defect or
deficiency that relates to the processing of date/time data from, into and
between the Twentieth and Twenty-First centuries, including leap year
calculations, in any system BISYS utilizes to provide services hereunder if not
curing such defect or deficiency would have a material or significant adverse
effect on the services to be performed by BISYS hereunder.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
OLD KENT SECURITIES CORPORATION
By: /s/ Xxxx X. Xxxxxx
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Title: President
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BISYS FUND SERVICES OHIO, INC.
By: /s/
---------------------------------
Title: President
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SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
OLD KENT SECURITIES CORPORATION
AND
BISYS FUND SERVICES OHIO, INC.
SERVICES
ADMINISTRATION
1. Prepare and file Form N24-F2.
2. Obtain tax identification numbers from the IRS for each Portfolio.
3. Assist the Company's independent accountants with 17f-2-audit process.
4. Assist the Company in obtaining Fund ratings from NRSROs.
5. Obtain Portfolio CUSIPs.
6. Assist the Company in the preparation of appropriate documentation and
records relating to the contribution of seed money capital.
7. Maintain books and records on behalf of the Company, as agreed upon by
the parties.
8. Make available persons to serve as officers of the Company.
9. Provide appropriate personnel to attend Board meetings.
COMPLIANCE
1. Review monthly compliance reports that are prepared by the investment
adviser(s).
2. Perform independent monthly Portfolio compliance testing.
3. Prepare quarterly tax compliance checklist for use by investment
adviser(s).
4. Notify appropriate Company officers of xxxx-to-market issues pursuant
to Board-approved procedures.
5. Provide appropriate assistance with respect to Commission inspections
including (i) rendering advice regarding proposed responses (ii)
compiling data and other information in response to Commission requests
for information and (iii) communicating with Commission staff members,
as necessary.
6. Provide appropriate assistance with respect to audits conducted by the
Company's independent accountants including (i) compiling data and
other information and (ii) communicating with independent accountants,
as necessary.
7. Consult with and advise, on a proactive basis, Company Portfolio
managers with respect to compliance matters.
8. Prepare quarterly brokerage allocation compliance checklist and
supporting documentation for use by investment adviser(s).
9. Provide compliance training for investment advisory personnel, as
requested.
10. Preparation of Company specific compliance manual.
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TAX AND FINANCIAL SERVICES
1. Prepare semi-annual/annual financial statements.
2. Prepare and file Form N-SAR
3. Calculate/distribute all standard performance information
4. Prepare annual Company expense budget and monthly accrual analyses
5. Validate/approve Company expenses to be paid for invoices sent to
BISYS.
6. Register Portfolios with NASDAQ
7. Prepare financial materials for Board books.
8. Calculate declaration of income/capital gain distributions in
compliance with income/excise tax distribution requirements.
9. Review all dividend declarations to ensure that such distributions are
not "preferential" under the Internal Revenue Code.
10. Review and file federal and state income tax returns and federal excise
tax returns within statutory deadlines.
11. Prepare/distribute year-end shareholder tax information letters and
Forms 1099-MISC for trustee fees/vendor payments within 30 days of
calendar year-end.
12. Provide compliance/consulting for Portfolio managers focused on the
impact of changes in tax laws and managing a tax-efficient mutual fund.
13. Provide consulting services for conversions.
14. Provide expense budgeting consulting to review expense ratios/fee
waivers.
15. Produce semi-annual/annual reports.
16. Calculate Portfolio performance information.
LEGAL SERVICES
GENERAL
1. Prepare or review broker-dealer agreements and agreements for
shareholder support services.
2. Provide general information concerning current legal and regulatory
developments.
3. Maintain appropriate insurance coverage on behalf of the Company in the
form of (i) a Directors & Officers/Errors & Omissions professional
liability policy and (ii) a Fidelity Bond. Prepare memoranda and other
correspondence that outlines the terms and conditions of the insurance
policies.
PROXY MATERIALS
1. Review proxy statements that are prepared by counsel to the Company.
BLUE SKY
1. Qualify the Company and its shares with appropriate state blue sky
authorities upon client authorization.
2. Amend and renew sales permits as required from time to time.
3. Monitor the sales of shares in individual states on a daily basis upon
receipt of sales information and, when required, report sales to
appropriate states.
4. Maintain Company blue-sky filing calendars.
5. Address all blue-sky audit and examination issues.
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6. Conduct blue-sky fee analysis, upon request.
7. Produce checks required for state filing fees at a fee of $8.00 per
check.
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XXXXXXXX X
TO THE SUB-ADMINISTRATION AGREEMENT
BETWEEN
OLD KENT SECURITIES CORPORATION
AND
BISYS FUND SERVICES OHIO, INC.
Pursuant to Section 1 of this Agreement, BISYS has agreed to perform
the services described in this Agreement in accordance with the service
standards set forth in this Schedule B. Such standards are contained on the page
attached hereto. The parties agree that such service standards may be revised,
from time to time, by mutual agreement.
Each of the service standards will be monitored by a Quality Assurance
team. In the event BISYS fails to meet a service standard in any particular
month, BISYS agrees to take appropriate corrective measures within the following
thirty-day period in order to be in compliance with the appropriate standard at
the end of such thirty-day period; provided, however, that the foregoing
requirement shall not apply in those instances in which BISYS's failure to meet
a service standard was due to circumstances beyond its control.
In the event BISYS fails to meet a particular service standard (except
for any failure due to circumstances beyond its control) in two consecutive
months, the fee payable to BISYS hereunder shall be reduced by one percent (1%)
or such lower amount as the parties shall agree upon for the second of those two
months. If such failure occurs in three consecutive months, the fee payable to
BISYS hereunder shall be reduced by one and one-half percent (1.5%) or such
lower amount as the parties shall agree upon for the third of those three
months.
In the event BISYS fails to meet a particular service standard (except
for any failure due to circumstances beyond its control) for any three months
within a six-month period, such failure shall be deemed to be a service standard
deficiency for purposes of the "cause" definition set forth in Schedule B to the
Fee Agreement.
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SERVICING STANDARDS
ITEM STANDARD
Portfolio Compliance Reviews Monthly
Financial Reports Printed and mailed within
sixty (60) days following
fiscal year end, or sixty (60)
days following semi-annual
period
Review of accruals Monthly
Prospectus Updates Prepared and printed within
five (5) days of the effective
date of the Registration
Statement
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