1
Exhibit 8(b)
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of the 21st day of October, 1997, by and
between UMB BANK, N.A., a national banking association with its principal
place of business located at Kansas City, Missouri ("UMB") and each of the
Funds which have executed the signature page hereof together with such
additional Funds which shall be made parties to this Agreement by the
execution of a separate signature page hereto (individually, a "Fund" and
collectively, the "Funds").
W I T N E S S E T H :
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, each Fund wishes to retain UMB to provide certain accounting
services, and UMB is willing to furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Funds hereby appoint UMB to provide certain
-----------
accounting services to the Funds for the period and on the terms set forth in
this Agreement. UMB accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Paragraph 13 of this Agreement.
2. Delivery of Documents. Each Fund has furnished UMB with copies,
---------------------
properly certified or authenticated, with all amendments or supplements
thereto, of the following documents:
(a) Certificate of Incorporation (or equivalent document) of
the Fund as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund
appointing UMB and approving the form of this Agreement; and
(d) The Fund's current prospectus and statement of additional
information. In addition, each Fund shall promptly furnish UMB with copies of
any updates, amendments or supplements to the foregoing documents.
3. Authorized Persons. Concurrently with the execution of this
------------------
Agreement, each Fund shall deliver to UMB copies of a Resolution of its Board
of Directors and all amendments or supplements thereto, properly certified or
authenticated, designating certain officers or employees of each such Fund
who will have continuing authority to certify to UMB the names, titles,
signatures and scope of authority of all persons authorized to give Proper
Instructions or any other notice, instruction, certificate, instrument or
other communication on behalf of each such Fund (collectively, the
"Authorized Persons" and individually, an "Authorized Person"). Such
Resolutions and certificates may be accepted and relied upon by UMB as
conclusive evidence of the facts set forth therein and shall be considered to
be in full force and effect until delivery to UMB of a similar Resolution or
certificate to the contrary. Upon delivery of a certificate which deletes or
does not include the name(s) of a person previously authorized to give Proper
Instructions, such person(s) shall no longer be considered an Authorized
Person authorized to give Proper Instructions. Unless the certificate
specifically requires that the approval of another Authorized Person must
first have been obtained, UMB will be under no obligation to inquire into the
right of the person giving such Proper Instructions to do so.
2
4. Proper Instructions.
-------------------
(a) Unless otherwise provided in this Agreement, UMB shall act
only upon Proper Instructions. Proper Instructions shall mean: (i) a tested
telex, a written (including, without limitation, facsimile transmission)
request, direction, instruction or certification signed or initialed by or on
behalf of a Fund by two or more Authorized Persons; (ii) a telephonic or
other oral communication from a person UMB reasonably believes to be an
Authorized Person; or (iii) a communication effected directly between an
electro-mechanical or electronic device or system (including, without
limitation, computers) on behalf of a Fund. Instructions given by facsimile
transmission will be considered Proper Instructions if UMB reasonably
believes them to have been given by Authorized Persons. Instructions in the
form of oral communications shall be confirmed by the Fund by tested telex or
in writing in the manner set forth in clause (i) above, but the lack of such
confirmation shall in no way affect any action taken by UMB in reliance upon
such oral instructions prior to UMB's receipt of such confirmation. Each Fund
authorizes UMB to tape record any and all telephonic or other oral
instructions given to UMB by or on behalf of a Fund (including any of its
respective officers, directors, employees or agents or any investment manager
or subadviser of a Fund or person or entity with similar responsibilities
which is authorized to give Proper Instructions on behalf of a Fund to UMB).
Proper Instructions may be in the form of standing instructions.
(b) Although UMB may know of the provisions of the Certificates
of Incorporation (or equivalent document) and By-Laws of the Funds, UMB may
assume that any Proper Instructions received hereunder are not in any way
inconsistent with any provisions of such Certificates of Incorporation (or
equivalent document) or By-Laws or any vote, resolution or proceeding of the
Funds' shareholders, or of the Boards of Directors or of any committees
thereof. UMB shall be entitled to rely upon any Proper Instructions actually
received by it pursuant to this Agreement.
5. Services on a Continuing Basis.
-------------------------------
(a) With respect to each Fund, UMB will perform the following
accounting functions on a daily basis:
(1) Journalize the Fund's investment, capital share and
income and expense activities;
(2) Verify investment buy/sell trade tickets received
from the Fund's investment subadviser or from the Fund, as the case might be,
and transmit trades to the Fund's custodian for proper settlement;
(3) Maintain individual ledgers for investment
securities;
(4) Maintain historical tax lots for each security;
(5) Reconcile cash and investment balances of the Fund
with the Fund's custodian, and provide the Fund's investment subadviser with
the beginning cash balance available for investment purposes;
(6) Update the cash availability throughout the day as
required by the Fund's investment subadviser;
(7) Post to and prepare the Fund's Statement of Assets
and Liabilities and the Statement of Operations;
3
(8) Calculate various contractual expenses (e.g.,
advisory, subadvisory, administrative, transfer agency and custody fees);
(9) Calculate capital gains and losses;
(10) Determine the Fund's net income;
(11) Obtain security market quotes from services approved
by the Fund's investment subadviser, or if such quotes are unavailable, then
obtain such prices from the Fund's investment subadviser, and in either case
calculate the market value of the Fund's investments;
(12) Value the assets of the Fund, including the valuation
of the Fund's commitments to acquire mortgage-backed securities secured by
Qualified Mortgage Loans (as defined in the Fund's current registration
statement) and originated through the ProLoan program according to the formula
set forth on Appendix C attached hereto, and compute the net asset value per
share of the Fund at such times and dates and in the manner specified in the
Fund's then currently effective prospectus and statement of additional
information. The Fund's Manager, Capital Mortgage Management, Inc., will
provide UMB with the price at which the Fund committed to acquire the
outstanding mortgage-backed securities, the dollar amount of the outstanding
commitments and the weighted average coupon rate of those commitments by no
later than 3:00 p.m. Eastern standard each business day.
(13) Monitor the expense accruals and notify Fund
management of any proposed adjustments; and
(14) Receive and act on notices, instructions,
certificates, instruments or other communication from a Fund's shareholder
servicing agent and/or transfer agents.
(b) In addition to the accounting services described in the
foregoing Paragraph 5(a), UMB will:
(1) Prepare monthly financial statements, which will
include the following items:
Statement of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses; and
(2) At the reasonable request of the Fund, assist in the
preparation of various reports or other financial documents required by
federal, state and other appropriate laws and regulations.
6. Records. With respect to each Fund, UMB shall keep all books and
-------
records with respect to the Fund's books of account as requested to be
maintained under this Agreement. The books and records pertaining to the
Funds which are in the possession of UMB shall be the property of the Funds.
The Funds, or the Funds' authorized representatives, shall have access to
such books and records at all times during UMB's normal business hours. Upon
the reasonable request of a Fund, copies of any such books and records shall
be provided by UMB to the Fund or the Fund's authorized representative at the
Fund's expense.
4
7. Liaison with Accountants. UMB shall act as liaison with the
------------------------
Funds' independent public accountants and shall provide account analyses,
fiscal year summaries, and other audit related schedules.
8. Confidentiality. UMB agrees on behalf of itself and its employees
---------------
to treat confidentially and as proprietary information of the Funds all
records and other information relative to the Funds and their prior, present
or potential shareholders, and not to use such records and information for
any purpose other then performance of its responsibilities and duties
hereunder, except, (1) after notification to and approval by a Fund, which
approval shall not be unreasonably withheld and may not be withheld where UMB
may be exposed to civil or criminal contempt proceedings for failure to comply
when requested to divulge such information by duly constituted authorities; (2)
when so requested by a Fund; or (3) where otherwise permitted by law.
9. Equipment Failures. In the event of equipment failures, UMB
------------------
shall, at no additional expense to the Funds, take reasonable steps to
minimize service interruptions.
10. Right to Receive Advice.
-----------------------
(a) Advice of Funds. If UMB shall be in doubt as to any action
---------------
to be taken or omitted by it, it may request, and shall promptly receive,
from the relevant Fund or Funds directions or advice, including Proper
Instructions where appropriate.
(b) Advice of Counsel. If UMB shall be in doubt as to any
-----------------
question of law involved in any action to be taken or omitted by UMB, it may
request advice from counsel of its own choosing but subject to approval by
the Funds (such approval shall not unreasonably be withheld).
(c) Conflicting Advice. In case of conflict between directions,
-------------------
advice or Proper Instructions received by UMB pursuant to subsection (a) of
this paragraph and advice received by UMB pursuant to subsection (b) of this
paragraph, UMB shall be entitled to rely on and follow the advice received
pursuant to the latter provision alone.
(d) Protection of UMB. UMB shall be protected in any action or
-----------------
inaction which it takes in reliance on any directions, advice or Proper
Instructions received pursuant to subsections (a) or (b) of this paragraph
which UMB, after receipt of any such directions, advice or Proper
Instructions, believes to be consistent with such directions, advice or
Proper Instructions, as the case may be. However, nothing in this paragraph
shall be construed as imposing upon UMB any obligation (i) to seek such
directions, advice or Proper Instructions, or (ii) to act in accordance with
such directions, advice or Proper Instructions when received, unless, under
the terms of another provision of this Agreement, the same is a condition to
UMB's properly taking or omitting to take such action. Nothing in this
subsection shall excuse UMB when an action or omission on the part of UMB
constitutes willful misfeasance, bad faith, negligence or reckless disregard
by UMB of its duties under this Agreement.
11. Compliance with Governmental Rules and Regulations. Each Fund
--------------------------------------------------
assumes full responsibility for ensuring that the Fund complies with its
investment objectives, policies and limitations. Each Fund further assumes
full responsibility for ensuring that the Fund complies with all applicable
requirements of the Securities Act of 1933 ("1933 Act"), the Securities
Exchange Act of 1934 ("1934 Act"), the 1940 Act, the Commodities Exchange
Act, Subchapter M of the Internal Revenue Code of 1986, as amended, and all
regulations thereunder, and any laws, rules and regulations of governmental
authorities having jurisdiction.
5
12. Notices. Instructions, Certificates, Instruments or other
---------------------------------------------------------
Communications. With respect to any notices, instructions, certificates,
instruments or other communications from a Fund's custodian, UMB shall be
authorized to rely and act upon its own internal sources of communication for
so long as UMB is also serving as custodian for such Fund. With respect to
any notices, instructions, certificates, instruments or other communications
from a Fund, any investment manager, subadviser, shareholder servicing agent
or transfer agent for a Fund, any custodian other than UMB, or any other
source, UMB shall be entitled to rely and act upon any such notices,
instructions, certificates, instruments or other communications it reasonably
believes to be genuine.
13. Fees and Expenses.
-----------------
(a) As compensation for the services rendered by UMB during the
term of this Agreement, each of the Funds will pay to UMB a fee, as specified
in the Fee Schedule, attached hereto as Appendix A to this Agreement, as may
be revised from time to time in writing by the Funds and UMB.
(b) In addition to the fees paid pursuant to the Fee Schedule,
the Funds agree to reimburse UMB for its cash disbursements, expenses or
charges in connection with the Agreement as previously authorized by the
Fund(s) (excluding salaries and usual overhead expenses).
(c) UMB will, on a timely basis, xxxx each Fund separately with
respect to fees and all amounts for which UMB is to be reimbursed. Each Fund
will promptly pay to UMB the amount of such billing.
(d) UMB in its sole discretion may from time to time employ or
associate with itself such person or persons as UMB may believe to be
particularly suited to assist it in performing services under this Agreement.
The compensation of such person or persons shall be paid by UMB and no
obligation shall be incurred on behalf of any Fund.
14. Responsibility of UMB. UMB shall be under no duty to take any
---------------------
action on behalf of the Funds except as specifically set forth herein or as
may be specifically agreed to by UMB in writing. UMB shall not be liable for
any error in judgment or mistake at law for any loss suffered by the Funds in
connection with any matters to which this Agreement relates, but nothing
herein contained shall be construed to protect UMB against any liability by
reason of willful misfeasance, bad faith or negligence in the performance of
its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement. Without limiting the generality of the foregoing
or of any other provision of this Agreement, UMB, in connection with its
duties under this Agreement, shall not be under any duty or obligation to
inquire into and shall not be liable for or in respect of (a) the validity or
invalidity or authority or lack thereof of any Proper Instruction, notice,
certificate, instrument or other communication from either a Fund or other
source which conforms to the applicable requirements of this Agreement, and
which UMB reasonably believes to be genuine; (b) prices obtained in the
manner set forth in paragraphs 5(a)(11); or (c) delays or errors or loss of
data occurring by reason of circumstances beyond UMB's control, including,
without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, earthquakes, mechanical breakdowns
(except as provided in paragraph 9), flood or catastrophe, act of God,
insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
15. Responsibility of UMB in Computing Net Asset Value. In computing
--------------------------------------------------
the net asset value per share of the Fund, UMB may rely upon any information
furnished to it including, without limitation, information as to (a) accrual
of liabilities of the Fund and
6
liabilities of the Fund not appearing on the books of account kept by UMB, (b)
the existence, status and proper treatment of reserves, if any, authorized by
the Fund, (c) the sources of quotations to be used in computing the net asset
value, (d) the fair value to be assigned to any securities or other property for
which price quotations are not readily available, and (e) the sources of
information with respect to "corporate actions" affecting portfolio securities
of the Fund. (Information as to "corporate actions" shall include information as
to dividends, distributions, interest payments, prepayments, stock splits, stock
dividends, rights offerings, conversions, exchanges, recapitalizations, mergers,
redemptions, calls, maturity dates and similar actions, including the
tax-dividend and record dates and the amounts or other terms thereof.)
Notwithstanding any other provisions of this Agreement, including
Section 14, the following provisions shall apply with respect to UMB's
computation of the Fund's net asset value: UMB shall be held to the exercise
of reasonable care in computing and determining net asset value as provided
in paragraph 5(a)(12), but shall not be held accountable or liable for any
losses, damages or expenses the Fund or any shareholder or former shareholder
of the Fund may suffer or incur arising from or based upon errors or delays
in the determination of such net asset value unless such error or delay was
due to UMB's negligence or willful misfeasance in the computation and
determine of such net asset value. (The parties hereto acknowledge, however,
that UMB's causing an error or delay in determination of net asset value may,
but does not in and of itself, constitute negligence or willful misfeasance.)
Without limiting the foregoing, UMB shall not be held accountable or
liable to the Fund, any shareholder or former shareholder thereof or any
other person for any delays or losses, damages or expenses any of them may
suffer or incur resulting from (1) UMB's failure to receive timely and
suitable notification concerning quotations, corporate actions or similar
matters relating to or affecting portfolio securities of the Fund or (2) any
errors in the computation of the net asset value based upon or arising out of
quotations or information as to corporate actions if received by UMB from a
source which UMB was authorized to rely upon. Nevertheless, UMB will use its
best judgment in determining whether to verify through other sources any
information it has received as to quotations or corporate actions if UMB has
reason to believe that any such information is incorrect.
16. Indemnification. The Funds agree to indemnify and hold harmless
---------------
UMB and its nominees from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, liabilities arising under the
1933 Act, the 1934 Act, the 1940 Act, the CEA, Subchapter M of the Internal
Revenue Code and any regulations thereunder, and any state securities and
blue sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or thing which UMB takes or does or
omits to take or do in reliance upon any Proper Instruction, notice,
certificate, instrument or other communication from a Fund, or from a Fund's
custodian, investment manager, subadviser, shareholder servicing agent or
transfer agent, which conforms to the applicable requirements of this
Agreement provided that neither UMB nor any of its nominees shall be
indemnified against any liability to the Funds or to their shareholders (or
any expenses incident to such liability) arising out of UMB's own willful
misfeasance, bad faith, negligence or reckless disregard of its duties and
obligations specifically described in the Agreement.
17. Liability for Past Records. UMB shall not have any liability in
--------------------------
respect of any loss, damage or expense suffered by any Fund, insofar as such
loss, damage or expense arises from the performance of UMB in reliance upon
records that were maintained for any Fund by entities other than UMB.
7
18. Duration and Termination. This Agreement shall continue until
------------------------
termination by either UMB or a Fund or Funds on sixty days' written notice.
19. Notices. Written notices (including but not limited to written
-------
Proper Instructions) shall be addressed: (a) if hand-delivered to UMB, to the
Securities Administration Department of UMB at its office at 000 Xxxxx
Xxxxxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000; (b) if to a Fund, at the address of
the Fund as listed on Appendix B; or (c) at such other address as shall have
been notified to the other party in writing. Notices may be sent by first
class mail, in which case it shall be deemed to have been given two days after
it is sent, or if sent by messenger, it shall be deemed to have been given on
the day it is delivered, or if sent by certified or registered mail, it shall
be deemed to have been given on the day it is received. All postage, cable,
telex or facsimile sending device charges arising from the sending of a notice
hereunder shall be paid by the sender.
20. Further Actions. Each party agrees to perform such further acts
---------------
and execute such further documents as are necessary to effectuate the
purposes hereof.
21. Amendments; Waiver. This Agreement or any part hereof may be
------------------
amended, modified or waived only by an instrument in writing signed by both
parties hereto.
22. Additional Funds. An additional Fund or Funds may become a party
----------------
to this Agreement after the date hereof by an instrument in writing to such
effect signed by such Fund or Funds and UMB. If this Agreement is terminated
as to one or more of the Funds (but less than all of the Funds) or if an
additional Fund or Funds shall become a party to this Agreement, there shall
be delivered to each party an Appendix B or an amended Appendix B signed by
each of the additional Funds (if any) and each of the remaining Funds as well
as the Custodian, deleting or adding such Fund or Funds, as the case may be.
The termination of this Agreement as to less than all of the Funds shall not
affect the obligations of UMB and the remaining Funds hereunder as set forth
on the signature page hereto and in Appendix B as revised from time to time.
23. Assignment. Neither this Agreement nor any rights or obligations
----------
hereunder may be assigned by either party without the written consent of the
other party.
24. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered
by each of the parties.
25. Miscellaneous. This Agreement embodies the entire agreement and
-------------
understanding between the parties thereto, and supersedes all prior
agreements and understandings, relating to the subject matter hereof,
provided that the parties hereto may embody in one or more separate documents
their agreement, if any, with respect to Proper Instructions. The captions in
this Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be deemed to be a contract made
in Missouri and governed by Missouri law. If any provision of this Agreement
shall be held or made invalid by a court decision, statute, rule, regulation
or otherwise, the remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding and shall inure to the benefit of the parties
hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
8
ATTEST: UMB BANK, N.A.
/s/ Xxxxx X. Xxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxx
---------------------------------- ---------------------------
Treasurer Xxxxx X. Xxxxxxx
Title: Senior Vice President
BUILDERS PROLOAN FUND, INC.
ATTEST:
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Xxxx X. Xxxxxxx
Title: Director, President
and Secretary
9
APPENDIX A
FUND ACCOUNTING AGREEMENT
FEE SCHEDULE
Asset-based Fees - US Domestic Portfolios
To be computed as of month-end on the average monthly net asset value
of each portfolio at the annual rate of:
3.0 basis points on the first $100,000,000 of average net assets;
plus
2.0 basis points on the next $250,000,000 of average net assets;
plus
1.0 basis point on the next $650,000,000 of average net assets;
plus
0.5 basis point on average net assets in excess of
$1,000,000,000;
subject to an annual minimum of $24,000.
Out-of-Pocket Expenses
Includes, but is not limited to, security pricing charges,
telecommunication line and equipment charges, portfolio recalculations, and
special programming requests.
Fees for services not contemplated by this schedule shall be negotiated
on a case-by-case basis.
00
XXXXXXXX X
FUND ACCOUNTING AGREEMENT
The following open-end management investment companies ("Funds") are
hereby made parties to the Fund Accounting Agreement dated -----------------,
1997, with UMB Bank, N.A. ("UMB"), and agree to be bound by all the terms and
conditions contained in said Agreement:
ATTEST: Builders Proloan Fund, Inc.
(Name of Fund)
By:
Xxxx X. Xxxxxxx
Title: President
Address: 000 X. Xxxxxxx Xxx., Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000
ATTEST: UMB BANK, N.A.
By:
Title:
11
APPENDIX C
VALUATION METHOD
FOR
PROLOAN QUALIFIED MORTGAGE LOAN COMMITMENTS
Commitments to acquire mortgage-backed securities secured by ProLoan
Qualified Mortgage Loans ("QMLs") entered into by the Builders ProLoan Fund,
Inc. ("Fund") shall be valued at an amount equal to the principal amount of
the underlying QMLs multiplied by any positive difference between the price
at which the Fund committed to acquire the mortgage-backed securities and the
six-month forward to-be-announced ("TBA") price of Xxxxxx Xxx mortgage-backed
securities with a one-half percent (1/2%) coupon rate increment nearest to, but
not greater than, the weighted average yield for all such QMLs, minus 0.625%
(the approximate amount that would be spent by the Fund for servicing,
guarantee fees and securitization costs had such QMLs been securitized).
The Custodian will value the Fund's commitments to acquire ProLoan
mortgage-backed securities at the above price, as long as this price is
considered by the Fund's Manager, Capital Mortgage Management, Inc., to be no
more than the fair market value of the commitments. The Manager will notify the
Custodian promptly if it considers the above price to represent more than the
fair market value of the commitments.
