Exhibit (h)(1)
THIS
AGREEMENT is made and entered into as of this 1st day of July, 2005, by and between
The Xxxxxxxx Funds, Inc., a Maryland business company (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 beneficial interest 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. |
| |
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. |
| |
(3) |
Coordinate
the Company’s board of directors’ (the “Board of
Directors” or the “Directors”) communications, such
as: |
| |
a. |
Prepare
meeting agendas and resolutions, with the assistance of Fund counsel. |
| |
b. |
Prepare
reports for the Board of Directors 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 of Directors and Fund shareholders. |
| |
f. |
Recommend
dividend declarations to the Board of Directors 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 of Directors meetings and present
materials for Directors’ review at such meetings. |
| |
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. |
| |
(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. |
2
| |
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 Company in
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’s standard of care as set forth herein. |
| |
d. |
Monitor
applicable regulatory and operational service issues, and update Board of
Directors periodically. |
| |
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, Form N-SAR, Form N-CSR, and
Form 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 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. |
| |
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. |
3
| |
(iii) |
Distribution
requirements. |
| |
b. |
Calculate
required distributions (including excise tax distributions). |
| |
(1) |
Provide
financial data required by the Prospectus and SAI. |
| |
(2) |
Prepare
financial reports for officers, shareholders, tax authorities,
performance reporting companies, the Board of Directors, the SEC, and
independent accountants. |
| |
(3) |
Supervise
the Fund’s custodian and fund accountants in the maintenance of
the Fund’s general ledger and in the preparation of the Fund’s
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, 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, 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. |
| |
f. |
Schedule
of Capital Gains and Losses. |
| |
(7) |
Prepare
quarterly broker security transaction summaries. |
| |
(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. |
4
| |
(5) |
Calculate
eligible dividend income for corporate shareholders. |
| |
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 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 shall notify
USBFS in writing within 30 calendar days following receipt of each invoice if the Company
is disputing any amounts in good faith. The Company shall pay such disputed amounts within
10 calendar days of the day on which the parties agree to the amount to be paid.
Notwithstanding anything to the contrary, amounts owed by the Company to USBFS shall only
be paid out of the assets and property of the particular Fund involved. |
| 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. |
5
| |
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; |
| |
(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 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 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 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 of Directors of
the Company, except for any and all claims, demands, losses, expenses, and
liabilities arising out of or relating to USBFS’s refusal or failure
to comply with the terms of this Agreement 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’s directors, officers and employees. |
6
| |
USBFS
shall indemnify and hold 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 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, 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” shall include the Company’s directors,
officers and employees. |
| |
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 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. Moreover, USBFS shall provide the Company, at such times as the Company
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
| |
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. |
| |
The
Company has and retains primary responsibility for all compliance matters relating to the
Fund, including but not limited to compliance with the 1940 Act, the Code, the SOX Act,
the USA Patriot Act of 2002 and the policies and limitations of the Fund relating to its
portfolio investments as set forth in its Prospectus and SAI. USBFS’s services
hereunder shall not relieve the Company of its responsibilities for assuring such
compliance or the Board of Director’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 one year. Subsequent to the initial one-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 any party upon the breach of the other
party of any material term of this Agreement 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 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’s 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’s 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
| |
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 Company’s Board of
Directors. |
| |
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. |
| |
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. |
| |
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, XX 00000
Fax No.: (000) 000-0000 |
| |
and
notice to the Company shall be sent to: |
| |
The
Xxxxxxxx Funds, Inc.
The Courtyard Square
000 Xxxxx
Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax No.: (000)
000-0000 |
| |
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.
|
|
| THE XXXXXXXX FUNDS, INC. |
U.S. BANCORP FUND SERVICES, LLC |
By: /s/ Xxxx X. Xxxxxxxx |
By: /s/ Xxx X. Xxxxxxx |
Title: President |
Title: President |
12
Fund Names
Separate Series of The
Xxxxxxxx Funds, Inc.
|
|
| Name of Series |
Date Added |
Xxxxxxxx Balanced Fund |
3/8/96 |
Xxxxxxxx Total Return Fund |
7/29/98 |
A-1
Exhibit B to the following agreements between:
The Xxxxxxxx Funds, Inc. and U.S.
Bancorp Fund Services, LLC;
The Xxxxxxxx Mutual Funds, Inc. and U.S. Bancorp Fund
Services, LLC; and
Xxxxxxxx Funds Trust and U.S. Bancorp Fund Services, LLC
Fund Accounting
Servicing Agreement dated July 1, 2005
Fund Administration Servicing Agreement dated July
1, 2005
Exhibit C to Transfer Agent
Servicing Agreement dated July 1, 2005, between:
The Xxxxxxxx Funds, Inc. and U.S.
Bancorp Fund Services, LLC;
The Xxxxxxxx Mutual Funds, Inc. and U.S. Bancorp Fund
Services, LLC; and
Xxxxxxxx Funds Trust and U.S. Bancorp Fund Services, LLC
Exhibit D to the Custody
Agreement dated July 1, 2005, between:
The Xxxxxxxx Funds, Inc. and U.S.
Bank, N.A.;
The Xxxxxxxx Mutual Funds, Inc. and U.S. Bank, N.A.; and
Xxxxxxxx Funds Trust
and U.S. Bank, X.X.
X.X. BANCORP FUND
SERVICES, LLC
ANNUAL FEE SCHEDULE
| |
Annual
fee schedule per fund for the following funds (the fund complex): |
| |
The
Xxxxxxxx Funds, Inc.: |
| |
Xxxxxxxx
Balanced Fund
Xxxxxxxx Total Return Fund |
| |
The
Xxxxxxxx Mutual Funds, Inc.: |
| |
Xxxxxxxx
Cornerstone Growth Fund
Xxxxxxxx Cornerstone Value Fund
Xxxxxxxx Focus 30 Fund |
| |
Xxxxxxxx
Cornerstone Growth Fund, Series II |
| |
Annual
fee based upon fund complex net assets: |
| |
25.5
basis points on all net assets up to $1 billion
21 basis points on the
next $1 billion
17 basis points on net assets over $2 billion
Minimum annual fee: $600,000 for fund complex |
| |
Extraordinary
services - quoted separately
Fees are billed monthly |
| |
Annual
fee includes all fund expenses, excluding extraordinary expenses, related to the
agreements indicated above. |
D-1
