EXHIBIT (h)(2)(a)
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT, dated May 31, 1997, by and between the parties set forth in
Schedule A hereto (designated collectively hereafter as the "Funds") and XXX
XXXXXX AMERICAN CAPITAL INVESTMENT ADVISORY CORP., a Delaware corporation
("Advisory Corp.").
WITNESSETH:
WHEREAS, each of the Funds is registered as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, Advisory Corp. has the capability of providing certain accounting
services to the Funds; and
WHEREAS, each desires to utilized Advisory Corp. in the provision of such
accounting services; and
WHEREAS, Advisory Corp. intends to maintain its staff in order to
accommodate the provision of all such services.
NOW THEREFORE, in consideration of the premises and the mutual covenants
spelled out herein, it is agreed between the parties hereto as follows:
1. Appointment of Advisory Corp.. As agent, Advisory Corp. shall provide each of
the Funds the accounting services ("Accounting Services") as set forth in
Paragraph 2 of this Agreement. Advisory Corp. accepts such appointment and
agrees to furnish the Accounting Services in return for the compensation
provided in Paragraph 3 of this Agreement.
2. Accounting Services to be Provided. Advisory Corp. will provide to each
respective Fund accounting related services in connection with the maintenance
of the financial records of such Fund, including without limitation: (i)
maintenance of the general ledger and other financial books and records; (ii)
processing of portfolio transactions; (iii) coordination of the valuation of
portfolio securities; (iv) calculation of the Fund's net asset value; (v)
coordination of financial and regulatory reporting; (vi) preparation of
financial reports for each Fund's Board of Trustees; (vii) coordination of tax
and financial compliance issues; (viii) the establishment and maintenance of
accounting policies; (ix) recommendations with respect to dividend policies; (x)
preparation of each Fund's financial reports and other accounting and tax
related notice information to shareholders; and (xi) the assimilation and
interpretation of accounting data for meaningful management review. Advisory
Corp. shall provide accurate maintenance of each Fund's financial books and
records as required by the applicable securities statutes and regulations, and
shall hire persons (collectively the "Accounting Service Group") as needed to
provide such Accounting Services.
1
3. Expenses and Reimbursements. Advisory Corp. shall be reimbursed by the Funds
for all costs and services incurred in connection with the provision of the
aforementioned Accounting Services ("Accounting Service Expenses"), including
but not limited to all salary and related benefits paid to the personnel of the
Accounting Service Group, overhead and expenses related to office space and
related equipment and out-of-pocket expenses.
The Accounting Services Expenses will be paid by Advisory Corp. and
reimbursed by the Funds. Advisory Corp. will tender to each Fund a monthly
invoice as of the last business day of each month which shall certify the total
support service expenses expended. Except as provided herein, Advisory Corp.
will receive no other compensation in connection with Accounting Services
rendered in accordance with this Agreement.
4. Payment for Accounting Service Expenses Among the Funds. As to one quarter
(25%) of the Accounting Service Expenses incurred under the Agreement, the
expense shall be allocated between all Funds based on the number of classes of
shares of beneficial interest that each respective Fund has issued. As to the
remaining three quarters (75%) of the Accounting Service Expenses incurred under
the Agreement, the expense shall be allocated between all Funds based on their
relative net assets. For purposes of determining the percentage of expenses to
be allocated to any Fund, the liquidation preference of any preferred shares
issued by any such Fund shall not be considered a liability of such Fund for the
purposes of calculating relative net assets of such Fund.
5. Maintenance of Records. All records maintained by Advisory Corp. in
connection with the performance of its duties under this Agreement will remain
the property of each respective Fund and will be preserved by Advisory Corp. for
the periods prescribed in Section 31 of the 1940 Act and the rules thereunder or
such other applicable rules that may be adopted from time to time under the act.
In the event of termination of the Agreement, such records will be promptly
delivered to the respective Funds. Such records may be inspected by the
respective Funds at reasonable times.
6. Liability of Advisory Corp. Advisory Corp. shall not be liable to any Fund
for any action taken or thing done by it or its agents or contractors on behalf
of the fund in carrying out the terms and provisions of the Agreement if done in
good faith and without gross negligence or misconduct on the part of Advisory
Corp., its agents or contractors.
7. Indemnification By Funds. Each Fund will indemnify and hold Advisory Corp.
harmless from all lost, cost, damage and expense, including reasonable expenses
for legal counsel, incurred by Advisory Corp. resulting from: (a) any claim,
demand, action or suit in connection with Advisory Corp.'s acceptance of this
Agreement; (b) any action or omission by Advisory Corp. in the performance of
its duties hereunder; (c) Advisory Corp.'s acting upon instructions believed by
it to have been executed by a duly authorized officer of the Fund; or (d)
Advisory Corp.'s acting upon information provided by the Fund in form and under
policies agreed to by Advisory Corp. and the Fund. Advisory Corp. shall not be
entitled to such indemnification in respect of actions or omissions constituting
gross negligence or willful misconduct of Advisory Corp. or its agents or
contractors. Prior to confessing any claim against it which may be subject to
this indemnification, Advisory Corp. shall give the Fund reasonable opportunity
to defend against said claim in its own name or in the name of Advisory Corp.
8. Indemnification By Advisory Corp. Advisory Corp. will indemnify and hold
harmless each Fund from all loss, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by the Fund resulting from any claim,
demand, action or suit arising out of Advisory Corp.'s failure to comply with
the terms of this Agreement or which arises out of the gross negligence or
willful misconduct of Advisory Corp. or its agents or contractors; provided that
such negligence or misconduct is not attributable to the Funds, their agents or
contractors. Prior to confessing any claim against it which may be subject to
this indemnification, the Fund shall give Advisory Corp. reasonable opportunity
to defend against said claim in its own name or in the name of such Fund.
2
9. Further Assurances. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
10. Dual Interests. It is understood that some person or persons may be
directors, trustees, officers or shareholders of both the Funds and Advisory
Corp. (including Advisory Corp.'s affiliates), and that the existence of any
such dual interest shall not affect the validity hereof or of any transactions
hereunder except as otherwise provided by a specific provision of applicable
law.
11. Execution, Amendment and Termination. The term of this Agreement shall begin
as of the date first above written, and unless sooner terminated as herein
provided, this Agreement shall remain in effect through May, 1998, and
thereafter from year to year, if such continuation is specifically approved at
least annually by the Board of Trustees of each Fund, including a majority of
the independent Trustees of each Fund. This Agreement may be modified or amended
from time to time by mutual agreement between the parties hereto and may be
terminated after May, 1998, by at least sixty (60) days' written notice given by
one party to the others. Upon termination hereof, each Fund shall pay to
Advisory Corp. such compensation as may be due as of the date of such
termination and shall likewise reimburse Advisory Corp. for its costs, expenses
and disbursements payable under this Agreement to such date. This Agreement may
be amended in the future to include as additional parties to the Agreement other
investment companies for with Advisory Corp., any subsidiary or affiliate serves
as investment advisor or distributor if such amendment is approved by the
President of each Fund.
12. Assignment. Any interest of Advisory Corp. under this Agreement shall not be
assigned or transferred, either voluntarily or involuntarily, by operation of
law or otherwise, without the prior written consent of the Funds. This Agreement
shall automatically and immediately terminate in the event of its assignment
without the prior written consent of the Funds.
13. Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or sent by registered or certified mail, postage prepaid, to the other
party at such address as such other party may designate for the receipt of such
notices. Until further notice to the other parties, it is agreed that for this
purpose the address of each Fund is Xxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx,
Xxxxxxxx 00000, Attention: President and that of Advisory Corp. for this purpose
is Xxx Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: President.
14. Personal Liability. As provided for in the Agreement and Declaration of
Trust of the various Funds, under which the Funds are organized as
unincorporated trusts, the shareholders, trustees, officers, employees and other
agents of the Fund shall not personally be found by or liable for the matters
set forth hereto, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder.
15. Interpretative Provisions. In connection with the operation of this
Agreement, Advisory Corp. and the Funds may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor of this
Agreement.
16. State Law. This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Illinois.
17. Captions. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
3
IN WITNESS WHEREOF, the parties have caused this amended and restated
Agreement to be executed as of the day and year first above written.
ALL OF THE PARTIES SET FORTH IN SCHEDULE A
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, Vice President
XXX XXXXXX AMERICAN CAPITAL INVESTMENT
ADVISORY CORP.
By: /s/ Xxxxxx X. XxXxxxxxx
---------------------------------
Xxxxxx X. XxXxxxxxx, President
4
SCHEDULE A
I. FUNDS ADVISED BY XXX XXXXXX AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER XXX XXXXXX FUNDS"):
CLOSED END FUNDS
Xxx Xxxxxx American Capital Municipal Income Trust Xxx Xxxxxx American Capital
California Municipal Trust Xxx Xxxxxx American Capital High Income Trust Xxx
Xxxxxx American Capital High Income Trust II Xxx Xxxxxx American Capital
Investment Grade Municipal Trust Xxx Xxxxxx American Capital Municipal Trust Xxx
Xxxxxx American Capital California Quality Municipal Trust Xxx Xxxxxx American
Capital Florida Quality Municipal Trust Xxx Xxxxxx American Capital New York
Quality Municipal Trust Xxx Xxxxxx American Capital Ohio Quality Municipal Trust
Xxx Xxxxxx American Capital Pennsylvania Quality Municipal Trust Xxx Xxxxxx
American Capital Trust For Insured Municipals Xxx Xxxxxx American Capital Trust
For Investment Grade Municipals
Xxx Xxxxxx American Capital Trust For Investment Grade California Municipals Xxx
Xxxxxx American Capital Trust For Investment Grade Florida Municipals Xxx Xxxxxx
American Capital Trust For Investment Grade New Jersey Municipals Xxx Xxxxxx
American Capital Trust For Investment Grade New York Municipals Xxx Xxxxxx
American Capital Trust For Investment Grade Pennsylvania Municipals Xxx Xxxxxx
American Capital Municipal Opportunity Trust Xxx Xxxxxx American Capital
Advantage Municipal Income Trust Xxx Xxxxxx American Capital Advantage
Pennsylvania Municipal Income Trust Xxx Xxxxxx American Capital Strategic Sector
Municipal Trust Xxx Xxxxxx American Capital Value Municipal Income Trust Xxx
Xxxxxx American Capital California Value Municipal Income Trust Xxx Xxxxxx
American Capital Massachusetts Value Municipal Income Trust Xxx Xxxxxx American
Capital New Jersey Value Municipal Income Trust Xxx Xxxxxx American Capital New
York Value Municipal Income Trust Xxx Xxxxxx American Capital Ohio Value
Municipal Income Trust Xxx Xxxxxx American Capital Pennsylvania Value Municipal
Income Trust Xxx Xxxxxx American Capital Municipal Opportunity Trust II Xxx
Xxxxxx American Capital Florida Municipal Opportunity Trust Xxx Xxxxxx American
Capital Advantage Municipal Income Trust II Xxx Xxxxxx American Capital Select
Sector Municipal Trust
INSTITUTIONAL FUNDS
II. FUNDS ADVISED BY XXX XXXXXX AMERICAN CAPITAL MANAGEMENT, INC. ("MANAGEMENT,
INC.") (COLLECTIVELY, THE "FORMER XXX XXXXXX FUNDS"):
The Explorer Institutional Trust
on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
5
OPEN END FUNDS
III. FUNDS ADVISED BY XXX XXXXXX AMERICAN CAPITAL ASSET MANAGEMENT, INC.
("ASSET MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER AMERICAN CAPITAL
FUNDS"):
Xxx Xxxxxx American Capital Xxxxxxxx Fund ("Xxxxxxxx Fund")
Xxx Xxxxxx American Capital Corporate Bond Fund ("Corporate Bond Fund")
Xxx Xxxxxx American Capital Emerging Growth Fund ("Emerging Growth Fund")
Xxx Xxxxxx American Capital Enterprise Fund ("Enterprise Fund")
Xxx Xxxxxx American Capital Equity Income Fund ("Equity Income Fund")
Xxx Xxxxxx American Capital Global Managed Assets Fund ("Global Managed
Assets Funds")
Xxx Xxxxxx American Capital Government Securities Fund ("Government
Securities Fund")
Xxx Xxxxxx American Capital Government Target Fund ("Government Target
Fund")
Xxx Xxxxxx American Capital Growth and Income Fund ("Growth and Income
Fund")
Xxx Xxxxxx American Capital Harbor Fund ("Harbor Fund")
Xxx Xxxxxx American Capital High Income Corporate Bond Fund ("High Income
Corporate Bond Fund")
Xxx Xxxxxx American Capital Life Investment Trust ("Life Investment
Trust" or "LIT") on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation
Portfolio") Money Market Portfolio ("LIT Money Market Portfolio")
Real Estate Securities Portfolio ("LIT Real Estate Securities
Portfolio") Growth and Income Portfolio ("LIT Growth and Income
Portfolio")
Xxx Xxxxxx American Capital Limited Maturity Government Fund ("Limited
Maturity Government Fund")
Xxx Xxxxxx American Capital Pace Fund ("Pace Fund")
Xxx Xxxxxx American Capital Real Estate Securities Fund ("Real Estate
Securities Fund")
Xxx Xxxxxx American Capital Reserve Fund ("Reserve Fund")
Xxx Xxxxxx American Capital Small Capitalization Fund ("Small
Capitalization Fund")
Xxx Xxxxxx American Capital Tax-Exempt Trust ("Tax-Exempt Trust") on
behalf of its Series
Xxx Xxxxxx American Capital High Yield Municipal Fund ("High Yield
Municipal Fund")
Xxx Xxxxxx American Capital U.S. Government Trust for Income ("U.S.
Government Trust for Income")
6
IV. FUNDS ADVISED BY XXX XXXXXX AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER XXX XXXXXX
FUNDS"):
Xxx Xxxxxx American Capital U.S. Government Trust ("U.S. Government Trust")
on behalf of its series
Xxx Xxxxxx American Capital U.S. Government Fund ("U.S. Government Fund")
Xxx Xxxxxx American Capital Tax Free Trust ("Tax Free Trust") on behalf of
its series
Xxx Xxxxxx American Capital Insured Tax Free Income Fund ("Insured Tax Free
Income Fund")
Xxx Xxxxxx American Capital Tax Free High Income Fund ("Tax Free High
Income Fund")
Xxx Xxxxxx American Capital California Insured Tax Free Fund ("California
Insured Tax Free Fund")
Xxx Xxxxxx American Capital Municipal Income Fund ("Municipal Income Fund")
Xxx Xxxxxx American Capital Intermediate Term Municipal Income Fund
(Intermediate Term Municipal Income Fund")
Xxx Xxxxxx American Capital Florida Insured Tax Free Income Fund ("Florida
Insured Tax Free Income Fund")
Xxx Xxxxxx American Capital New Jersey Tax Free Income Fund ("New Jersey
Tax Free Income Fund")
Xxx Xxxxxx American Capital New York Tax Free Income Fund ("New York Tax
Free Income Fund")
Xxx Xxxxxx American Capital California Tax Free Income Fund ("California
Tax Free Income Fund")
Xxx Xxxxxx American Capital Michigan Tax Free Income Fund ("Michigan Tax
Free Income Fund")
Xxx Xxxxxx American Capital Missouri Tax Free Income Fund ("Missouri Tax
Free Income Fund")
Xxx Xxxxxx American Capital Ohio Tax Free Income Fund ("Ohio Tax Free
Income Fund")
Xxx Xxxxxx American Capital Trust ("VKAC Trust")
Xxx Xxxxxx American Capital High Yield Fund ("High Yield Fund")
Xxx Xxxxxx American Capital Short-Term Global Income Fund ("Short-Term
Global Income Fund")
Xxx Xxxxxx American Capital Strategic Income Fund ("Strategic Income Fund")
Xxx Xxxxxx American Capital Equity Trust ("Equity Trust") on behalf of its
series
Xxx Xxxxxx American Capital Utility Fund ("Utility Fund")
Xxx Xxxxxx American Capital Growth Fund ("Growth Fund")
Xxx Xxxxxx American Capital Value Fund ("Value Fund")
Xxx Xxxxxx American Capital Great American Companies Fund ("Great American
Companies Fund")
Xxx Xxxxxx American Capital Prospector Fund ("Prospector Fund")
Xxx Xxxxxx American Capital Aggressive Growth Fund ("Aggressive Growth
Fund")
Xxx Xxxxxx American Capital Foreign Securities Fund ("Foreign Securities
Fund")
Xxx Xxxxxx American Capital Pennsylvania Tax Free Income Fund
("Pennsylvania Tax Free Income Fund")
Xxx Xxxxxx American Capital Tax Free Money Fund ("Tax Free Money Fund")
7
