FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of October,
2002, by and between Brazos Mutual Funds, a Delaware business trust (the
"Trust"), and U.S. Bancorp Fund Services, LLC, a Wisconsin limited liability
company ("USBFS").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company, and
is authorized to issue shares of beneficial interest in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets;
WHEREAS, the Trust is authorized to issue separate classes of shares for
each such series;
WHEREAS, USBFS is, among other things, in the business of providing mutual
fund accounting services to investment companies; and
WHEREAS, the Trust desires to retain USBFS to provide accounting services
to each series of the Trust listed on Exhibit A hereto (as amended from time to
time) (each a "Fund", collectively the "Funds") and each class of shares of each
Fund listed on Exhibit A hereto (as amended from time to time) (each a "Class").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. APPOINTMENT OF USBFS AS FUND ACCOUNTANT
The Trust hereby appoints USBFS as fund accountant of the Trust on the
terms and conditions set forth in this Agreement, and USBFS hereby accepts
such appointment and agrees to perform the services and duties set forth
in this Agreement.
2. SERVICES AND DUTIES OF USBFS
USBFS shall provide the following fund accounting services for the Funds,
including but not limited to:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the investment
adviser.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Trustees of the Trust (the "Board of
Trustees" or the "Trustees") and apply those prices to the
portfolio positions. For those securities where market
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quotations are not readily available, the Board of Trustees
shall approve, in good faith, procedures for determining the
fair value for such securities, which shall be followed when
valuing such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for
the accounting period.
(4) Determine gain/loss on security sales and identify them as
short-term or long-term; account for periodic distributions of
gains or losses to shareholders and maintain undistributed gain
or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual amounts
as directed by the Trust as to methodology, rate or dollar
amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from the Trust.
(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by
USBFS and the Trust.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges, transfers,
dividend reinvestments, and other Fund share activity as
reported by the Funds' transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Trust.
(3) Determine net investment income (earnings) for each Fund as of
each valuation date. Account for periodic distributions of
earnings to shareholders and maintain undistributed net
investment income balances as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of each Fund according to the
accounting policies and procedures set forth in the Fund's
Prospectus.
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(6) Calculate per share net asset value, per share net earnings, and
other per share amounts reflective of Fund operations at such
time as required by the nature and characteristics of a Fund.
(7) Communicate, at an agreed upon time, the per share price for
each valuation date to parties as agreed upon from time to time.
(8) Prepare monthly reports that document the adequacy of accounting
detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolio of each
Fund to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for each Fund's investment portfolio.
(3) Calculate taxable gain/loss on security sales using the tax lot
relief method designated by the Trust.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to
the Funds' transfer agent to support tax reporting to the
shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making each Fund's accounting records
available to the Trust, the Securities and Exchange Commission
(the "SEC"), and the outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
F. USBFS will perform the following accounting functions on a daily
basis:
(1) Reconcile cash and investment balances of each Fund with each
Fund's custodian, and provide each Fund's investment adviser
with the beginning cash balance available for investment
purposes.
(2) Transmit or mail a copy of the portfolio valuation to each
Fund's investment adviser.
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(3) Review the impact of current day's activity on a per share
basis, and review changes in market value.
G. In addition, USBFS will:
(1) Prepare monthly security transactions listings.
(2) Supply various Trust, Fund and Class statistical data as
requested by the Trust on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, USBFS shall obtain prices from a pricing source
recommended by USBFS and approved by the Board of Trustees and apply those
prices to the portfolio positions of each Fund. For those securities where
market quotations are not readily available, the Board of Trustees shall
approve, in good faith, procedures for determining the fair value for such
securities, which shall be followed when valuing such securities.
If the Trust desires to provide a price that varies from the pricing
source, the Trust shall promptly notify and supply USBFS with the
valuation of any such security on each valuation date. All pricing changes
made by the Trust will be in writing and must specifically identify the
securities to be changed by CUSIP, name of security, new price or rate to
be applied, and, if applicable, the time period for which the new price(s)
is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Trustees that affects accounting
practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by USBFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
USBFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect
the service provided to the Trust under this Agreement.
6. COMPENSATION
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit B
hereto (as amended from time to time). The Trust shall pay all fees and
reimbursable expenses within thirty (30) calendar days following receipt
of the billing notice, except for any fee or expense subject to a good
faith dispute. The Trust shall notify USBFS in writing within thirty (30)
calendar days following receipt of each invoice if the Trust is disputing
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any amounts in good faith. The Trust shall settle such disputed amounts
within ten (10) calendar days of the day on which the parties agree to the
amount to be paid. With the exception of any fee or expense the Trust is
disputing in good faith as set forth above, unpaid invoices shall accrue a
finance charge of one and one-half percent (1 1/2%) per month, after the
due date. Notwithstanding anything to the contrary, amounts owed by the
Trust to USBFS shall only be paid out of the assets and property of the
particular Fund involved.
7. DISCLAIMER OF LIABILITY
This Agreement is executed on behalf of the Trust by its officers in their
capacities as officers and not individually. The obligations of the Trust
under this Agreement are not binding upon the Trust's trustees, officers,
or shareholders individually, but are binding only upon the assets and
property of the Trust to which the services performed pursuant to this
Agreement relate. USBFS agrees that if obligations or liability relates to
one or more Funds, the obligations or liability hereunder shall be limited
to the respective assets of such Funds.
8. INDEMNIFICATION; LIMITATION OF LIABILITY
A. USBFS shall exercise reasonable care in the performance of its duties
under this Agreement. USBFS shall not be liable for any error of
judgment or mistake of law or for any loss resulting from mechanical
breakdowns or the failure of communication or power supplies beyond
USBFS's control, except a loss arising out of or relating to USBFS's
refusal or failure to comply with the terms of this Agreement or from
bad faith, negligence, or willful misconduct on its part in the
performance of its duties under this Agreement. The Trust shall
indemnify and hold harmless USBFS from and against any and all
claims, demands, losses, expenses, and liabilities of any and every
nature (including reasonable attorneys' fees) that USBFS may sustain
or incur or that may be asserted against USBFS by any person arising
out of any action taken or omitted to be taken by the Trust as a
result of the Trust's refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence or from willful
misconduct on its part in performance of its duties under this
Agreement.
USBFS shall indemnify and hold the Trust harmless from and against
any and all claims, demands, losses, expenses, and liabilities of any
and every nature (including reasonable attorneys' fees) that the
Trust may sustain or incur or that may be asserted against the Trust
by any person arising out of any action taken or omitted to be taken
by USBFS as a result of USBFS's refusal or failure to comply with the
terms of this Agreement, its bad faith, negligence, or willful
misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, USBFS shall take all reasonable
steps to minimize service interruptions for any period that such
interruption continues beyond USBFS's control. USBFS will make every
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reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of USBFS. USBFS
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision for emergency
use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Trust shall be
entitled to inspect USBFS's premises and operating capabilities at
any time during regular business hours of USBFS, upon reasonable
notice to USBFS.
Notwithstanding the above, USBFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee harmless,
the indemnitor shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further
understood that the indemnitee will use all reasonable care to notify
the indemnitor promptly concerning any situation that presents or
appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim that may be the subject of this
indemnification. In the event that the indemnitor so elects, it will
so notify the indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. Indemnitee shall in no
case confess any claim or make any compromise in any case in which
the indemnitor will be asked to indemnify the indemnitee except with
the indemnitor's prior written consent.
9. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and prior,
present, or potential shareholders of the Trust (and clients of said
shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld
where USBFS 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 the Trust.
Further, USBFS will adhere to the privacy policies adopted by the Trust
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from
time to time (the "Act"). Notwithstanding the foregoing, USBFS will not
share any nonpublic personal information concerning any of the Trust's
shareholders to any third party unless specifically directed by the Trust
or allowed under one of the exceptions noted under the Act.
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10. TERM OF AGREEMENT; AMENDMENT
This Agreement shall become effective as of the date first written above
and will continue in effect for a period of three years. Subsequent to the
initial three-year term, this Agreement may be terminated by either party
upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However,
this Agreement may be amended by mutual written consent of the parties.
11. RECORDS
USBFS shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Trust, but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. USBFS
agrees that all such records prepared or maintained by USBFS relating to
the services to be performed by USBFS hereunder are the property of the
Trust and will be preserved, maintained, and made available in accordance
with such applicable sections and rules of the 1940 Act and will be
promptly surrendered to the Trust on and in accordance with its request.
12. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin, without regard to conflicts of law principles. To the extent
that the applicable laws of the State of Wisconsin, or any of the
provisions herein, conflict with the applicable provisions of the 1940
Act, the latter shall control, and nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or order of the SEC
thereunder.
13. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any of
USBFS's duties or responsibilities hereunder is designated by the Trust by
written notice to USBFS, USBFS will promptly, upon such termination and at
the expense of the Trust, transfer to such successor all relevant books,
records, correspondence and other data established or maintained by USBFS
under this Agreement in a form reasonably acceptable to the Trust (if such
form differs from the form in which USBFS has maintained the same, the
Trust shall pay any expenses associated with transferring the same to such
form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from USBFS's
personnel in the establishment of books, records and other data by such
successor.
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14. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower USBFS to
act as agent for the other party to this Agreement, or to conduct business
in the name, or for the account, of the other party to this Agreement.
15. DATA NECESSARY TO PERFORM SERVICES
The Trust or its agent shall furnish to USBFS the data necessary to
perform the services described herein at such times and in such form as
mutually agreed upon. If USBFS is also acting in another capacity for the
Trust, nothing herein shall be deemed to relieve USBFS of any of its
obligations in such capacity.
16. NOTIFICATION OF ERROR
The Trust will notify USBFS of any balancing or control error caused by
USBFS and the Trust, including, but not limited to, failing to account for
a security position in a Fund's portfolio, by the later of: within three
(3) business days after receipt of any reports rendered by USBFS to the
Trust; within three (3) business days after discovery of any error or
omission not covered in the balancing or control procedure, or within
three (3) business days of receiving notice from any shareholder.
17. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party.
18. SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants, and restrictions of
this Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
19. SURVIVAL
Sections 6, 7, 8, 9, 11, 13 and 18 shall survive termination of this
Agreement.
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20. NOTICES
Any notice required or permitted to be given by either party to the other
shall be in writing and shall be deemed to have been given on the date
delivered personally or by courier service, or three (3) days after sent
by registered or certified mail, postage prepaid, return receipt
requested, or on the date sent and confirmed received by facsimile
transmission to the other party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Trust shall be sent to:
Brazos Mutual Funds
Xx. Xxx Xxxxxxxxxxxx
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the date
first above written.
BRAZOS MUTUAL FUNDS U.S. BANCORP FUND SERVICES, LLC
By: /s/ Xxx X. Xxxxxxxxxxxx By: /s/ Xxx Xxxxxxx
------------------------------- -------------------------------
Title: President Title: President
----------------------------- ----------------------------
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EXHIBIT A
TO THE
FUND ACCOUNTING SERVICING AGREEMENT
FUND NAMES AND CLASSES
SEPARATE SERIES OF BRAZOS MUTUAL FUNDS
Name of Series Classes Date Added
-------------- ------- ----------
Brazos Micro Cap Portfolio (Classes A,B,II,Y) 10/1/02
Brazos Small Cap Portfolio (Classes A,B,II,Y) 10/1/02
Brazos Mid Cap Portfolio (Classes A,B,II,Y) 10/1/02
Brazos Real Estate Securities
Portfolio (Classes A,B,II,Y) 10/1/02
Brazos Multi Cap Portfolio (Classes A,B,II,Y) 10/1/02
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EXHIBIT B
TO THE
FUND ACCOUNTING SERVICING AGREEMENT
FEE SCHEDULE
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DOMESTIC EQUITY FUNDS MULTIPLE CLASSES
--------------------- ----------------
$30,000 for the first $100 million Each class is an additional 25% of the charge of
1.25 basis point on the next $200 million the initial class. FOUR CLASSES WILL BE CHARGED AT
..75 basis point on the balance THE RATE OF THREE CLASSES PER FUND.
DOMESTIC BALANCED FUNDS MASTER/FEEDER FUNDS
----------------------- -------------------
$33,000 for the first $100 million Each master and feeder is charged according to the
1.5 basis points on the next $200 million schedule.
1 basis point on the balance
MULTIPLE MANAGER FUNDS
DOMESTIC FIXED INCOME FUNDS ----------------------
--------------------------- Additional base fee:
FUNDS OF FUNDS $12,000 per manager/sub-advisor per fund
--------------
SHORT OR DERIVATIVE FUNDS
-------------------------
INTERNATIONAL EQUITY FUNDS Extraordinary services - quoted separately
-------------------------- ----------------------
TAX-EXEMPT MONEY MARKET FUNDS
-----------------------------
$39,000 for the first $100 million Conversion Estimate - one month's fee (if necessary)
2 basis points on the next $200 million -------------------
1 basis point on the balance NOTE - All schedules subject to change depending
upon the use of derivatives - options, futures,
TAXABLE MONEY MARKET FUNDS short sales, etc.
--------------------------
$39,000 for the first $100 million All fees are billed monthly plus out-of-pocket
1 basis point on the next $200 million expenses, including pricing service:
1/2 basis point on the balance
$.15 Domestic and Canadian Equities
INTERNATIONAL INCOME FUNDS $.15 Options
-------------------------- $.50 Corp/Gov/Agency Bonds
$42,000 for the first $100 million $.80 CMO's
3 basis points on the next $200 million $.50 International Equities and Bonds
1.5 basis points on the balance $.80 Municipal Bonds
$.80 Money Market Instruments
$125 Per fund per month - Mutual Funds
$2.00 Per corporate action
Factor Services (BondBuyer)
Per CMO - $1.50/month
Per Mortgage Backed - $0.25/month
Minimum - $300/month
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