Exhibit K.2
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of May,
2003, by and between Calamos Convertible and High Income Fund, a Delaware
statutory trust (the "Fund"), and U.S. Bancorp Fund Services, LLC, a Wisconsin
limited liability company ("USBFS").
WHEREAS, the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-end management investment
company, which has elected to do business as a business development company;
WHEREAS, USBFS is, among other things, in the business of providing
mutual fund accounting services to investment companies; and
WHEREAS, the Fund desires to retain USBFS to provide accounting
services to the Fund.
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 FUND ACCOUNTANT
The Fund hereby appoints USBFS as fund accountant of the Fund 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 accounting services for the
Funds, including but not limited to:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated from
the Fund.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Trustees of the Fund
(the "Board of Trustees" or the "Trustees") and apply
those prices to the portfolio positions. For those
securities where market quotations are not readily
available, the Board of Trustees, or a designee
thereof, shall provide, in good faith, the fair value
for such securities.
(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 Fund as to
methodology, rate or dollar amount.
(2) Record payments for expenses upon receipt of written
authorization from the Fund.
(3) Account for expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed
upon by USBFS and the Fund.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share repurchases, tenders, sales,
exchanges, transfers, dividend reinvestments, and
other Fund share activity as reported by the Fund's
transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Fund.
(3) Determine net investment income (earnings) for the
Fund 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 Fund in the form as
agreed upon.
(5) Determine the net asset value of the Fund according
to the accounting policies and procedures set forth
in the Fund's Prospectus or other operative
documents.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of
Fund operations at such time as required by the
nature and characteristics of the Fund.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed
upon from time to time.
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(8) Prepare monthly reports that 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 Fund to support the tax reporting
required for IRS-defined regulated investment
companies.
(2) Maintain tax lot detail for the Fund's investment
portfolio.
(3) Calculate taxable gain/loss on security sales using
the tax lot relief method designated by the Fund.
(4) Provide the necessary financial information to
support the taxable components of income and capital
gains distributions to the Fund's 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 Fund's
accounting records available to the Fund, the
Securities and Exchange Commission (the "SEC"), and
the outside auditors.
(2) Maintain accounting records according to the 1940 Act
and regulations provided thereunder.
F. USBFS will perform the following accounting functions on a
daily basis:
(1) Reconcile cash and investment balances of the Fund
with the Fund's custodian, and provide the Fund with
the beginning cash balance available for investment
purposes.
(2) Transmit or mail a copy of the portfolio valuation to
the Fund.
(3) Review the impact of current day's activity on a per
share basis, and review changes in market value.
G. In addition, USBFS will:
(1) Prepare monthly security transactions listings.
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(2) Supply various statistical data as requested by the
Fund on an ongoing basis.
(3) Prepare monthly a reconciliation between the Fund's
cash portfolio as held on USBFS's accounting records
and the Fund's internal records.
3. PRICING OF SECURITIES
For each valuation date, USBFS shall obtain prices from a pricing
source selected by USBFS but approved by the Board of Trustees and
apply those prices to the portfolio positions of the Fund. For those
securities where market quotations are not readily available, the Board
of Trustees shall provide, in good faith, the fair value for such
securities.
If the Fund desires to provide a price that varies from the pricing
source, the Fund shall promptly notify and supply USBFS with the
valuation of any such security on each valuation date. All pricing
changes made by the Fund 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 that affects accounting
practices and procedures under this Agreement shall be effective upon
written receipt by USBFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
USBFS 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 Fund under this Agreement.
6. COMPENSATION
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit A
hereto (as amended from time to time). The Fund 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 Fund shall notify USBFS in writing within
thirty (30) calendar days following receipt of each invoice if the Fund
is disputing any amounts in good faith. The Fund 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 Fund 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.
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Notwithstanding anything to the contrary, amounts owed by the Fund to
USBFS shall only be paid out of the assets and property of the
particular Fund involved.
7. 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 Fund in connection with matters to which this Agreement
relates, 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 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 USBFS has exercised reasonable care in the
performance of its duties under this Agreement, the Fund 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 standard of care set forth herein, or (ii)
in reliance upon any written or oral instruction provided to
USBFS by any duly authorized officer of the Fund, such duly
authorized officer to be included in a list of authorized
officers furnished to USBFS and as amended from time to time
in writing by resolution of the Board of Trustees, except for
any and all claims, demands, losses, expenses, and liabilities
arising directly or indirectly out of or relating to USBFS'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 Fund, its officers,
trustees and employees harmless from and against any and all
claims, demands, losses, expenses, and liabilities of any and
every nature (including reasonable attorneys' fees) that the
Fund may sustain or incur or that may be asserted against the
Fund by any person arising directly or indirectly 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
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equipment is available. Representatives of the Fund 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.
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 with
counsel reasonably satisfactory to indemnitee unless the legal
rights and defenses available to indemnitor and indemnitee
present a conflict for joint counsel. 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; provided
however, that the indemnitor shall not settle a claim that
results in any admission of wrongdoing by indemnitee without
indemnitee's prior written consent.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFS agrees on behalf of itself and its trustees, officers, and
employees to treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund and prior,
present, or potential shareholders of the Fund (and clients of said
shareholders) including all shareholder trading information, 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 Fund, 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 Fund. USBFS
acknowledges that it may come into possession of material nonpublic
information with respect to the Fund and confirms that it has in place
effective procedures to prevent the use of such information in
violation of applicable xxxxxxx xxxxxxx laws.
Further, USBFS will adhere to the privacy policies adopted by the Fund
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified
from time to time (the
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"Act"). Notwithstanding the foregoing, USBFS will not share any
nonpublic personal information concerning any of the Fund's
shareholders to any third party unless specifically directed by the
Fund or allowed under one of the exceptions noted under the Act.
9. TERM OF AGREEMENT; AMENDMENT
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 amended by mutual written
consent of the parties. The representations of FMFS contained in
Section 8 shall survive the termination of this Agreement.
10. 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 Fund, 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 Fund 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 Fund on and in accordance with its
request. USBFS agrees to provide any records necessary to the Fund to
comply with the Fund's disclosure controls and procedures adopted in
accordance with the Xxxxxxxx-Xxxxx Act. Without limiting the generality
of the foregoing, the USBFS shall cooperate with the Fund and assist
the Fund as necessary by providing information to enable the
appropriate officers of the Fund to execute any required
certifications.
11. 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.
12. 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
Fund by written notice to USBFS, USBFS will promptly, upon such
termination and at the expense of the Fund, transfer to such
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successor all relevant books, records, correspondence and other data
established or maintained by USBFS under this Agreement in a form
reasonably acceptable to the Fund (if such form differs from the form
in which USBFS has maintained the same, the Fund 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 USBFS's personnel in the establishment of
books, records and other data by such successor.
13. 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.
14. DATA NECESSARY TO PERFORM SERVICES
The Fund 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 Fund, nothing herein shall be deemed to relieve USBFS of any of its
obligations in such capacity.
15. NOTIFICATION OF ERROR
The Fund will notify USBFS of any discrepancy between USBFS and the
Fund, including, but not limited to, failing to account for a security
position in the Fund's portfolio, by the later of: within five (5)
business days after receipt of any reports rendered by USBFS to the
Fund; within five (5) business days after discovery of any error or
omission not covered in the balancing or control procedure, or within
five (5) business days of receiving notice from any shareholder.
16. ASSIGNMENT
This Agreement may not be assigned by either party without the prior
written consent of the other party.
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17. 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 upon delivery 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 Fund shall be sent to:
Calamos Convertible and High Income Fund
000 Xxxx Xxxxxxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000-0000
18. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, whether written or oral.
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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.
CALAMOS CONVERTIBLE AND HIGH INCOME FUND U.S. BANCORP FUND SERVICES, LLC
By: /s/ Rhowena Blank By: /s/ Xxx X. Xxxxxxx
----------------- ------------------
Rhowena Blank Xxx X. Xxxxxxx
Title: Treasurer Title: President
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EXHIBIT A
TO THE
FUND ACCOUNTING SERVICING AGREEMENT
ANNUAL FEE SCHEDULE
CALAMOS INVESTMENT TRUST
CALAMOS ADVISORS TRUST
CALAMOS CONVERTIBLE AND HIGH INCOME FUND
FUND ACCOUNTING SERVICING AGREEMENT
1.(a) FUND ACCOUNTING ANNUAL SERVICE FEE BASED UPON COMBINED ASSETS
First $2.5 billion - $750,000
Next $2.5 billion - 2 basis points
Next $2.5 billion - 1 basis point
Next $2.5 billion - .75 basis point
Above $10 billion - .5 basis point
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/ month
Factor Services (BondBuyer)
Per CMO $1.50 / month
Per Mortgage Backed $0.25 / month
Minimum $300 / month
ADDITIONAL FUND ACCOUNTING SERVICES
o Morningstar/Lipper quarterly portfolio reporting, monthly NAV
reporting
o Alternative verification of corporate actions for preferred
securities and private placements
o Comparison of manual prices (provided by Calamos) to pricing vendor
quotations
1.(b) PERFORMANCE DELIVERY SERVICES
o NAV data delivery services
o Pre-tax monthly performance calculations (pre- and post-liquidation)
o Post-tax monthly performance calculations (pre- and
post-liquidation)
o Reporting and benchmark comparisons
Performance Delivery Service Fee
$300 per class per month
Setup - $1,000 per fund - includes loading all NAV and distribution
history since inception of each class, reconciling performance
calculations with current provider
2. FINANCIAL ACCOUNTING SERVICES
o Fund expense management
o Fund expense payment processing
o Expense accrual monitoring, analysis and modifications
o Expense reimbursement, management fee waiver coordination
o 1099 MISC for the Board members and service providers
o SEC yield calculations (Convertible, Convertible G&I, Market
Neutral, High Yield Fund, Global Convertible, Convertible Portfolio)
o Deferred compensation plan - monitor the deferred comp plan (subject
receipt of direction from Calamos Asset Management and/or the
trustee/director)
o Calculation of quarterly net investment income distributions and
annual long term capital gain distributions (both regular and excise
tax distributions)
o Year-end dividend disclosure information
o Calculate, track and report tax adjustments on all Contingent Debt
Obligations
o Calculate, track and report tax adjustments on all Trust Preferred
Obligations
o Prepare final excise and fiscal distribution schedules
o Prepare tax footnote information required for financial statements
(i.e., post October loss deferral, capital loss carryforwards,
distributable earnings, tax cost of investments and ROCSOP
adjustments)
o Prepare all state and federal tax returns
o Daily review of restricted security status (144A vs registered)
o Specialized calculation of amortization on convertible securities
for financial statements
Financial Accounting Annual Service Fee Based Upon Combined Assets
2.0 basis points on the first $1 billion of combined assets
1.50 basis points on the next $1 billion of combined assets
1.25 basis points on the balance of combined assets
Fees and out-of-pocket expenses are billed to the fund monthly
Extraordinary services - quoted separately
