LOSS REIMBURSEMENT AGREEMENT
THIS AGREEMENT is made and entered into
as of the 31st day of December, 2008, by and between U.S. Bancorp Fund Services,
LLC, a Wisconsin limited liability company (“USBFS”), and Baird Funds, Inc., a
Wisconsin corporation (the “Baird Funds”).
WHEREAS,
USBFS provides transfer agent, fund administration, fund accounting and other
services to Xxxxx.
WHEREAS,
FAF Advisors, Inc. (“FAF”), an affiliate of USBFS, provides securities lending
services to the Xxxxx Funds pursuant to a Securities Lending Agreement (the
“Securities Lending Agreement”).
WHEREAS, under the Securities Lending
Agreement, FAF enters into securities loans on behalf of certain series of the
Xxxxx Funds (the “Series”) and invests the cash received as collateral for the
loans.
WHEREAS, FAF invested $32,000,000 of
cash collateral received by the Series in connection with securities lending in
shares of the Reserve Primary Fund (the “Reserve Fund”).
WHEREAS,
after reporting a net asset value of less than $1.00 per share in September 2008
as a result of its holdings of debt securities issues by Xxxxxx Brothers
Holdings, the Reserve Fund has ceased calculating its NAV, experienced
redemption requests involving substantially all of its assets, distributed some
of its assets and adopted a plan of liquidation and distribution of its
remaining assets;
WHEREAS,
following the Reserve Funds’ announcement of its plan of liquidation and
distribution of its assets, and based on other publicly available information,
the Valuation Committee for the Xxxxx Funds has determined the fair value of the
shares of the Reserve Fund still owned by the Series to be $0.9286 per
share;
WHEREAS,
out of the $32,000,000 that had been invested in the Reserve Fund by FAF on
behalf of the Series at the time, the Series have received distributions,
leaving a current balance at amortized cost of $6,744,513.15 (currently valued
at 0.9286 of amortized cost);
WHEREAS,
in consideration of their ongoing business relationships with the Xxxxx Funds,
FAF and USBFS wish to provide an amount of money to the Series that will enable
the Series to cause the current value of the Reserve Fund shares to be equal to
$1.00 per share.
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. Loss
Reimbursement Amount
USBFS
hereby agrees to pay to the Xxxxx Funds an amount equal to $492,549.05, to be
allocated across the Series in respect of their ownership of Reserve Fund shares
as set forth on Schedule I attached hereto. This payment, amounting to a waiver
of securities lending income earned by U.S. Bank in 2008, shall be made as soon
as practicable following the parties’ execution of this
Agreement. USBFS shall not be obligated under this Agreement to pay
any additional amounts to the Xxxxx Funds in respect of Reserve Fund shares in
the event the fair value of such shares experiences further
declines.
2. No
Admission of Liability; No Compromise of Rights
(a) The Xxxxx Funds acknowledge and
agree that (i) USBFS and FAF are entering into this Agreement to preserve the
business relationships that such parties have with Xxxxx and (ii) by entering
into this Agreement, FAF and USBFS are not (x) admitting to any facts with
respect to the purchase of shares of the Reserve Fund or any liability with
respect to such purchase under the Securities Lending Agreement or otherwise,
(y) compromising any defenses that such parties might have under the Securities
Lending Agreement or otherwise, or (z) creating any rights (other than the
express rights contained in this Agreement) in addition to those that Xxxxx
might have under the Securities Lending Agreement.
(b) FAF
and USBFS acknowledge and agree that, by entering into this Agreement, Xxxxx is
not compromising any rights that it might have under the Securities Lending
Agreement or otherwise with respect to the purchase of shares of the Reserve
Fund or any other related actions taken thereafter.
3. Automatic
Termination
This Agreement shall automatically
terminate in the event that Xxxxx terminates either (a) any agreement with USBFS
under which USBFS provides to Xxxxx transfer agent, fund administration, fund
accounting or any other services, or (b) the Securities Lending
Agreement.
4. Amendment;
Termination
This
Agreement may not be amended except in writing executed by the party against
which such amendment is sought to be enforced. No course of dealing
between or among any persons having any interest in this Agreement will be
deemed effective to modify or amend any part of this Agreement or any rights or
obligations of any person under or by reason of this Agreement. Other
than as set forth in Section 3 hereof, this Agreement may not be terminated
except with the written consent of all of the parties hereto.
2
5. Assignment
Neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any party hereto without the prior written consent of the other
parties.
6. Counterparts
This
Agreement may be executed in one or more counterparts, any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together will constitute one and the same instrument.
7. Governing
Law
The
internal law, without regard to conflicts of laws principles, of the State of
Wisconsin shall govern all questions concerning the construction, validity and
interpretation of this Agreement and the performance of the obligations imposed
by this Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first written above.
U.S.
BANCORP FUND SERVICES, LLC
By /s/ Xxx
Xxxxxxx
Its
President
BAIRD
FUNDS, INC.
By /s/ Xxxx Xxxxx
Xxxxxx
Its
President
3
SCHEDULE
I
Allocation of Loss
Reimbursement Amount
|
Name
of Fund
|
Allocation
Amount
|
|
Xxxxx
LargeCap
|
$8,642.10
|
|
Xxxxx
XxxXxx
|
$10,442.25
|
|
Xxxxx
Short-Term Bond
|
$19,558.34
|
|
Xxxxx
Core Plus Bond
|
$55,799.05
|
|
Xxxxx
Intermediate Bond
|
$138,821.85
|
|
Xxxxx
Aggregate Bond
|
$259,285.47
|
4
