FUND ADMINISTRATION SERVICING AGREEMENT
THIS
AGREEMENT is made and entered into as of this 6th
day of
November, 2006, by and between BUILDERS
FIXED INCOME FUND, INC.,
a
Maryland 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 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.
|
| (2) |
Supply:
|
| a. |
Office
facilities (which may be in USBFS’s, or an affiliate’s, own offices).
|
| b. |
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,
as
requested by the Company; 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 attend Board of Directors 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 at the direction of the officers of 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 calculation.
(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
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.
|
2
| d. |
Monitor
applicable regulatory and operational service issues, and update Board
of
Directors periodically.
|
| (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, 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.
|
| (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).
|
| C. |
Financial
Reporting:
|
| (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
| (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 total return, expense ratio and portfolio turnover rate of each
class
of the Fund.
|
| (5) |
Monitor
the expense accruals; notify the Company’s management of any proposed
adjustments, if requested.
|
| (6) |
Prepare
financial statements at fiscal reporting periods, 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. |
Statement
of Cash Flows, as necessary.
|
| f. |
Schedule
of Capital Gains and Losses.
|
| (7) |
Prepare
quarterly broker security transaction summaries.
|
| D. |
Tax
Reporting:
|
| (1) |
Unless
another firm is engaged to perform this duty, prepare and file on a
timely
basis appropriate federal and state tax returns including, without
limitation, Forms 1120/8613, with any necessary schedules.
|
| (2) |
Unless
another firm is engaged to perform this duty, prepare state income
breakdowns where relevant.
|
| (3) |
File
Form 1099 for payments to disinterested Directors and other service
providers.
|
| (4) |
Monitor
wash sale losses based on data provided by the Company’s Fund
Accountant.
|
| (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 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. With the exception of any
fee
or expense the Company 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 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;
|
|
(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
| 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.
|
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.
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 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.
|
| 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.
|
7
| 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 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.
12. Early
Termination
In
the
absence of any material breach of this Agreement, should the Company elect
to
terminate this Agreement prior to the end of the term, the Company agrees to
pay
the following fees:
| a. |
all
monthly fees through the life of the contract, including the rebate
of any
negotiated discounts;
|
| b. |
all
fees associated with converting services to successor service
provider;
|
9
| c. |
all
fees associated with any record retention and/or tax reporting obligations
that may not be eliminated due to the conversion to a successor service
provider;
|
| d. |
all
out-of-pocket costs associated with a-c
above.
|
13. 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 Company’s Board of Directors.
14. 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.
15. 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.
16. 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.
17. 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.
18.
Legal-Related Services
Nothing
in this Agreement shall be deemed to appoint USBFS and its officers, directors
and employees as the Fund attorneys, form attorney-client relationships or
require the provision of legal advice. The Fund acknowledges that in-house
USBFS
attorneys exclusively represent USBFS and rely on outside counsel retained
by
the Fund to review all services provided by in-house USBFS attorneys and to
provide independent judgment on the Fund’s behalf. Because no attorney-client
relationship exists between in-house USBFS attorneys and the Fund, any
information provided to USBFS attorneys may not be privileged and may be subject
to compulsory disclosure under certain circumstances. USBFS represents that
it
will maintain the confidentiality of information disclosed to its in-house
attorneys on a best efforts basis.
10
19. 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:
Notice
to
USBFS shall be sent to:
U.S.
Bancorp Fund Services, LLC
000
Xxxx
Xxxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
and
notice to the Company shall be sent to:
Builders
Fixed Income Fund
000
Xxxxx
Xxxxxx
Xxxxxxxxxx,
XX 00000
20. 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.
|
BUILDERS
FIXED INCOME FUND, INC.
|
U.S.
BANCORP FUND SERVICES, LLC
|
|
By:
______________________________
Name:
____________________________
|
By:
______________________________
Name:
___________________________
|
|
Title:
_____________________________
|
Title:
_____________________________
|
12
Exhibit
A
to
the
Fund
Names
Separate
Series of Builders Fixed Income Fund, Inc.
Name
of Series
Builders
Fixed Income Fund
