PROSPECT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 25th day of November,
2002, by and among Brazos Mutual Funds, a Delaware business trust (the "Trust"),
Xxxx XxXxxx Investment Counsel, L.P., a Texas limited partnership (the
"Adviser"), 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 Adviser is duly registered under the Investment Advisers Act
of 1940, as amended, and any applicable state securities laws, as an investment
adviser;
WHEREAS, the Adviser serves as investment adviser to each series of the
Trust;
WHEREAS, USBFS is, among other things, in the business of providing
fulfillment services to mutual funds; and
WHEREAS, the Trust and the Adviser desire to retain USBFS to provide
fulfillment services for each series of the Trust listed on Exhibit A hereto (as
amended from time to time) (each a "Fund", collectively the "Funds").
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 TO PROVIDE FULFILLMENT SERVICES
The Trust and the Adviser hereby appoint USBFS to provide fulfillment
services to 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. DUTIES AND RESPONSIBILITIES OF USBFS
USBFS shall provide the following fulfillment services for the Funds,
including but not limited to:
A. Answer all prospective shareholder calls concerning each Fund.
B. Send all available Fund fulfillment literature requested by a
prospect within 24 hours from time of call.
C. Ensure that all Fund fulfillment literature sent contains the most
current information.
D. Provide 24 hour answering service to record prospect calls made after
hours (7 p.m. to 8 a.m. Central Time).
E. Maintain and store Fund fulfillment inventory.
F. Send periodic fulfillment reports to the Trust as agreed upon between
the parties.
G. Maintain and preserve required books and records related to
fulfillment services for the Trust under applicable federal and state
securities laws and regulations of regulatory agencies.
For purposes of this Agreement, "fulfillment literature" includes the
prospectus and statement of additional information of a Fund (and any
supplements), any annual and semi-annual shareholder report of a Fund (and any
supplements), privacy notices and any advertisement or sales literature of a
Fund approved by the Trust or the Adviser.
In providing these services, USBFS represents and warrants that it will
comply with all applicable laws and regulations.
3. DUTIES AND RESPONSIBILITIES OF THE TRUST
The Trust shall:
A. Provide Fund fulfillment literature updates to USBFS as necessary.
B. File with the National Association of Securities Dealers, Inc., the
Securities and Exchange Commission (the "SEC") and state regulatory
agencies, as appropriate, all fulfillment literature that the Fund
requests USBFS send to prospective shareholders.
C. Supply USBFS with sufficient inventory of fulfillment literature as
requested from time to time by USBFS.
D. Provide USBFS with any sundry information about a Fund in order to
answer prospect questions.
4. 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
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. To the extent such fees are not payable by the Trust, the
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Adviser shall be responsible for paying the remaining amount of fees to
USBFS.
5. 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.
6. 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
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
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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.
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.
7. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFSagrees 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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8. 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 any party
upon giving ninety (90) days prior written notice to the other parties 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.
9. 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.
10. 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.
11. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower USBFS to
act as agent for any other party to this Agreement, or to conduct business
in the name, or for the account, of any other party to this Agreement.
12. 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.
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13. ASSIGNMENT
This Agreement may not be assigned by any party without the prior written
consent of the other parties.
14. 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.
15. 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.
16. SURVIVAL
Sections 4, 5, 6, 7, 10, 14 and 15 shall survive termination of this
Agreement.
17. NOTICES
Any notice required or permitted to be given by any party to the others
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 parties' addresses set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
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notice to the Trust shall be sent to:
Brazos Mutual Funds
Xx. Xxx Xxxxxxxxxxxx
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, XX 00000
and notice to the Adviser shall be sent to:
Xxxx XxXxxx Investment Counsel, L.P.
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 XXXX XXXXXX INVESTMENT COUNSEL, L.P.
By: /s/ Xxx X. Xxxxxxxxxxxx By: /s/ Xxx X. Xxxxxxxxxxxx
------------------------------- -------------------------------
Title: President Title: Business Manager
----------------------------- ----------------------------
U.S. BANCORP FUND SERVICES, LLC
By: /s/ Xxx Xxxxxxx
-------------------------------
Title: President
----------------------------
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EXHIBIT A
TO THE
PROSPECT SERVICING AGREEMENT
FUND NAMES
SEPARATE SERIES OF BRAZOS MUTUAL FUNDS
Name of Series Date Added
-------------- ----------
Brazos Micro Cap Portfolio 11/25/02
Brazos Small Cap Portfolio 11/25/02
Brazos Mid Cap Portfolio 11/25/02
Brazos Real Estate Securities Portfolio 11/25/02
Brazos Multi Cap Portfolio 11/25/02
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EXHIBIT B
TO THE
PROSPECT SERVICING AGREEMENT
FEE SCHEDULE
----------------------------------------------------------------------------------------------------
FULL SERVICE (INBOUND TELESERVICING AND KIT LEAD CONVERSION REPORTING
-------------------------------------------- -------------------------
ASSEMBLY AND MAILING) Account Management $ 700/month
---------------------- Database Installation, Setup $1,500/fund group
TIER 1 (0-50 orders per month)
Account Management $ 300/month
WEB ON-LINE FUND FULFILLMENT
----------------------------
TIER 2 (51-250 orders per month) Account Management $ 500/month
Account Management $ 300/month Installation, Setup $ 0 (NC)
First 50 orders NC Per Retail Request $ .40/retail request
Per order over 50 $ 4.00/order Per Intermediary Request $ .60/retail request
TIER 3 (251-500 orders per month)
Account Management $ 1,000/month FOLLOW-UP SERVICES
------------------
First 250 orders NC Correspondence $2.00/letter
Per order over 250 $ 3.50/order E-mail Correspondence (Separate Quote)*
Telemarketing (Separate Quote)*
TIER 4 (over 500 orders per month) Customized Services (Separate Quote)*
Account Management $ 2,000/month
First 500 orders NC *Dependent upon client requirements
Per order over 500 $ 3.00/order
All fees are billed monthly plus out-of-pocket
E-mail/internet Lead Origination - $2.50 per expenses, including, but not limited to:
request Customized reporting development ($150.00/hour)
Postage, stationery
Service includes account management, lead Programming, special reports
reporting, call servicing, database management, Retention of records
kit assembly and mailing (excluding postage and File transmission charges
materials). Legal expenses
All other out-of-pocket expenses
INBOUND TELESERVICING (ONLY)
----------------------------
Account Management $100/month
Call Servicing $.99/minute
Base Reporting Services Included.
Assumes that client is responsible for costs
associated with order delivery.
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