SUBADMINISTRATION SERVICING AGREEMENT
Exhibit
(k)(2)
THIS
AGREEMENT (this “Agreement”) is made and entered into as of this 25th day of
July 2007, by and between ALLEGIANCE
INVESTMENT MANAGEMENT, LLC, a Delaware limited liability company
with its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Administrator”), and
U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability
company (“USBFS”).
WHEREAS,
the Administrator is the primary administrator of A T Fund of Funds, a series
of
A T Funds Investment Trust, a Delaware statutory trust registered under the
Investment Company Act of 1940, as amended (the “1940 Act”) as a closed-end
management investment company (the “Master Fund”), pursuant to that certain
Administration Agreement made as of February 25, 2005 (the “Master Fund
Administration Agreement”) between the Administrator and A T Funds, LLC, a
Delaware limited liability company, as the investment adviser of the Master
Fund
(the “Manager”);
WHEREAS,
the Administrator is the primary administrator of A T Fund of Funds TEI,
a
Delaware statutory trust registered under the 1940 Act as a closed-end
management investment company (“TEI”), and of A T Fund of Funds Ltd., a Cayman
Islands exempted company (the “Offshore Fund”; and TEI, the Offshore Fund and
the Master Fund are sometimes referred to herein individually as a “Fund”, and
collectively as the “Funds”), pursuant to those certain Administration
Agreements made as of May 23, 2007 (collectively with the Master Fund
Administration Agreement, the “Administration Agreement”), between the
Administrator and the Fund;
WHEREAS,
the Offshore Fund is not required to register under the 1940 Act;
WHEREAS,
all or substantially all of TEI’s assets will be invested in the Offshore
Fund;
WHEREAS,
all or substantially all of the Offshore Fund’s assets will be invested in the
Master Fund;
WHEREAS,
each Fund is authorized to offer and sell shares of beneficial interest or
ordinary shares in such Fund (collectively, the “Shares”) in one or more
transactions exempt from the registration requirements of the Securities
Act of
1933, as amended (“1933 Act”), to investors who meet appropriate specified
investor qualifications;
WHEREAS,
the Master Fund and the Manager have entered into an Investment Management
Agreement under which the Manager, as manager to the Master Fund, has
discretionary authority for the Master Fund with respect to investment
management of the Master Fund’s Assets;
WHEREAS,
pursuant to each Administration Agreement, the Administrator may retain third
parties to perform all or any of the administrative services with respect
to the
Fund;
WHEREAS,
the Administrator desires that USBFS perform certain subadministration, fund
accounting, investor services and recordkeeping services to the Funds, and
USBFS
is willing to provide those services on the terms and conditions set forth
in
this Agreement;
NOW,
THEREFORE, in consideration of the mutual promises and agreements 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:
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1.
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Appointment
of USBFS as
Subadministrator
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The
Administrator hereby appoints USBFS as subadministrator of each of the Funds
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. Subject to the terms and
conditions of this Agreement and under the direction and control of the
Administrator and the ultimate control of the Funds’ respective Boards of
Trustees or Board of Directors, as applicable (the “Boards of Directors” or the
“Directors”), USBFS shall provide the services and duties set forth
in this Agreement.
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2.
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Services
and Duties of USBFS
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USBFS
shall provide the following subadministration services to the
Funds:
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A.
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General
Fund Management:
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(1)
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Act
as liaison among Fund service
providers.
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(2)
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Supply:
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a.
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Corporate
secretarial services.
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b.
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Office
facilities (which may be in USBFS’, or an affiliate’s, own
offices).
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c.
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Non-investment-related
statistical and research data as reasonable required by the
Funds.
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(3)
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Coordinate
the Funds’ respective Boards of Directors reasonably required
communications, including, but not limited to the
following:
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a.
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Prepare
materials for meetings of the Boards of Directors, including as
applicable, meeting agendas, resolutions and periodic questionnaires,
with
the assistance of Fund counsel.
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b.
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Prepare
reports for the Boards of Directors based on financial and administrative
data, including topics covering (i) regulatory and industry developments
of general applicability, and (ii) the Fund’s
operations.
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c.
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Evaluate
independent auditor.
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d.
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If
requested, solicit proposals for, analyze, secure and monitor
fidelity bond and director and officer/errors & omissions liability
insurance coverage, and make the necessary Securities and Exchange
Commission (the “SEC”) filings relating
thereto.
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e.
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Prepare,
file and maintain minutes of meetings of the Boards of Directors
and any
committee thereof and Fund shareholders (the
“Shareholders”).
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f.
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If
applicable, recommend dividend declarations to the Boards of Directors
and
prepare and distribute to appropriate parties notices announcing
declaration of dividends and other distributions to
Shareholders.
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g.
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Attend
Boards of Directors meetings or any committee thereof and present
materials for Directors’ review at such
meetings.
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h.
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Maintain
a calendar of scheduled meetings of the Boards of
Directors.
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i.
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Distribute
materials for meetings of the Boards of Directors, including materials
that have been approved or supplied by the Fund’s investment adviser,
Administrator, counsel, auditors, custodians and other service
providers.
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2
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(4)
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Audits:
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a.
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Prepare
appropriate schedules and assist independent
auditors.
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b.
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Prepare
draft financial statements and footnotes in conjunction with the
annual
audit of the Funds.
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c.
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Provide
information to the SEC and facilitate audit
process.
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d.
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Provide
office facilities.
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(5)
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Assist
in overall operations of the
Funds.
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(6)
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Pay
Fund expenses upon written authorization from the
Funds.
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(7)
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Maintain each
Fund’s governing documents, including its Agreements and Declarations
of
Trust, Memorandum & Articles of Association (together with the Fund’s
PPM and SAI (as defined below), the “Governing Documents”), and minute
books, but only to the extent such documents are provided to USBFS
by the
Administrator or its representatives for safe
keeping.
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(8)
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Assist
the Fund’s officers in the negotiation of agreements to which the Fund is
a party that are related to the operations of the
Fund.
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B.
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Compliance:
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(1)
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Regulatory
Compliance:
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a.
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Monitor
compliance with the 1940 Act requirements,
including:
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(i)
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Total
return and SEC yield calculations.
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(ii)
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Maintenance
of books and records under Rule
31a-3.
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b.
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Monitor
each Fund's compliance with the policies and investment limitations
as set
forth in its private placement memorandum (“PPM”) and statement of
additional information where relevant information is available
(“SAI”).
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c.
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Perform
its duties hereunder in compliance with all applicable laws and
regulations and provide any sub-certifications reasonably requested
by the
each Fund in connection with any certification required of the
Fund
pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “SOX Act”), the 1940 Act
or any rules or regulations promulgated by the SEC
thereunder.
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d.
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Monitor
and assist the Fund’s investment adviser and other appropriate persons
(including, the Fund’s Chief Compliance Officer) with respect to
applicable regulatory and operational service issues (including,
without
limitation, under conditions of applicable SEC staff “no-action” letters),
the implementation, administration and updating of the Fund’s compliance
program, policies, procedures, committee charters and similar
documents, and update Boards of Directors
periodically.
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e.
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Produce
quarterly compliance reports for the Fund’s Chief Compliance Officer and
the Fund’s Boards of Trustees.
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f.
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Coordinate
examinations of the Fund by the staff of the SEC or other regulatory
authorities, the responses to those examinations and the responses
to
general communications from those
authorities.
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(2)
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State
and SEC Registration and Reporting:
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a.
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Assist
Fund counsel in preparing annual or other periodic updates of the
PPM and
SAI, including in connection with post-effective amendments of
TEI’s and
the Master Funds’ respective registration statements on Form N-2, and in
preparation of proxy statements.
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b.
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Prepare
and file with the SEC (upon the Fund’s approval) annual and
semiannual shareholder reports, Form N-SAR, Form N-CSR, and Form
N-Q
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3
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filings,
joint insurance policy filings, and Rule 24f-2 notices. As
requested by the Fund, prepare and file Form N-PX
filings.
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c.
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Coordinate
the printing, filing with the SEC (upon the Fund’s approval) and mailing
of PPMs and shareholder reports, and amendments and supplements
thereto,
documentation related to each Fund’s periodic tender offers to repurchase
Shares (including, without limitation, Schedules TO, Letters to
Shareholders, Letters of Transmittal and Offers to Purchase), and
as
needed, proxy statements to
Shareholders.
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d.
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File
with SEC fidelity bond and related documents under Rule 17g-1 of
the 1940
Act.
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e.
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In
cooperation with personnel of the Administrator under the supervision
of
the Boards of Directors, prepare documentation for filing with
SEC related
to each Fund’s periodic tender offers to repurchase Shares, including,
without limitation, Schedules TO, Letters to Shareholders, Letters
of
Transmittal and Offers to Purchase.
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f.
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Monitor
sales of Shares and prepare and timely file (or pre-file, as required)
with the SEC and applicable state securities commissioners all
applicable
filings with respect to the private placement of such Shares under
the
1933 Act and applicable rules and regulations adopted thereunder,
including preparation, amendment and filing of Form D and related
documents required under any applicable state securities
laws.
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C.
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Financial
Reporting:
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(1)
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Provide
financial data required by the PPM and
SAI.
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(2)
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Prepare
financial reports for officers, Shareholders, tax authorities,
performance
reporting companies, the Boards of Directors, the SEC, and independent
accountants.
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(3)
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Compute
the yield, total return, expense ratio, fees and expenses table
and
expense example, and portfolio turnover rate of each class of the
Funds.
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(4)
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Monitor
the expense accruals and notify each Fund’s management of any proposed
adjustments.
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(5)
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Provide
monthly financial information and prepare quarterly financial statements,
which include, without limitation, the following
items:
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a.
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Schedule
of Investments.
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b.
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Statement
of Assets and Liabilities.
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c.
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Statement
of Operations.
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d.
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Statement
of Changes in Net Assets.
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e.
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Cash
Statement, if applicable.
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f.
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Schedule
of Capital Gains and Losses.
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(6)
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Prepare
quarterly broker security transaction
summaries.
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(7)
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Upon
request, prepare Fund budgets, pro-forma financial statements,
expense and
profit/loss projections, and fee waiver/expense reimbursement projections
on a periodic basis.
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(8)
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If
authorized by the Funds, report the Fund’s fund data to investment company
industry survey companies (e.g., Lipper, Inc.) and applicable data
to
rating agencies (such as Standard & Poors) that rate the
Fund.
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D. General
Accounting:
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(1)
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Maintain
portfolio records on a trade date basis using security trade information
communicated from the Manager.
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(2)
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Identify
interest and dividend accrual balances as of each valuation date
and
calculate gross earnings on investments for each accounting
period.
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(3)
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Determine
gain/loss on security sales in accordance with Generally Accepted
Accounting Principles (GAAP) and the Governing Documents 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.
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(4)
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Calculate
the Management Fee (as that term is defined in the PPM), and monitor
for
compliance with the expense limitation arrangement as set forth
in the
Governing Documents.
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(5)
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Maintain
records with respect to any investment management fees waived by
the
Adviser and/or expenses paid by the Adviser, along with the available
and
actual recovery of such fees and expenses by the Adviser within
the
periods applicable to such
recovery.
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(6)
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For
each valuation date, calculate the expense accrual amounts in accordance
with the Governing Documents or otherwise as directed by the Funds
as to
methodology, rate or dollar amount.
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(7)
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Process
and record payments for expenses upon receipt of written authorization
from the Funds.
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(8)
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For
each valuation date, determine the net asset value of the Funds
according
to the accounting policies and procedures set forth in the Governing
Documents under the supervision of the Boards of
Directors.
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(9)
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Reconcile
cash and investment balances of the Funds’
custodian.
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(10)
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Prepare
monthly reports which document the adequacy of the accounting detail
to
support month-end ledger balances.
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(11)
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Prepare
and provide various statistical data relating to the Funds as requested
on
an ongoing basis, including security transactions listings and
portfolio
valuations.
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(12)
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Account
for capital contributions and withdrawals on a timely basis in
accordance
with the Governing Documents.
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(13)
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Calculate
per Share net asset value, per Share net earnings, and other per
Share
amounts reflective of the Funds’ operations at such time as required by
the nature and characteristics of the Funds (or as specified in
the
Governing Documents).
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(14)
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Communicate,
at an agreed upon time, the per Share price for each valuation
date.
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(15)
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Prepare
allocations of profit, loss, special and other allocations among
the
Shareholders in accordance with the allocation methodology identified
in
the PPM and Governing Documents.
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(16)
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Monitor
and allocate any “new issue” income among the Shareholders in accordance
with applicable National Association of Securities Dealers, Inc.,
rules.
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F. Tax
Reporting:
5
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(1)
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Prepare
and file on a timely basis appropriate federal and state tax returns
including, without limitation, Form 1065 with any necessary schedules
including Schedule K-1. Coordinate receipt of Schedules K-1 and/or
other relevant financial information from the Funds’ investments which is
necessary for completion of the Funds’ tax
returns.
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(2)
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Calculate
the adjusted tax basis of securities held by the Funds in accordance
with
Section 754 of the Code.
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(3)
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Prepare
state income breakdowns where relevant when
due.
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(4)
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File
Form 1099 Miscellaneous for payments to service providers when
due.
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(5)
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Monitor
tax items requiring special treatment, including wash sale losses
in
accordance with Section 1091 of the Code, straddles (Code Section
1092),
1256 contracts, constructive sales (Code Section 1259), short sales
(Code
Section 1233), foreign currency gain and loss (Code Section 988),
foreign
taxes paid, and passive foreign investment company
interests.
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(6)
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Calculate
eligible dividend income for corporate Shareholders and qualified
dividend
income on an annual basis for Shareholders who are
individuals.
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(7)
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If
relevant, monitor the amount of unrelated business taxable income
earned
by the Funds.
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(8)
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Perform
tax withholding, deposits and reporting with respect to non-U.S.
Shareholders, if any.
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(9)
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Maintain
tax identification number listings.
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G. Shareholder
Reporting:
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(1)
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Receive
orders and review subscription booklets for the purchase of
Shares.
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(2)
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Process
purchase orders, confirming subscribers’ eligibility under the
requirements specified in the respective PPMs to invest in TEI
and the
Master Fund, as applicable, with prompt delivery, where appropriate,
of
payment and supporting documentation to the Funds’ custodian, and issue
and record the appropriate number of uncertificated Shares with
such
uncertificated Shares being held in the appropriate Shareholder
account,
including, with respect to investments in TEI, the issuance and
recording
of the corresponding conduit investments into the Offshore Fund,
and in
turn, into the Master Fund.
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(3)
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Arrange
for issuance of Shares obtained through transfers of funds from
Shareholders’ accounts at financial
institutions.
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(4)
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Process
Share repurchase tenders by Shareholders pursuant to appropriate
tender
offering documents and terms and related capital withdrawal requests
received in good order, including, without limitation, any and
all
appropriate corresponding Share repurchases and redemptions among
the
Funds as necessary and appropriate to handle Share repurchase tenders
by
Shareholders of TEI, and, where relevant, deliver appropriate
documentation to the Manager.
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(5)
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Pay
monies upon receipt from the Funds where relevant and appropriate,
in
accordance with the instructions of redeeming
Shareholders. Issue promissory notes where relevant and
appropriate based on the applicable provisions of tender offers
made by
the Funds.
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(6)
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Process
transfers of Shares in accordance with the Shareholder’s instructions and
as permitted by the Governing Documents (and only upon receipt
of any
required consents and appropriate supporting
documentation).
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(7)
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Prepare
and transmit payments for distributions declared by the Funds,
after
deducting any amount required to be withheld by any applicable
laws, rules
and regulations and in accordance with Shareholder instructions,
and
prepare and mail to Shareholder any appropriate notices required
under
Section 19 of the 1940 Act in connection
therewith.
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(8)
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Make
changes to Shareholder records, including, but not limited to,
address
changes.
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(9)
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Provide
Shareholder account information upon request and prepare and mail
confirmations and monthly statements of account to Shareholders,
and other
recipient(s) designated by Shareholders, for all purchases, repurchases
pursuant to tender offers, corresponding redemptions in the Offshore
Fund,
and other confirmable transactions as agreed upon with the
Funds.
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(10)
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Mail
account statements and performance reports in a form approved by
the
Manager to Shareholders on a quarterly
basis.
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(11)
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Mail
financial statements to Shareholders as required by any rule or
regulations of the SEC or other regulatory authority and as reasonably
requested by the Administrator.
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(12)
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Mail
those federal, state and local income tax returns and schedules
as will
enable the Shareholders to prepare their respective federal, state
and
local income tax returns required with respect to Shareholder
activity.
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3.
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Pricing
of Securities
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For
each
valuation date, USBFS shall, to the extent that any portfolio securities
are
priced by an pricing source, obtain prices from a pricing source recommended
by
USBFS and approved by the Manager or subadviser to the Master Fund
(“Subadviser”) and apply those prices to the portfolio positions of the Master
Fund, consistent with the provisions of the Governing Documents. For
those securities where market quotations are not readily available, the Manager
or Subadviser shall approve, in good faith, procedures for determining the
fair
value for such securities.
With
respect to any portfolio securities priced by a pricing source, if the Manager
or Subadviser desires to provide a price that varies from the price provided
by
the pricing source, the Manager or Subadviser shall promptly notify and supply
USBFS with the price of any such security on each valuation date. All
such pricing changes made by the Funds 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.
Notwithstanding
anything to the contrary in Section 8 below, as more fully provided in this
paragraph, USBFS shall reimburse the Funds and its Shareholders for losses
due
to NAV Differences (as defined below) arising out of, or relating to, USBFS’
refusal or failure to comply with the terms of this Agreement or from its
bad
faith, negligence or willful misconduct or reckless disregard in the performance
of its duties under this Agreement. Specifically, USBFS shall
reimburse for any net losses during each NAV Error Period (as defined below)
resulting from an NAV Difference that is at least $0.01 per Share and that,
as a
percentage of Recalculated NAV (as defined below) of the Funds, is at least
½ of
1%; provided, however, that USBFS shall not be responsible for reimbursing
any
Shareholder experiencing a loss during any such NAV
7
Error
Period
of less than $25. In providing reimbursement to the applicable Fund
and any Shareholder, USBFS shall, at its option, either make direct payment
limited to the amount of the NAV Differences for the Funds and any Shareholder,
or will reprocess the Shareholder transactions affected by the NAV
Differences. NAV Differences and any liability of USBFS therefrom are
to be calculated each time the net asset value per Share is
calculated. For purposes of calculating USBFS’ liability hereunder,
gains shall offset losses within each NAV Error Period and future losses;
however, net gains shall not be carried back to offset losses in a prior
NAV
Error Period. For purposes of this paragraph:
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(i)
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“NAV
Error Period” means any month during which any NAV Difference
exists.
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(ii)
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“NAV
Difference” means the difference between the Recalculated NAV and the net
asset value per Share at which a given purchase or redemption is
effected,
divided by the Recalculated NAV with respect to such purchase or
redemption.
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(iii)
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“Recalculated
NAV” means the net asset value per Share at which a Shareholder purchase
or redemption should have been
affected.
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4.
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Changes
in Accounting Procedures
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Any
changes to the Governing Documents that affect accounting practices and
procedures under this Agreement shall be effective upon written receipt of
notice and acceptance by USBFS.
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5.
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Changes
in Equipment, Systems,
Etc.
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USBFS
reserves the right to make changes from time to time, as it deems advisable,
relating to its systems, programs, rules, operating schedules and equipment,
so
long as such changes do not adversely affect the nature, quality or scope
of the
services provided under this Agreement.
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6.
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Compensation
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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 in accordance with the terms
hereof). 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 Funds or the Administrator
shall pay all such fees and reimbursable expenses within 30 calendar days
following the receipt of the billing notice, except for any fee or expense
subject to a good faith dispute. The Administrator shall notify USBFS
in writing within 30 calendar days following receipt of each invoice if the
Administrator is disputing any amounts in good faith. The
Administrator 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 Administrator is disputing in good faith
as
set forth above, unpaid invoices shall accrue a finance charge of 1½% per month
after the due date.
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7.
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Representations
and Warranties
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A.
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The
Administrator hereby represents and warrants to USBFS, which
representations and warranties shall be deemed to be continuing
throughout
the term of this Agreement, that:
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8
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(1)
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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;
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(2)
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This
Agreement has been duly authorized, executed and delivered by the
Administrator in accordance with all requisite action and, assuming
due
authorization, execution and delivery by USBFS, constitutes a valid
and
legally binding obligation of the Administrator, enforceable against
the
Administrator 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
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(3)
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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.
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B.
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USBFS
hereby represents and warrants to and agrees with the Administrator,
which representations and warranties and agreement shall be deemed
to be
continuing throughout the term of this Agreement,
that:
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(1)
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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;
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(2)
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This
Agreement has been duly authorized, executed and delivered by USBFS
in
accordance with all requisite action and, assuming due authorization,
execution and delivery by the Administrator, constitutes a valid
and
legally binding obligation of USBFS, enforceable against USBFS
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
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(3)
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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.
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8.
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Standard
of Care; Indemnification; Limitation of
Liability
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A.
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USBFS
shall exercise the care of a professional fund administrator, which
shall
in any event be a standard of care not less than 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 Administrator or the Funds in connection with its
duties
under this Agreement, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond
USBFS’
control, except a loss arising out of or relating to USBFS’ refusal or
failure to comply with the terms of this
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9
Agreement
or
from its bad faith, negligence, or willful misconduct or reckless disregard
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 Administrator 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 Administrator or the Funds
or such
other person, the names of whom to be included in a list of authorized
persons
approved by the Administrator or the Funds and set forth on Exhibit
C hereto (as amended from time to time), except for any and all claims,
demands, losses, expenses, and liabilities arising out of or relating to
USBFS’
refusal or failure to comply with the terms of this Agreement or from its
bad
faith, negligence or willful misconduct or reckless disregard in the performance
of its duties under this Agreement. This indemnity shall be a
continuing obligation of the Administrator, its successors and assigns,
notwithstanding the termination of this Agreement. As used in this
paragraph, the term “USBFS” shall include USBFS’ directors, officers and
employees.
USBFS
shall indemnify and hold the Funds and the Administrator harmless from and
against any and all claims, demands, losses, expenses, and liabilities of
any
and every nature (including reasonable attorneys' fees) that the Funds or
the
Administrator may sustain or incur or that may be asserted against the Funds
or
the Administrator by any person arising out of any action taken or omitted
to be
taken by USBFS as a result of USBFS’ refusal or failure to comply with the terms
of this Agreement, or from its bad faith, negligence, or willful misconduct
or
reckless disregard in the performance of its duties under this Agreement,
and
any material breach of the representations and warranties of USBFS in Section
7.B of 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 terms “Funds,” and
“Administrator” shall include their respective trustees, directors, officers,
managers, members and employees.
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 Administrator or the
Funds shall be entitled to inspect USBFS’ premises and operating capabilities at
any time during regular business hours of USBFS, upon reasonable notice to
USBFS. Moreover, USBFS shall provide the Administrator or the Funds,
at such times as the Administrator or the Funds 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.
10
Notwithstanding
the above, USBFS reserves the right to reprocess and correct administrative
errors at its own expense.
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B.
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In
order that the indemnification provisions contained in this section
shall
apply, it is understood that if in any case either party (the
“indemnitor”) may be asked to indemnify or hold the other party
(“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; provided that the indemnitee’s failure to so notify the
indemnitor shall not relieve the indemnitor of its responsibility
to
indemnify the indemnitee. 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.
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C.
|
The
indemnity and defense provisions set forth in this Section 8 shall
indefinitely survive the termination and/or assignment of this
Agreement.
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9.
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Notification
of Error
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The
Administrator will notify USBFS of any balancing or control errors caused
by
USBFS known to the Administrator upon the later to occur of: (i)
three business days after receipt of any reports rendered by USBFS to the
Administrator or the Funds; (ii) three business days after discovery of any
error or omission not covered in the balancing or control procedure; or (iii)
three business days after receiving notice from any Shareholder regarding
any
such balancing or control error.
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10.
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Data
Necessary to Perform
Services
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The
Administrator or their agent shall furnish, or shall cause the Funds to furnish,
to USBFS the data necessary to perform the services described herein at such
times and in such form as mutually agreed upon.
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11.
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Proprietary
and Confidential
Information
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USBFS
agrees on behalf of itself and its directors, officers, employees and agents
to
treat confidentially and as proprietary information of the Funds all records
and
other information relative to the Funds and prior, present, or potential
Shareholders of the Funds (and clients of said Shareholders), and the Manager
or
Subadviser, 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 Funds, which approval
shall not be unreasonably withheld and may not be withheld where USBFS is
advised by counsel to USBFS or the Administrator that failure to do
so may expose USBFS to civil or criminal contempt proceedings for failure
to
comply, (ii) when requested to divulge such information by duly constituted
governmental authorities if USBFS is advised by counsel to
USBFS or the Administrator that failure to do so will result in
liability to USBFS and provided that, in such
11
event
USBFS shall promptly advise the Administrator of such advice, or
(iii) when so requested by the Administrator. 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 legitimately in the possession of USBFS prior to the receipt
thereof
from the Administrator, the Funds or their agents, shall not be subject to
this
paragraph. Further, USBFS will adhere to any privacy policies adopted
by the Funds.
The
Subadministrator acknowledges that certain Shareholder information made
available by the Administrator to USBFS or otherwise maintained by
USBFS under this Agreement may be deemed nonpublic personal
information under the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and other applicable privacy
laws
(collectively, “Privacy Laws”). The Subadministrator agrees (i) not
to disclose or use such information except as required to carry out its duties
under the Agreement or as otherwise permitted by law in the ordinary course
of
business; (ii) to limit access to such information to authorized representatives
of USBFS and the Administrator; (iii) to establish and maintain
reasonable physical, electronic and procedural safeguards to protect such
information; and (iv) to cooperate with the Administrator and provide reasonable
assistance in ensuring compliance with such Privacy Laws to the extent
applicable to either or both of the Parties.
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12.
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Records
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USBFS
shall keep records relating to the services to be performed hereunder, in
the
form and manner, in such locations, and for such period, as it may deem
advisable, as is consistent with industry practice, as required by applicable
law and as is agreeable to the Administrator. 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 Funds and will be promptly
surrendered to the Administrator, the Funds or their designees on and in
accordance with its request.
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13.
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Compliance
with Laws
|
In
the
performance of its duties hereunder, USBFS undertakes to comply with the
laws,
rules and regulations of governmental authorities having jurisdiction with
respect to the duties to be performed by USBFS hereunder. Except as
specifically set forth herein, USBFS assumes no responsibility for such
compliance by the Administrator or the Funds.
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14.
|
Term
of Agreement; Amendment
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A.
|
This
Agreement shall commence on the date hereof, and shall continue
for an
initial term of one (1) year (the “Initial Term”) unless otherwise
terminated as provided below. Thereafter, unless otherwise
terminated earlier as provided below, this Agreement automatically
renews
for additional one year terms (each a “Renewal
Term”).
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B.
|
The
Administrator or USBFS may terminate this Agreement at any time
by giving
the other party a written notice not less than ninety (90)
days prior to the date the termination is
to be effective.
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C.
|
In
the event the Administrator gives notice of termination pursuant
to either
Section 14(A) or (B), USBFS shall thereby be relieved of all duties
and
responsibilities pursuant to this Agreement (except with respect
to any
provisions of this Agreement that purport to survive the termination
of
this Agreement). Fees and out-of-pocket expenses incurred by
USBFS, but unpaid by the Administrator upon such termination, shall
be
immediately due and payable upon and notwithstanding such
termination.
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12
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D.
|
Notwithstanding
the foregoing, this Agreement may be terminated by USBFS upon the
breach
of the Administrator, and by the Administrator upon the breach
of USBFS,
of any material term of this Agreement (including, with respect
to USBFS,
the failure by USBFS to act consistently with the standard of care
set
forth in Section 8) if such breach is not cured within 15 days
of written
notice of such breach to the breaching
party.
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E.
|
This
Agreement may not be amended or modified in any manner except by
written
agreement executed by USBFS and the
Administrator.
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15.
|
Duties
in the Event of
Termination
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In
the
event that, in connection with termination, a successor to any of USBFS’ duties
or responsibilities hereunder is designated by the Administrator by written
notice to USBFS, USBFS will promptly, upon such termination and at the
reasonable expense of the Administrator, 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 Administrator (if such form differs from the form in which USBFS has
maintained the same, the Administrator 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’
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 Administrator.
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16.
|
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 either party hereto without the written consent of the
other party.
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17.
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Governing
Law
|
This
Agreement shall be construed in accordance with the laws of the State of
Delaware, without regard to conflicts of law principles.
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18.
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No
Agency Relationship
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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.
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19.
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Services
Not Exclusive
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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.
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20.
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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
13
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.
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21.
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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 any facsimile transmission to the other party’s
address set forth below:
Notice
to
USBFS shall be sent to:
U.S.
Bancorp Fund Services, LLC
Attention: Vice
President, Alternative Investment Products
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Notice
to
the Administrator shall be sent to:
Allegiance
Investment Management, LLC
Attention: President
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax
No.: (▇▇▇)
▇▇▇-▇▇▇▇
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22.
|
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.
14
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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U.S.
BANCORP FUND SERVICES, LLC
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By:
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Name:
|
|
Title:
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|
ALLEGIANCE
INVESTMENT MANAGEMENT, LLC
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By:
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Name:
|
|
Title:
|
15
Exhibit
A
Fee
Schedule
Annual
fee based on the net assets of the Master
Fund:
12
basis
points on the first $150 million
9
basis
points on the next $150 million
6
basis
points on the balance above $300 million
Annual
minimum fee: $120,000
The
fees
set forth above shall be billed monthly based on one-twelfth (1/12) of the
annual fee amount as applicable to the net assets of the Master Fund as of
the
start of business on the first day of each month, after adjustment for any
subscriptions effective on that date.
Extraordinary
Services – additional as necessary:
▪
Conversion of records – if required, $5,000, includes initial statement
customization and related programming and interface with prime
broker(s)
▪ Investor web access to capital account information
▪ Investor web access to capital account information
▪ Custody
services, if required
▪ Offshore
registrar, if required
Plus
out-of-pocket expenses, if required, including but not limited
to:
Postage,
Stationery
Programming
/customization
Retention
of records
Special
reports
Federal
and state regulatory filing fees
Expenses
from U.S. Bancorp participation in client meetings
Auditing
and legal expenses
All
other
out-of-pocket expenses
All
fees
are billed monthly and payable in arrears subsequent to the closing of the
books
for each month.
16
Exhibit
(k)(2)
Exhibit
B
List
of Authorized Officers
Name Title Specimen
Signature
▇▇▇▇
▇.
▇▇▇▇▇▇▇ Chief
Executive
Officer ___________________________
▇▇▇▇▇▇▇▇▇
▇.
Popof Chief
Financial
Officer ___________________________
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇ Chief
Compliance
Officer ___________________________
C-1