EXHIBIT k.4
SUB-FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of February,
2004, by and among U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited
liability company ("USBFS") and XXXXXXXX MANAGEMENT COMPANY, an Ohio company
("Xxxxxxxx").
WHEREAS, the Company is a closed-end investment company which has
elected to be treated as a business development company under the Investment
Company Act of 1940, as amended (the "1940 Act") and is authorized to issue
shares of common stock;
WHEREAS, Xxxxxxxx, pursuant to the Fund Accounting Servicing Agreement
("Fund Accounting Agreement"), is the Company's fund accountant and wishes to
delegate some of its responsibilities under the Fund Accounting Agreement to
USBFS as sub-fund accountant;
WHEREAS, USBFS is, among other things, in the business of providing
business development company accounting services to business development
companies; and
WHEREAS, Xxxxxxxx and the Company desire to retain USBFS to provide
certain sub-accounting services to the Company.
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 SUB-FUND ACCOUNTANT
Xxxxxxxx hereby retains USBFS as sub-fund accountant of the Company on
the terms and conditions set forth in this Agreement, and USBFS hereby
accepts such position and agrees to perform the services and duties
described in Exhibit B attached hereto, as the same may be amended from
time to time by the mutual consent of the parties hereto, and as set
forth in this Agreement.
2. SERVICES AND DUTIES OF USBFS
USBFS shall provide the following fund accounting services for the
Company, including but not limited to:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 (or
other appropriate basis as directed by the Company)
basis using security trade information communicated
from the Adviser or Xxxxxxxx.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Directors of the
Company (the "Board of Directors" or the "Directors")
and apply those prices to the portfolio positions.
For those securities where market quotations are not
readily available, the Board of Directors shall
approve, in good faith, procedures for determining
the fair value for 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 Company as to
methodology, rate or dollar amount.
(2) Record payments for Company expenses upon receipt of
written authorization from Company.
(3) Account for Company expenditures and maintain expense
accrual balances at the level of accounting detail,
as agreed upon by USBFS and the Company.
(4) Provide expense accrual and payment reporting.
C. Company Valuation and Financial Reporting Services:
(1) Account for Company dividend reinvestments,
repurchases, tenders, issuances, sales, and other
Company share activity as reported by the Company's
transfer agent on a timely basis.
(2) Determine net investment income (earnings) for the
Company 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.
(3) Maintain a general ledger and other accounts, books,
and financial records for the Company in the form as
agreed upon.
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(4) Determine the net asset value of the Company
according to the accounting policies and procedures
set forth in the Company's prospectus or other
operative documents.
(5) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of
Company operations at such time as required by the
nature and characteristics of the Company.
(6) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed
upon from time to time.
(7) 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 the Company to support the tax reporting
required for IRS-defined regulated investment
companies.
(2) Maintain tax lot detail for the Company's investment
portfolio.
(3) Calculate taxable gain/loss on security sales using
the tax lot relief method designated by the Company.
(4) Provide the necessary financial information to
support the taxable components of income and capital
gains distributions to the Company's 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 the
Company's accounting records available to the
Company, Xxxxxxxx, 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 or otherwise agreed periodic basis:
(1) Reconcile cash and investment balances of the Company
with the Company's custodian, and provide the
Company's investment adviser with the beginning cash
balance available for investment purposes.
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(2) Transmit or mail a copy of the portfolio valuation to
the Company's investment adviser.
(3) Review the impact of current period'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 Company and class statistical data as
requested by the Company on an ongoing basis.
(3) Provide a monthly reconciliation between the
Company's cash portfolio as held on USBFS's
accounting records and the Company's internal
records.
3. PRICING OF SECURITIES
For each valuation date, USBFS shall obtain prices from a pricing
source selected by USBFS but approved by the Board of Directors and
apply those prices to the portfolio positions of the Company. For those
securities where market quotations are not readily available, the Board
of Directors shall approve, in good faith, procedures for determining
the fair value for such securities.
If the Adviser or the Company desires to provide a price that varies
from the pricing source, the Adviser or the Company shall promptly
notify and supply USBFS with the valuation of any such security on each
valuation date. All pricing changes made by the Adviser or the Company
will be in writing and must specifically identify the securities to be
changed by CUSIP (if any), 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 Directors 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 Xxxxxxxx and the Company under
this Agreement.
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6. COMPENSATION
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time
based on services to be performed for the Company by Xxxxxxxx as
compared to services provided by USBFS. Xxxxxxxx shall pay all fees and
reimbursable expenses within thirty (30) calendar days following
receipt of the billing notice. Notwithstanding anything to the
contrary, amounts owed by Xxxxxxxx to USBFS shall only be paid out of
the assets and property of Xxxxxxxx and in no event shall the Company
be liable for any amounts due under this Agreement. USBFS expressly
agrees that it will only look to Xxxxxxxx for payment of fees and
reimbursable expenses under this Agreement.
7. 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 suffered
by the Company or Xxxxxxxx in connection with matters to which
this Agreement relates, including losses 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. Notwithstanding any other
provision of this Agreement, Xxxxxxxx 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 it
in performing the services hereunder (i) in accordance with
the foregoing standards, or (ii) in reliance upon any written
or oral instruction provided to USBFS by any duly authorized
officer of Xxxxxxxx or the Company, such duly authorized
officer to be included in a list of authorized officers
furnished to USBFS and as amended from time to time in writing
by resolution of the Board of Directors of the Company.
USBFS shall indemnify and hold Xxxxxxxx and the Company
harmless from and against any and all claims, demands, losses,
expenses, and liabilities of any and every nature (including
reasonable attorneys' fees) that Xxxxxxxx and the Company may
sustain or incur or that may be asserted against the Company
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
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service interruptions for any period that such interruption
continues beyond USBFS's control. USBFS will make every
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 Company 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.
8. 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
Company and Xxxxxxxx all records and other information relative to the
Company and Xxxxxxxx and prior, present, or potential shareholders of
the Company (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 Company or Xxxxxxxx,
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 Company or Xxxxxxxx.
Further, USBFS will adhere to the privacy policies adopted by the
Company 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
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information concerning any of the Company's shareholders to any third
party unless specifically directed by the Company or allowed under one
of the exceptions noted under the Act.
9. TERM OF AGREEMENT; AMENDMENT
This Agreement shall become effective as of the date first written
above and, unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods. This Agreement
may be terminated by either party upon giving sixty (60) 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. The representations of USBFS in
Section 7 shall survive the termination of this Agreement.
10. 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 Company and Xxxxxxxx, 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 Company 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 Company on and in
accordance with its request. USBFS agrees to provide Xxxxxxxx and the
Company any records necessary for the Company to comply with its
obligations under the Xxxxxxxx-Xxxxx Act. Without limiting the
generality of the foregoing, USBFS shall cooperate with Xxxxxxxx and
the Company and assist Xxxxxxxx and the Company as is necessary by
providing information to enable the appropriate officers of the Company
to execute any required certifications, including by providing
appropriate back-up certificates to the officers of the Company in the
form reasonably requested by the Company.
11. 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.
12. 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
Xxxxxxxx by written notice to USBFS, USBFS will promptly, upon such
termination and at the expense of Xxxxxxxx or the Company,
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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 Company, 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.
13. 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.
14. DATA NECESSARY TO PERFORM SERVICES
The Company, Xxxxxxxx or their 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 Company, nothing herein shall be deemed to relieve
USBFS of any of its obligations in such capacity.
15. COMPANY THIRD PARTY BENEFICIARY
USBFS agrees that the Company is a third party beneficiary under this
Agreement.
16. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party.
17. 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, Xxxxxxxxx 00000
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and notice to Xxxxxxxx shall be sent to:
Xxxxxxxx Management Company
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
18. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, whether written or oral.
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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.
XXXXXXXX MANAGEMENT COMPANY U.S. BANCORP FUND SERVICES, LLC
By: ______________________________ By: ___________________________
Xxxxxx X. Xxxxxx Xxx X. Xxxxxxx
Title: Chief Executive Officer Title: President
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EXHIBIT A
SUB-FUND ACCOUNTING ANNUAL FEE SCHEDULE:
$30,000 on the first $100 million
2 basis points on the next $200 million
1 basis point on the balance
Extraordinary services - quoted separately
Plus out-of-pocket expenses, including but not limited to:
Postage, Stationery
Programming /customization
Retention of records
Special reports
Federal and state regulatory filing fees
Expenses from U.S. Bancorp participation in client meetings
Auditing and legal expenses
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EXHIBIT B
