Page 1
PORTFOLIO ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1ST day of JUNE,
2000, by and between Brazos Insurance Funds, a Delaware business trust
(hereinafter referred to as the "Trust") and Firstar Mutual Fund Services, LLC,
a corporation organized under the laws of the State of Wisconsin (hereinafter
referred to as "FMFS").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Trust is authorized to create separate series, each with
its own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things,
mutual fund accounting services to investment companies; and
WHEREAS, the Trust desires to retain FMFS to provide accounting
services to the Small Cap Growth Portfolio (the "Portfolio") and each additional
series of the Trust listed on Exhibit A attached hereto, as it may be amended
from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and FMFS agree as follows:
1. APPOINTMENT OF PORTFOLIO ACCOUNTANT
The Trust hereby appoints FMFS as Portfolio Accountant of the Trust on
the terms and conditions set forth in this Agreement, and FMFS hereby accepts
such appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the investment manager.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Trustees of the Trust and apply those
prices to the portfolio positions. For those securities where market
quotations are not readily available, the Board of Trustees of the
Trust shall approve, in good faith, the method for determining the fair
value for such securities.
Page 2
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for the
accounting period.
(4) Determine gain/loss on security sales and identify them
as, short-term or long-term; account for periodic distributions of
gains or losses to shareholders and maintain undistributed gain or loss
balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Trust as to methodology, rate or dollar
amount.
(2) Record payments for Portfolio expenses upon receipt of
written authorization from the Trust.
(3) Account for Portfolio expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed upon by
FMFS and the Trust.
(4) Provide expense accrual and payment reporting.
C. Portfolio Valuation and Financial Reporting Services:
(1) Account for Portfolio share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Portfolio share activity
as reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Trust.
(3) Determine net investment income (earnings) for the
Portfolio as of each valuation date. Account for periodic distributions
of earnings to shareholders and maintain undistributed net investment
income balances as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
financial records for the Portfolio in the form as agreed upon.
(5) Determine the net asset value of the Portfolio according
to the accounting policies and procedures set forth in the Portfolio's
Prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of Portfolio
operations at such time as required by the nature and characteristics
of the Portfolio.
(7) Communicate, at an agreed upon time, the per share price
for each valuation date to parties as agreed upon from time to time.
Page 3
(8) Prepare monthly reports which 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 Portfolio to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using the
tax lot relief method designated by the Trust.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to the
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 Portfolio's accounting
records available to the Trust, the Securities and Exchange Commission,
and the outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder
F. FMFS will perform the following accounting functions on a
daily basis:
(1) Reconcile cash and investment balances of each Portfolio
with the Custodian, and provide the Advisor with the beginning cash
balance available for investment purposes;
(2) Update the cash availability throughout the day as
required by the Advisor;
(3) Transmit or mail a copy of the portfolio valuation to the
Advisor;
(4) Review the impact of current day's activity on a per share
basis, review changes in market value of securities, and review yields
for reasonableness.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings;
Page 4
(2) Supply various Trust, Portfolio and class statistical data
as requested on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, obtain prices from a pricing source selected by FMFS
but approved by the Trust's Board of Trustees and apply those prices to the
portfolio positions of the Portfolio. For those securities where market
quotations are not readily available, the Trust's Board of Trustees shall
approve, in good faith, the method for determining the fair value for such
securities.
If the Trust desires to provide a price which varies from the pricing source,
the Trust shall promptly notify and supply FMFS with the valuation of any such
security on each valuation date. All pricing changes made by the Trust will be
in writing and must specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Trustees of the Trust that affects
accounting practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by the FMFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
FMFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect the
service provided to the Trust under this Agreement.
6. COMPENSATION
FMFS 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. The Trust agrees to pay all fees and
reimbursable expenses within ten (10) business days following the receipt of the
billing notice. Notwithstanding anything to the contrary, amounts owed by the
Trust to FMFS shall only be paid out of the assets and property of the
particular Portfolio involved.
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of
its duties under this Agreement. FMFS shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Trust in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's control, except a loss
arising out of or
Page 5
relating to FMFS'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, if FMFS has
exercised reasonable care in the performance of its duties under this
Agreement, the Trust shall indemnify and hold harmless FMFS from and
against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which FMFS may sustain or incur
or which may be asserted against FMFS by any person arising out of any
action taken or omitted to be taken by it in performing the services
hereunder, except for any and all claims, demands, losses, expenses,
and liabilities arising out of or relating to FMFS'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, (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction
provided to FMFS by any duly authorized officer of the Trust, such duly
authorized officer to be included in a list of authorized officers
furnished to FMFS and as amended from time to time in writing by
resolution of the Board of Trustees of the Trust.
FMFS shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the Trust may sustain or
incur or which may be asserted against the Trust by any person arising
out of any action taken or omitted to be taken by FMFS as a result of
FMFS'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, FMFS shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FMFS's control. FMFS 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 FMFS. FMFS
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision for emergency use
of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Trust shall be entitled
to inspect FMFS's premises and operating capabilities at any time
during regular business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS 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
Page 6
situation which 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 which 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.
C. FMFS is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust Instrument of the Trust
and agrees that obligations assumed by the Trust pursuant to this
Agreement shall be limited in all cases to the Trust and its assets,
and if the liability relates to one or more series, the obligations
hereunder shall be limited to the respective assets of such series.
FMFS further agrees that it shall not seek satisfaction of any such
obligation from the shareholder or any individual shareholder of a
series of the Trust, nor from the Trustees or any individual Trustee of
the Trust.
8. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.
9. RECORDS
FMFS 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. FMFS agrees that all such records prepared or
maintained by FMFS relating to the services to be performed by FMFS hereunder
are the property of the Trust and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Trust on and in accordance with its request.
10. DATA NECESSARY TO PERFORM SERVICES
The Trust or its agent, which may be FMFS, shall furnish to FMFS the data
necessary to perform the services described herein at such times and in such
form as mutually agreed upon. If FMFS is also acting in another capacity for the
Trust, nothing herein shall be deemed to relieve FMFS of any of its obligations
in such capacity.
Page 7
11. NOTIFICATION OF ERROR
The Trust will notify FMFS of any balancing or control error caused by FMFS the
later of: within three (3) business days after receipt of any reports rendered
by FMFS to the Trust; within three (3) business days after discovery of any
error or omission not covered in the balancing or control procedure, or within
three (3) business days of receiving notice from any shareholder.
12. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Trust all records and
other information relative to the Trust and prior, present, or potential
shareholders of the Trust (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where FMFS 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.
13. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof 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 ninety (90) days prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties. However, this Agreement may be
replaced or modified by a subsequent agreement between the parties.
14. NOTICES
Notices of any kind to be given by either party to the other party shall be in
writing and shall be duly given if mailed or delivered as follows: Notice to
FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
Attn.: Xxx Xxxxx
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Trust shall be sent to:
Xxxx XxXxxx Investment Counsel
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
Page 8
15. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any of FMFS's
duties or responsibilities hereunder is designated by the Trust by written
notice to FMFS, FMFS 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 FMFS under this Agreement in a form
reasonably acceptable to the Trust (if such form differs from the form in which
FMFS 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 FMFS's
personnel in the establishment of books, records and other data by such
successor.
16. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or regulation promulgated by the SEC thereunder.
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 day
and year first written above.
BRAZOS INSURANCE FUNDS FIRSTAR MUTUAL FUND SERVICES, LLC
By: /s/ XXX X. XXXXXXXXXXXX By: /s/ XXX X. XXXXXXX
------------------------------ ------------------------------
Xxx X. Xxxxxxxxxxxx Xxx X. Xxxxxxx
Attest: /s/ XXXXXX X. XXXX Attest: /s/ XXX XXXX
-------------------------- --------------------------
Xxxxxx X. Xxxx Xxx Xxxx
Page 9
PORTFOLIO ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
EXHIBIT A
Separate Series of Brazos Insurance Funds
NAME OF SERIES DATE ADDED
Brazos Small Cap Growth Portfolio
Domestic Equity Funds
$30,000 for the first $100 million
1.25 basis point on the next $200 million
.75 basis point on the balance
Domestic Balanced Funds
$33,000 for the first $100 million
1.5 basis points on the next $200 million
1 basis point on the balance
Domestic Fixed Income Funds, Funds of Funds, International Equity Funds, T/E
Money Market Funds
$39,000 for the first $100 million
2 basis points on the next $200 million
1 basis point on the balance
Taxable Money Market Funds
$39,000 for the first $100 million
1 basis point on the next $200 million
1/2 basis point on the balance
International Income Funds
$42,000 for the first $100 million
3 basis points on the next $200 million
1.5 basis points on the balance
Multiple Classes - Each class is an additional 25% of the charge of the initial
class.
Extraordinary services - quoted separately
NOTE - All schedules subject to change depending upon the use of derivatives -
options, futures, short sales, etc.
Page 10
Plus out-of-pocket expenses, including pricing service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Mutual Funds $125/fund/mo
Factor Services (BondBuyer)
Per CMO $1.50/month
Per Mortgage Backed $0.25/month
Minimum $300/month
Fees and out-of-pocket expenses are billed to the fund monthly
