FUND ADMINISTRATION SERVICING AGREEMENT
THIS
AGREEMENT is made and entered into as of this 15th
day of
August, 2005, by and between Xxxxxx
X. Xxxxx & Co. Incorporated,
a
Wisconsin corporation (the “Advisor”), Baird
Funds, Inc.,
a
Wisconsin corporation (the “Company”), and
U.S.
Bancorp Fund Services, LLC,
a
Wisconsin limited liability company (“USBFS”).
WHEREAS,
the Company 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 common stock in separate series, with each such
series representing interests in a separate portfolio of securities and other
assets;
WHEREAS,
USBFS is, among other things, in the business of providing fund administration
services for the benefit of its customers; and
WHEREAS,
the Company desires to retain USBFS to provide fund administration services
to
each series of the Company listed on Exhibit
A
hereto
(as amended from time to time) (each a “Fund” and 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 as Administrator
|
The
Company
hereby
appoints USBFS as administrator of the Company
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. The services and duties of USBFS shall be confined to those matters
expressly set forth herein, and no implied duties are assumed by or may be
asserted against USBFS hereunder.
| 2. |
Services
and Duties of USBFS
|
USBFS
shall provide the following administration services to the Fund:
| A. |
General
Fund Management:
|
| (1) |
Act
as liaison among Fund service providers.
|
| (2) |
Supply:
|
|
a.
|
Corporate
secretarial services.
|
| b. |
Office
facilities (which may be in USBFS’s, or an affiliate’s, own offices).
|
| c. |
Non-investment-related
statistical and research data as
needed.
|
1
| (3) |
Coordinate
the Company’s
board of directors (the “Board” or the “Directors”) communications, such
as:
|
| a. |
Prepare
meeting agendas and resolutions, with the assistance of Fund counsel.
|
| b. |
Prepare
reports for the Board based on financial and administrative data.
|
|
c.
|
Evaluate
independent auditor.
|
| d. |
Secure
and monitor fidelity bond and director and officer liability
coverage, and
make the necessary Securities and Exchange Commission (the “SEC”) filings
relating thereto.
|
|
e.
|
Prepare
minutes of meetings of the Board and Fund shareholders.
|
|
f.
|
Recommend
dividend declarations to the Board and prepare and distribute to
appropriate parties notices announcing declaration of dividends and
other
distributions to shareholders.
|
| g. |
Provide
personnel to serve as officers of the Company
if
so elected by the Board of Directors, attend Board meetings and present
materials for Directors’ review at such meetings.
|
| (4) |
Audits:
|
| a. |
Prepare
appropriate schedules and assist independent auditors.
|
| b. |
Provide
information to the SEC and facilitate audit process.
|
| c. |
Provide
office facilities.
|
| (5) |
Assist
in overall operations of the Fund.
|
| (6) |
Pay
Fund expenses upon written authorization from the Company.
|
| (7) |
Keep
the Company’s
governing documents, including its charter, bylaws and minute books,
but
only to the extent such documents are provided to USBFS by the
Company
or
its representatives for safe
keeping.
|
| B. |
Compliance:
|
| (1) |
Regulatory
Compliance:
|
| a. |
Monitor
compliance with the 1940 Act requirements, including:
|
| (i) |
Asset
diversification tests.
|
| (ii) |
Total
return and SEC yield calculations.
|
| (iii) |
Maintenance
of books and records under Rule 31a-3.
|
| (iv) |
Code
of ethics requirements under Rule 17j-1 for the disinterested Directors.
|
| b. |
Monitor
Fund's compliance with the policies and investment limitations as
set
forth in its prospectus (the “Prospectus”) and statement of additional
information (the “SAI”).
|
| c. |
Perform
its duties hereunder in compliance with all applicable laws and
regulations and provide any sub-certifications reasonably requested
by the
Companyin
connection with any certification required of the Company
pursuant to the Xxxxxxxx-Xxxxx Act of 2002 (the “SOX Act”) or any rules or
regulations promulgated by the SEC thereunder, provided the same
shall not
be deemed to change USBFS’ standard of care as set forth
herein.
|
| d. |
Monitor
applicable regulatory and operational service issues, and update
Board of
Trustees periodically.
|
2
| (2) |
Blue
Sky Compliance:
|
|
a.
|
Prepare
and file with the appropriate state securities authorities any and
all
required compliance filings relating to the qualification of the
securities of the Fund so as to enable the Fund to make a continuous
offering of its shares in all states.
|
| b. |
Monitor
status and maintain registrations in each state.
|
| c. |
Provide
updates regarding material developments in state securities regulation.
|
| (3) |
SEC
Registration and Reporting:
|
| a. |
Assist
Fund counsel in annual update of the Prospectus and SAI and in preparation
of proxy statements as needed.
|
| b. |
Prepare
and file annual and semiannual shareholder reports, Forms N-SAR,
N-CSR,
and N-Q filings and Rule 24f-2 notices. As requested by the Company,
prepare and file Form N-PX filings.
|
| c. |
Coordinate
the printing, filing and mailing of Prospectuses and shareholder
reports,
and amendments and supplements thereto.
|
| d. |
File
fidelity bond and related certification and resolutions under Rule
17g-1.
|
| e. |
Monitor
sales of Fund shares and ensure that such shares are properly registered
or qualified, as applicable, with the SEC and the appropriate state
authorities.
|
| (4) |
IRS
Compliance:
|
| a. |
Monitor
the Company’s
status as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the “Code”), including without
limitation, review of the following:
|
| (i) |
Asset
diversification requirements.
|
|
(ii)
|
Qualifying
income requirements.
|
| (iii) |
Distribution
requirements.
|
| b. |
Calculate
required distributions (including excise tax distributions).
|
3
| C. |
Financial
Reporting:
|
|
(1)
|
Provide
financial and performance data required by the Prospectus and
SAI.
|
|
(2)
|
Prepare
financial reports for officers, shareholders, tax authorities,
performance
reporting companies, the Board, the SEC, and independent accountants.
|
|
(3)
|
Supervise
the Funds’ custodian and fund accountants in the maintenance of the Funds’
general ledger and in the preparation of the Funds’ financial statements,
including oversight of expense accruals and payments, the determination
of
net asset value and the declaration and payment of dividends and
other
distributions to shareholders.
|
|
(4)
|
Compute
the yield, total return (before and after taxes on distributions
and
redemptions of shares), expense ratio and portfolio turnover rate
of each
class of the Fund.
|
|
(5)
|
Monitor
the expense accruals and notify the Company’s
management of any proposed adjustments.
|
|
(6)
|
Prepare
monthly financial statements for the Funds, which include, without
limitation, the following items:
|
|
a.
|
Schedule
of Investments.
|
|
b.
|
Statement
of Assets and Liabilities.
|
|
c.
|
Statement
of Operations.
|
|
d.
|
Statement
of Changes in Net Assets.
|
|
e.
|
Cash
Statement.
|
|
f.
|
Schedule
of Capital Gains and Losses.
|
|
(7)
|
Prepare
quarterly broker security transaction summaries.
|
| D. |
Tax
Reporting:
|
|
(1)
|
Prepare
and file on a timely basis appropriate federal and state tax returns
including, without limitation, Forms 1120/8610, with any necessary
schedules.
|
|
(2)
|
Prepare
state income breakdowns where relevant.
|
|
(3)
|
File
Form 1099 for payments to disinterested Directors and other service
providers.
|
|
(4)
|
Monitor
wash sale losses.
|
|
(5)
|
Calculate
eligible dividend income for corporate shareholders.
|
| 3. |
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). USBFS shall also be compensated for such
out-of-pocket expenses (e.g., telecommunication charges, postage and delivery
charges, and reproduction charges) as are reasonably incurred by USBFS in
performing its duties hereunder. The Company
or the
Advisor (as the case may be) shall pay all such fees and reimbursable expenses
within 30 calendar days following receipt of the billing notice, except for
any
fee or expense subject to a good faith dispute. The Company
or the
Advisor (as the case may be) shall notify USBFS in writing within 30 calendar
days following receipt of each invoice if the Company
or the
Advisor (as the case may be) is disputing any amounts in good faith. The
Company
or the
Advisor (as the case may be) shall pay such disputed amounts within 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 Company
or the
Advisor (as the case may be) is disputing in good faith as set forth above,
unpaid invoices shall accrue a finance charge of 1½% per month after the due
date. Notwithstanding anything to the contrary, amounts owed by the Company
or the
Advisor (as the case may be) to USBFS shall only be paid out of the assets
and
property of the particular Fund involved.
4
| 4. |
Representations
and Warranties
|
| A. |
The
Company
hereby represents and warrants to USBFS, which representations
and
warranties shall be deemed to be continuing throughout the term
of this
Agreement, that:
|
| (1) |
It
is duly organized and existing under the laws of the jurisdiction
of its
organization, with full power to carry on its business as now
conducted,
to enter into this Agreement and to perform its obligations
hereunder;
|
| (2) |
This
Agreement has been duly authorized, executed and delivered by
the
Company
in
accordance with all requisite action and constitutes a valid
and legally
binding obligation of the Company,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and
secured
parties; and
|
| (3) |
It
is conducting its business in compliance in all material respects
with all
applicable laws and regulations, both state and federal, and
has obtained
all regulatory approvals necessary to carry on its business as
now
conducted; there is no statute, rule, regulation, order or judgment
binding on it and no provision of its charter, bylaws or any
contract
binding it or affecting its property which would prohibit its
execution or
performance of this
Agreement.
|
| B. |
USBFS
hereby represents and warrants to the Company,
which representations and warranties shall be deemed to be continuing
throughout the term of this Agreement,
that:
|
| (1) |
It
is duly organized and existing under the laws of the jurisdiction
of its
organization, with full power to carry on its business as now
conducted,
to enter into this Agreement and to perform its obligations
hereunder;
|
5
| (2) |
This
Agreement has been duly authorized, executed and delivered by
USBFS in
accordance with all requisite action and constitutes a valid
and legally
binding obligation of USBFS, enforceable in accordance with its
terms,
subject to bankruptcy, insolvency, reorganization, moratorium
and other
laws of general application affecting the rights and remedies
of creditors
and secured parties;
and
|
| (3) |
It
is conducting its business in compliance in all material respects
with all
applicable laws and regulations, both state and federal, and
has obtained
all regulatory approvals necessary to carry on its business as
now
conducted; there is no statute, rule, regulation, order or judgment
binding on it and no provision of its charter, bylaws or any
contract
binding it or affecting its property which would prohibit its
execution or
performance of this
Agreement.
|
| 5. |
Standard
of Care; Indemnification; Limitation of Liability
|
| A. |
USBFS
shall exercise reasonable care and otherwise act in accordance
with
industry standards 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
in
connection with its duties under this Agreement, 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 applicable law or from its bad faith, negligence,
or willful
misconduct in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, if USBFS
has
exercised reasonable care and otherwise act in accordance with
industry
standards in the performance of its duties under this Agreement,
the
Company
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 the Company,
as approved by the Board, except for any and all claims, demands,
losses,
expenses, and liabilities arising out of or relating to USBFS’ refusal or
failure to comply with the terms of this Agreement or applicable
law or
from its bad faith, negligence or willful misconduct in the performance
of
its duties under this Agreement. This indemnity shall be a continuing
obligation of the Company,
its successors and assigns, notwithstanding the termination of
this
Agreement. As used in this paragraph, the term “USBFS” shall include
USBFS’ directors, officers and
employees.
|
USBFS
shall
indemnify and hold the Company
and the
Advisor harmless from and against any and all claims, demands, losses, expenses,
and liabilities of any and every nature (including reasonable attorneys’ fees)
that the Company
or the
Advisor may sustain or incur or that may be asserted against the Company
or the
Advisor by any person arising out of any action taken or omitted to be taken
by
USBFS as a result of USBFS refusal or failure to comply with the terms of
this
Agreement or applicable law, or from its bad faith, negligence, or willful
misconduct in the performance of its duties under this Agreement. This indemnity
shall be a continuing obligation of USBFS, its successors and assigns,
notwithstanding the termination of this Agreement. As used in this paragraph,
the term “Company”
or
the
Advisor shall include the Company’s
or the
Advisor’s directors, officers and employees.
6
Neither
party to this Agreement shall be liable to the other party for consequential,
special or punitive damages under any provision of this Agreement.
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. 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
or the
Advisor shall be entitled to inspect USBFS’ premises and operating capabilities
at any time during regular business hours of USBFS, upon reasonable notice
to
USBFS. Moreover, USBFS shall provide the Company
and the Advisor,
at such
times as the Company
or the Advisor
may
reasonably require, copies of reports rendered by independent accountants on
the
internal controls and procedures of USBFS relating to the services provided
by
USBFS under this Agreement.
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. The 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
| C. |
The
indemnity and defense provisions set forth in this Section 5 shall
indefinitely survive the termination and/or assignment of this
Agreement.
|
| D. |
If
USBFS is acting in another capacity for the Company
pursuant to a separate agreement, nothing herein shall be deemed
to
relieve USBFS of any of its obligations in such other
capacity.
|
| 6. |
Data
Necessary to Perform Services
|
The
Company
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.
| 7. |
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,
all
records and other information relative to the Company
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 (i) after prior notification to and approval in writing by
the
Company,
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,
(ii) when requested to divulge such information by duly constituted authorities,
or (iii) when so requested by the Company.
Records
and other information which have become known to the public through no wrongful
act of USBFS or any of its employees, agents or representatives, and information
that was already in the possession of USBFS prior to receipt thereof from the
Company
or its
agent, shall not be subject to this paragraph.
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.
In this regard, USBFS shall have in place and maintain physical, electronic
and
procedural safeguards reasonably designed to protect the security,
confidentiality and integrity of, and to prevent unauthorized access to or
use
of, records and information relating to the Company
and its
shareholders.
| 8. |
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,
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
or its
designee on and in accordance with its request.
8
| 9. |
Compliance
with Laws
|
The
Company
has and
retains primary responsibility for all compliance matters relating to the Funds,
including but not limited to compliance with the 1940 Act, the Code, the SOX
Act, the USA PATRIOT Act, and the policies and limitations of the Funds relating
to its portfolio investments as set forth in its Prospectus and SAI. USBFS
services hereunder shall not relieve the Company
of its
responsibilities for assuring such compliance or the Board’s oversight
responsibility with respect thereto.
| 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 (3) years. Subsequent to the initial
three-year term, this Agreement may be terminated by either party upon giving
90
days prior written notice to the other party or such shorter period as is
mutually agreed upon by the parties. Notwithstanding the foregoing, this
Agreement may be terminated by the Company at any time upon giving 90 days
prior
written notice to USBFS, or by any party upon the breach of the other party
of
any material term of this Agreement (including without limitation the standard
of care set forth in Section 5.A hereof) if such breach is not cured within
15
days of notice of such breach to the breaching party. This Agreement may not
be
amended or modified in any manner except by written agreement executed by USBFS,
the Advisor and the Company,
and
authorized or approved by the Board of Directors.
| 11. |
Duties
in the Event of Termination
|
In
the
event that, in connection with termination, a successor to any of USBFS’ duties
or
responsibilities hereunder is designated by the Company
by
written notice to USBFS, USBFS will promptly, upon such termination and at
the
expense of the Company,
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
(if such
form differs from the form in which USBFS has maintained the same, the
Company
shall
pay any expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from USBFS’ personnel
in the
establishment of books, records, and other data by such successor. If no such
successor is designated, then such books, records and other data shall be
returned to the Company.
9
|
12.
|
Assignment
|
This
Agreement shall extend to and be binding upon the parties hereto and their
respective successors and assigns; provided, however, that this Agreement shall
not be assignable by the Company
without
the written consent of USBFS, or by USBFS without the written consent of the
Company
accompanied by the authorization or approval of the Board.
| 13. |
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.
| 14. |
No
Agency Relationship
|
Nothing
herein contained shall be deemed to authorize or empower either party 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. |
Services
Not Exclusive
|
Nothing
in this Agreement shall limit or restrict USBFS from providing services to
other
parties that are similar or identical to some or all of the services provided
hereunder.
| 16. |
Invalidity
|
Any
provision of this Agreement which may be determined by competent authority
to be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. In such case, the
parties shall in good faith modify or substitute such provision consistent
with
the original intent of the parties.
| 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 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:
10
Notice
to
USBFS shall be sent to:
U.S.
Bancorp Fund Services, LLC
000
Xxxx
Xxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxxx 00000
Attn:
Xxx
X. Xxxxxxx
Facsimile:
(000) 000-0000
and
notice to the Company
shall be
sent to:
Baird
Funds, Inc.
000
Xxxx
Xxxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxxx 00000
Attn:
General Counsel
Facsimile:
(000) 000-0000
| 18. |
Multiple
Originals
|
This
Agreement may be executed on 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.
11
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.
| BAIRD FUNDS, INC. | U.S. BANCORP FUND SERVICES, LLC |
| By: /s/ Xxxx Xxxxx Xxxxxx | By: /s/ Xxx X. Xxxxxxx |
| Name: Xxxx Xxxxx Xxxxxx | Name: Xxx X. Xxxxxxx |
| Title: President |
Title:
President
|
XXXXXX
X. XXXXX & CO. INCORPORATED
By:
/s/ J. Xxxx
Xxxxxx
Name:
J. Xxxx
Xxxxxx
Title:
Managing
Director
12
Exhibit
A
to
the
Fund
Names
Separate
Series of Funds
| Advisor | |
|
Name
of Series
|
Date Added |
|
Xxxxx
Intermediate Bond Fund
|
September 29, 2000 |
|
Xxxxx
Core Plus Bond Fund
|
September 29, 2000 |
|
Xxxxx
Aggregate Bond Fund
|
September 29, 2000 |
|
Xxxxx
Short-Term Bond Fund
|
September 29, 2000 |
|
Xxxxx
Intermediate Municipal Bond Fund
|
September 29, 2000 |
|
Company
|
|
|
Name
of Series
|
Date Added |
|
Baird
LargeCap Fund
|
September 29, 2000 |
|
Xxxxx
XxxXxx Fund
|
December 29, 2000 |
|
Baird
SmallCap Fund
|
June 30, 2004 |
A-1
