FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of October,
2002, by and between Brazos Mutual Funds, a Delaware business trust (the
"Trust"), and U.S. Bancorp Fund Services, LLC, a Wisconsin limited liability
company ("USBFS").
WHEREAS, the Trust 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 Trust desires to retain USBFS to provide fund administration
services for each series of the Trust listed on Exhibit A hereto (as amended
from time to time) (each a "Fund", 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 Trust hereby appoints USBFS as administrator of the Trust 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.
2. SERVICES AND DUTIES OF USBFS
USBFS shall provide the following fund administration services for the
Funds, including but not limited to:
A. General Fund Management:
(1) Act as liaison among all Fund service providers.
(2) Supply:
a. Corporate secretarial services.
b. Office facilities (which may be in USBFS's or its
affiliate's own offices).
c. Non-investment-related statistical and research data as
needed.
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(3) Coordinate the Trust's Board of Trustees' (the "Board of
Trustees" or the "Trustees") communications, which may include:
a. Establish draft Board meeting agendas.
b. Prepare reports for the Board of Trustees 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 Trustees and
Fund shareholders, if so requested by the Board.
f. Recommend dividend declarations to the Board of Trustees,
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 Trust if so
elected by the Board of Trustees, attend Board of Trustees
meetings and present materials for Trustees' review at such
meetings.
(4) Audits:
a. Prepare appropriate schedules and assist independent
auditors.
b. Subject to the Trust's consent, provide information to the
SEC and facilitate audit process.
c. Provide office facilities.
(5) Assist in overall operations of each Fund.
(6) Pay Fund expenses upon written authorization from the Trust.
(7) Monitor arrangements under shareholder services or similar plan.
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 for the disinterested
Trustees of the Fund.
b. Monitor each Fund's compliance with the policies and
investment limitations of the Trust as set forth in its
current prospectus (the "Prospectus") and statement of
additional information (the "SAI").
c. Maintain awareness of applicable regulatory and operational
service issues and recommend dispositions.
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(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
Trust, each Fund, or class of shares of a Fund, as
applicable, so as to enable the Trust to make a continuous
offering of its shares in all states.
b. Monitor status and maintain qualifications in each state.
c. Provide information regarding material developments in
state securities regulation.
(3) SEC Registration and Reporting:
a. Assist Fund counsel in updating the Prospectus and SAI and
in preparing proxy statements and Rule 24f-2 notices.
b. Prepare and file annual and semiannual reports, Form N-SAR
filings and Rule 24f-2 notices.
c. Coordinate the printing, filing and mailing of publicly
disseminated Prospectuses and reports, and amendments and
supplements thereto.
d. File fidelity bond under Rule 17g-1.
e. File shareholder reports under Rule 30b2-1.
f. Monitor sales of each Fund's 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 Trust's status as a regulated investment
company under Subchapter M, 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 Funds' Prospectus and
SAI.
(2) Prepare financial reports for officers, shareholders, tax
authorities, performance reporting companies, the Board of
Trustees, the SEC, and independent auditors.
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(3) Supervise the Trust's custodian and fund accountants in the
maintenance of the Trust's general ledger and in the preparation
of the Funds' financial statements, including oversight of
expense accruals and payments, of the determination of net asset
value of the Trust's net assets and of the Trust's shares, and
of the declaration and payment of dividends and other
distributions to shareholders.
(4) Compute the yield, total return and expense ratio of each class
of each Fund, and each Fund's portfolio turnover rate.
(5) Monitor the expense accruals and notify the Trust'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.
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 Miscellaneous for payments to Trustees 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). The Trust shall pay all fees and
reimbursable expenses within thirty (30) calendar days following receipt
of the billing notice, except for any fee or expense subject to a good
faith dispute. The Trust shall notify USBFS in writing within thirty (30)
calendar days following receipt of each invoice if the Trust is disputing
any amounts in good faith. The Trust shall settle such disputed amounts
within ten (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 Trust is
disputing in good faith as set forth above, unpaid invoices shall accrue a
finance charge of one and one-half percent (1 1/2%) per month, after the
due date. Notwithstanding anything to the contrary, amounts owed by the
Trust to USBFS shall only be paid out of the assets and property of the
particular Fund involved.
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4. DISCLAIMER OF LIABILITY
This Agreement is executed on behalf of the Trust by its officers in their
capacities as officers and not individually. The obligations of the Trust
under this Agreement are not binding upon the Trust's trustees, officers,
or shareholders individually, but are binding only upon the assets and
property of the Trust to which the services performed pursuant to this
Agreement relate. USBFS agrees that if obligations or liability relates to
one or more Funds, the obligations or liability hereunder shall be limited
to the respective assets of such Funds.
5. 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 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
bad faith, negligence, or willful misconduct on its part in the
performance of its duties under this Agreement. The Trust 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) which USBFS may sustain
or incur or which may be asserted against USBFS by any person arising
out of any action taken or omitted to be taken by the Trust as a
result of the Trust'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.
USBFS shall indemnify and hold the Trust harmless from and against
any and all claims, demands, losses, expenses, and liabilities of any
and every nature (including reasonable attorneys' fees) that the
Trust may sustain or incur or that may be asserted against the Trust
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, its bad faith, negligence, or willful
misconduct.
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 beyond USBFS's control. 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 Trust 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.
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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.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFSagrees 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 USBFS 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.
Further, USBFS will adhere to the privacy policies adopted by the Trust
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from
time to time (the "Act"). Notwithstanding the foregoing, USBFS will not
share any nonpublic personal information concerning any of the Trust's
shareholders to any third party unless specifically directed by the Trust
or allowed under one of the exceptions noted under the Act.
7. 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 years. Subsequent to the
initial three-year term, 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 amended by mutual written consent of the parties.
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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 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. 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
Trust 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 Trust on and in accordance with its request.
9. 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.
10. 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 Trust by
written notice to USBFS, USBFS 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 USBFS
under this Agreement in a form reasonably acceptable to the Trust (if such
form differs from the form in which USBFS has maintained, the Trust 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.
11. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower USBFS 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.
12. DATA NECESSARY TO PERFORM SERVICES
The Trust 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. If USBFS is also acting in another capacity for the
Trust, nothing herein shall be deemed to relieve USBFS of any of its
obligations in such capacity.
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13. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party.
14. SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants, and restrictions of
this Agreement shall remain in full force and effect and shall in no way
be affected, impaired or invalidated.
15. SURVIVAL
Sections 3, 4, 5, 6, 8, 10 and 14 shall survive termination of this
Agreement.
16. 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 (3) 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 Trust shall be sent to:
Brazos Mutual Funds
Xx. Xxx Xxxxxxxxxxxx
0000 Xxxxxx Xxxx
Xxxxx 0000
Xxxxxx, XX 00000
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.
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BRAZOS MUTUAL FUNDS U.S. BANCORP FUND SERVICES, LLC
By: /s/ Xxx X. Xxxxxxxxxxxx By: /s/ Xxx Xxxxxxx
------------------------------ ----------------------------
Title: President Title: President
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EXHIBIT A
TO THE
FUND ADMINISTRATION SERVICING AGREEMENT
FUND NAMES
SEPARATE SERIES OF BRAZOS MUTUAL FUNDS
Name of Series Date Added
-------------- ----------
Brazos Micro Cap Portfolio 10/1/02
Brazos Small Cap Portfolio 10/1/02
Brazos Mid Cap Portfolio 10/1/02
Brazos Real Estate Securities Portfolio 10/1/02
Brazos Multi Cap Portfolio 10/1/02
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EXHIBIT B
TO THE
FUND ADMINISTRATION SERVICING AGREEMENT
FEE SCHEDULE
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DOMESTIC FUNDS INTERNATIONAL FUNDS
-------------- -------------------
Annual fee based upon assets per fund: Annual fee based upon assets per fund:
8 basis points on the first $200 million 9 basis points on the first $200 million
7 basis points on the next $500 million 8 basis points on the next $300 million
5 basis points on the balance 6 basis points on the next $500 million
Minimum annual fee: $35,000 per fund 4 basis points on the balance
Minimum annual fee: $50,000 per fund
MULTIPLE CLASS ADMINISTRATION (B, II)
$12,000 PER YEAR PER CLASS Extraordinary services - quoted separately
Extraordinary services - quoted separately Plus out-of-pocket expenses, including but not
limited to:
Plus out-of-pocket expenses, including but not Postage, Stationery
limited to: Programming, Special Reports
Postage, Stationery Proxies, Insurance
Programming, Special Reports XXXXX filing - Approx. $9.00/page
Proxies, Insurance Retention of records
XXXXX filing - Approx. $9.00/page Federal and state regulatory filing fees
Retention of records Certain insurance premiums
Federal and state regulatory filing fees Expenses from board of directors meetings
Certain insurance premiums Auditing and legal expenses
Expenses from board of directors meetings Blue Sky conversion expenses (if necessary)
Auditing and legal expenses All other out-of-pocket expenses
Blue Sky conversion expenses (if necessary)
All other out-of-pocket expenses Fees are billed monthly
Fees are billed monthly
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