Exhibit 99.B(H)(2)
XXXXX FARGO VARIABLE TRUST
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of the 15th day of September, 1999, by and between Xxxxx
Fargo Variable Trust, a business trust organized under the laws of the State of
Delaware, with its principal office and place of business at 000 Xxxxxx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000 (the "Trust"), and Forum Accounting Services, LLC
("Forum") a Delaware limited liability company with its principal office and
place of business at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest (the "Shares"), in separate series
and classes; and
WHEREAS, the Trust offers shares in various series as listed in Appendix A
hereto (each such series, together with all other series subsequently
established by the Trust and subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust may offer shares of various classes of each Fund as
listed in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints Forum, and Forum hereby agrees, to act as fund
accountant of the Trust for the period and on the terms set forth in this
Agreement. In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Amended and Restated Declaration of Trust and, if applicable,
Bylaws (collectively, as amended from time to time, "Organic Documents"), (ii)
the Trust's Registration Statement and all amendments thereto filed with the
U.S. Securities and Exchange Commission ("SEC") pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), or the 1940 Act (the "Registration
Statement"), (iii) the Trust's current Prospectus and Statement of Additional
Information of each Fund (collectively, as currently in effect and as amended or
supplemented, the "Prospectus") and (iv) all procedures adopted by the Trust
with respect to the Funds (e.g., repurchase agreement procedures), and shall
promptly furnish Forum with all amendments of or supplements to the foregoing.
The Trust shall deliver to Forum a certified copy of the resolution of the Board
of Trustees of the Trust (the "Board") appointing Forum and authorizing the
execution and delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a) Forum and Xxxxx Fargo Bank, N.A., the Trust's administrator
(collectively with its agents, the "Administrator"), may from time to time adopt
such procedures as they agree upon to implement the terms of this Section. With
respect to each Fund, Forum shall perform the following services:
(i) calculate the net asset value per share ("NAV") with the
frequency prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, deduction, credit, gain and
loss, if any, and process each Fund's stated expense ratio as required
by the Trust and in conformance with generally accepted accounting
practice ("GAAP"), the SEC's Regulation S-X (or any successor
regulation) and the Internal Revenue Code of 1986, as amended (or any
successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
gross expenses, capital share activity and security transactions of
each Fund;
(iv) calculate the "SEC yield" and money market fund seven day
yields for each Fund, and each Class thereof, as applicable;
(v) provide the Trust and such other persons as the Administrator
may direct with the following reports (A) Key Numbers Summary, (B)
trial balance, (C) current security position report by tax lot, (D)
security position report by security identifier, (E) stale pricing and
(F) cash position and projection report;
(vi) prepare and record once daily, as of the time when the net
asset value of a Fund is calculated or at such other time as otherwise
directed by the Trust, either (A) a valuation of the assets of the Fund
(based upon the use of outside services normally used and contracted
for this purpose by Forum in the case of securities for which
information and market price or yield quotations are readily available
and based upon evaluations conducted in accordance with the Trust's
instructions in the case of all other assets) or (B) a calculation
confirming that the market value of the Fund's assets does not deviate
from the amortized cost value of those assets by more than a specified
percentage;
(vii) make such adjustments over such periods as the Administrator
deems necessary to reflect over-accruals or under-accruals of estimated
expenses or income;
(viii) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(ix) provide information typically supplied in the investment
company industry to the Fund's transfer agent and NASDAQ;
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(x) transmit the NAVs and dividend factors of all Funds to the
Administrator and to those persons designated by the Administrator in
writing either by internet e-mail or facsimile transmission as
designated by the Administrator;
(xi) provide the Trust or the Administrator with the data requested
by the Trust or the Administrator that is required to update the
Registration Statement;
(xii) provide the Trust or independent accountants the data requested
with respect to the preparation of the Trust's income, excise and other
tax returns;
(xiii) provide the Trust or Administrator with unadjusted Fund data
directly from Forum's portfolio accounting system for any Fund business
day and other data reasonably requested for the preparation of the
Trust's semi-annual financial statements;
(xiv) process all distributions as directed in writing by the Trust
or the Administrator;
(xv) transmit to and receive from each Fund's transfer agent
appropriate data to reconcile daily Shares outstanding and other data
with the transfer agent;
(xvi) reconcile cash daily and reconcile security identifier, units,
maturities and rates at least monthly with each Fund's custodian;
(xvii) verify investment trade tickets when received from an
investment adviser and maintain individual ledgers and historical tax
lots for each security;
(xviii) report to the Trust and the Administrator within 15 days after
the end of each calendar month, Forum's compliance for the prior month
with the written service level standards agreed upon from time to time
by the Trust and Forum (the "Service Standards"). The initial Service
Standards are attached as Appendix B hereto; and
(xix) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time by the Administrator in the
procedures adopted by the Board pursuant to mutually acceptable
compensation and implementation agreements.
(b) Forum shall prepare and maintain on behalf of the Trust the following
books and records of each Fund, and each Class thereof, pursuant to Rule 31a-1
under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) General and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv) of the Rule);
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(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
whether executed or not, and all other portfolio purchases or sales, as
required by subsections (b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any
direct or indirect interest or which the Trust has granted or
guaranteed and a record of any contractual commitments to purchase,
sell, receive or deliver any property, as required by subsection (b)(7)
of the Rule;
(v) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as agreed upon between the
parties hereto.
(c) The books and records prepared and maintained pursuant to Section 2(b)
shall be prepared and maintained in such form, for such periods and in such
locations as may be required by the 1940 Act. The books and records pertaining
to the Trust that are in possession of Forum shall be the property of the Trust.
The Trust, the Administrator, or the Trust's or the Administrator's authorized
representatives, shall have access to such books and records at all times during
Forum's normal business hours. Upon the reasonable request of the Trust or the
Administrator, copies of any such books and records shall be provided promptly
by Forum to the Trust or the Trust's authorized representatives at the Trust's
expense. In the event the Trust designates a successor that shall assume any of
Forum's obligations hereunder, Forum shall, at the expense and direction of the
Trust, transfer to such successor all relevant books, records and other data
established or maintained by Forum under this Agreement.
(d) Forum shall provide the Trust and, subject to agreement to be bound by
this subsection, the Administrator and any other service provider to the Trust
specified by the Trust, upon request, read only access to a fund accounting
database file containing books, records, and information maintained in
electronic format by Forum for the Trust pursuant to this Agreement. The
database, which will be updated as of the latest close of business, will be
placed in a directory on Forum's network so as to be retrievable by the Trust or
Administrator. The database will include, with respect to a Fund, trial balance
data, daily portfolios, portfolio history, and statistical data from the date
Forum first became or becomes the Fund's fund accountant, in a format structured
to ensure reasonable and efficient use. The Trust acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by Forum on databases under the
control and ownership of Forum or a third party hired by Forum constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to Forum or the third party. The
Trust agrees to treat all Proprietary Information as proprietary to Forum and
further agrees that it shall not divulge any Proprietary Information to any
person or organization except as may be provided under this Agreement.
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(e) Forum shall implement the accounting practices and procedures approved
by the Board as soon as practical following receipt of written notice thereof,
subject to Section 2(a)(xix).
(f) Forum shall obtain a report from a reputable certified public
accountant firm on the processing of fund accounting transactions by Forum in
accordance with Statement of Auditing Standards 70 (issued by the Auditing
Standards Board of the American Institute of Certified Public Accountants).
Forum shall obtain such a report as of a date no later than June 30, 2000 and
shall supply a copy of the report to the Trust and the Administrator by
September 30, 2000. Forum shall obtain annual updates to such report and shall
remedy any material weakness identified in the report within 90 days of the
issuance of the report.
(g) Nothing contained herein shall be construed to require Forum to perform
any service that could cause Forum to be deemed an investment adviser for
purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended, or
that could cause a Fund to act in contravention of the Fund's Prospectus or any
provision of the 1940 Act. Except as otherwise specifically provided herein, the
Trust assumes all responsibility for ensuring that the Trust complies with all
applicable requirements of the Securities Act, the 1940 Act and any laws, rules
and regulations of governmental authorities with jurisdiction over the Trust.
All references to any law in this Agreement shall be deemed to include reference
to the applicable rules and regulations promulgated under authority of the law
and all official interpretations of such law or rules or regulations.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION
(a) Forum shall be under no duty to take any action except as specifically
set forth herein or as may be specifically agreed to by Forum in writing. Forum
shall use its best judgment and efforts in rendering the services described in
this Agreement. Forum shall not be liable to the Trust or any of the Trust's
shareholders for any action or inaction of Forum relating to any event
whatsoever in the absence of bad faith, willful misfeasance or negligence in the
performance or disregard of Forum's duties or obligations under this Agreement;
provided, however, that with respect to any activity outside of normal
processing Forum shall not be liable to the Trust or any of the Trust's
shareholders for any action or inaction of Forum relating to any event
whatsoever in the absence of bad faith, willful misfeasance or gross negligence
in the performance or disregard of Forum's duties or obligations under this
Agreement. An activity related to the processing of data shall be deemed to be
outside of normal processing if Forum is willing and able to accept the data
(from whatever source) electronically and, after Forum has given the Trust 90
days' notice of such ability, the data is not transmitted to Forum in an
electronic format that may be manipulated and that contains sufficient imbedded
detail to define each piece of data; provided, however, that such notice shall
not be required with respect to (i) portfolio investment purchases and sales and
rate changes, (ii) custody account activity and positions, (iii) capital
transactions, (iv) broker quotes and non-proprietary fund prices and factors.
(b) The Trust agrees to indemnify and hold harmless Forum, its employees,
agents, directors, officers and managers and any person who controls Forum
within the meaning of section 15 of
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the Securities Act or section 20 of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), ("Forum Indemnitees"), against and from any and all
claims, demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of or in any way related to Forum's actions taken or
failures to act with respect to a Fund that are consistent with the standard of
care set forth in Section 3(a) or based, if applicable, on good faith reliance
upon an item described in Section 3(d) (a "Forum Claim"). The Trust shall not be
required to indemnify any Forum Indemnitee if, prior to confessing any Forum
Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not give
the Trust written notice of and reasonable opportunity to defend against the
Forum Claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its employees,
agents, directors, officers and managers and any person who controls the Trust
within the meaning of section 15 of the Securities Act or section 20 of the 1934
Act ("Trust Indemnitees"), against and from any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of or in any way related to (i) Forum's actions taken or failures to act
with respect to a Fund that are not consistent with the standard of care set
forth in Section 3(a) or based, if applicable, on good faith reliance upon an
item described in Section 3(d), or (ii) any breach of Forum's representation set
forth in Section 13 (a "Trust Claim"). Forum shall not be required to indemnify
any Trust Indemnitee if, prior to confessing any Trust Claim against the Trust
Indemnitee, the Trust or the Trust Indemnitee does not give Forum written notice
of and reasonable opportunity to defend against the Trust Claim in its own name
or in the name of the Trust Indemnitee.
(d) A Forum Indemnitee shall not be liable for any action taken or failure
to act in good faith reliance upon:
(i) the advice of the Trust or of reputable counsel to the Trust,
or the advice of in-house counsel of the Administrator or its
affiliates;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by a person or persons
authorized in a writing delivered to Forum by the Board or by the
Administrator to give such oral instruction. Provided that Forum has
such reasonable belief, Forum shall have no duty or obligation to make
any inquiry or effort of certification of such oral instruction;
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) any signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument, report, notice,
consent, order, or other document reasonably believed in good faith by
Forum to be genuine and to have been signed or presented by the Trust
or other proper party or parties;
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and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(e) Forum shall not be liable for the errors of other service providers to
the Trust or their systems, including the errors of pricing services (other than
to pursue all reasonable claims against the pricing service based on the pricing
services' standard contracts entered into by Forum) and errors in information
provided by an investment adviser (including prices and pricing formulas and the
untimely transmission of trade information), custodian or transfer agent to the
Trust.
(f) Forum shall reimburse each applicable Fund for any net losses to the
Fund during each NAV Error Period resulting from an NAV Difference that is at
least $0.01 per Fund share but that, as a percentage of Recalculated NAV of such
Fund, is less than 1/2 of 1%. Forum shall reimburse the Fund on its own behalf
and on behalf of each Fund shareholder for any losses experienced by the Fund or
any Fund shareholder, as applicable, during each NAV Error Period resulting from
an NAV Difference that is at least $0.01 per Fund share and that, as a
percentage of Recalculated NAV of such Fund, is at least 1/2 of 1%; provided,
however, that Forum shall not be responsible for reimbursing any Fund with
respect to any shareholder that experiences an aggregate loss during any NAV
Error Period of less than $10.
(g) For purposes of this Agreement, (i) the NAV Difference shall mean the
difference between the NAV at which a shareholder purchase or redemption should
have been effected ("Recalculated NAV") and the NAV at which the purchase or
redemption is effected, (ii) NAV Error Period shall mean any Fund business day
or series of two or more consecutive Fund business days during which an NAV
Difference of $0.01 per Fund share or more exists, (iii) NAV Differences and any
Forum liability therefrom are to be calculated each time a Fund's (or Class's)
NAV is calculated, (iv) in calculating any amount for which Forum would
otherwise be liable under this Agreement for a particular NAV error, Fund (or
Class) losses and gains shall be netted and (v) in calculating any amount for
which Forum would otherwise be liable under this Agreement for a particular NAV
error that continues for a period covering more than one NAV determination, Fund
(or Class) losses and gains for the period shall be netted.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix C hereto.
All fees payable hereunder shall be accrued daily by the Trust. The fees
payable for the services listed in clause (i) of Appendix C hereto shall be
payable monthly on the first Fund business day of each calendar month for
services to be performed during that month. If fees payable for the services
listed in clause (i) begin to accrue in the middle of a month or if this
Agreement terminates before the end of any month, all fees for the period from
the date on which such accrual begins to the end of that month or from the
beginning of that month to the date of
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termination, as the case may be, shall be prorated according to the proportion
that the period bears to the full month in which the commencement or termination
occurs. Upon the termination of this Agreement with respect to a Fund, the Trust
shall pay to Forum such compensation as shall be payable prior to the effective
date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in clause (ii) of Appendix C hereto. Reimbursements shall be
payable as incurred. In addition, the Trust, on behalf of the applicable Fund,
shall reimburse Forum for all reasonably incurred expenses and employee time (at
150% of salary) attributable to any review of the Trust's accounts and records
by the Trust's independent accountants or any regulatory body outside of routine
and normal periodic reviews. Should the Trust exercise its right to terminate
this Agreement, the Trust, on behalf of the applicable Fund, shall reimburse
Forum for all reasonably incurred out-of-pocket expenses and employee time (at
150% of salary) associated with the copying and movement of records and material
to any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(c) Forum may, with respect to questions of law relating to its services
hereunder, apply to and obtain the advice and opinion of counsel to the Trust or
counsel to Forum; provided, however, that Forum shall in all cases first
reasonably attempt to apply to and obtain the advice and opinion of in-house
counsel to the Administrator. In the event that Forum is unable to contact in-
house counsel to the Administrator, it shall nonetheless inform a Vice President
or more senior person at the Administrator of the matters for which it intends
to seek advice and opinion. The costs of any such advice or opinion shall be
borne by the Trust.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of September 17, 1999 or the date of the commencement of
operations of the Fund or Class. Upon effectiveness of this Agreement, it shall
supersede all previous agreements between the parties hereto covering the
subject matter hereof insofar as any such agreement may have been deemed to
relate to the Funds.
(b) This Agreement shall continue in effect with respect to each Fund until
December 31, 2002 (the "Initial Term") and shall continue in effect thereafter
for successive one year periods unless earlier terminated in accordance with
this Section or until the Fund ceases operations.
(c) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board or Forum at any time without notice if:
(i) the other party breaches any material provision of this Agreement,
the terminating party has provided written notice of such breach to the
breaching party and the breaching party has not cured the breach within
30 days of receipt of such notice; provided that such termination
rights may not be exercised more than 30 days after the breaching party
has
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cured the breach;
(ii) the other party becomes the subject of any federal or state
bankruptcy proceeding that is not dismissed within 60 days after the
initiation of such proceeding; provided that such termination shall not
occur more than 60 days after the dismissal of such proceeding; or
(iii) the other party (or in the case of Forum, the Administrator) is
convicted of corporate criminal activity.
(d) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board at any time with 180 days' notice prior
to the expiration of the Initial Term if Forum fails to meet or exceed its
Service Standard Percentage:
(i) in any four consecutive months; or
(ii) in any six months during any consecutive period of twelve months.
The Service Standard Percentage and whether Forum met or exceeded it shall be
calculated each month. Forum shall meet or exceed the Service Standard
Percentage for a given month if Forum meets or exceeds at least 3 (three) of the
5 (five) Service Standard criteria listed in Appendix B. For these purposes,
each of the Service Standard criteria shall be measured on an aggregate basis
for all Funds combined with all "Funds" that are included as "Funds" in a Fund
Accounting Agreement between Forum and Xxxxx Fargo Funds Trust or between Forum
and Xxxxx Fargo Core Trust, if any.
The Trust may change this standard and require that Forum shall meet or
exceed the Service Standard Percentage for a given month if Forum meets or
exceeds at least 4 (four) of the 5 (five) Service Standard criteria listed in
Appendix B. Such change may only be made with respect to the month of April 2001
and all months thereafter and only upon 60 days' notice to Forum.
Notwithstanding anything to the contrary, Forum shall use its best efforts to
satisfy all Service Standard criteria and score at least 99.8 each month on each
Service Standard criteria.
Nothing in this subsection (d) shall in any way diminish the Trust's right
to terminate this Agreement in the event of a breach of a material provision of
this Agreement by Forum pursuant to Section 5(c).
(e) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board at any time after the date that is 180
days prior to the expiration of the Initial Term on 180 days' written notice to
Forum.
(f) Notwithstanding Section 5(b), this Agreement may be terminated by Forum
at any time on 180 days' written notice to the Trust.
(g) Notwithstanding Section 5(b), this Agreement may be terminated with
respect to any or all Funds by the Board at any time if Xxxxx Fargo & Company
directly or indirectly acquires, is acquired by, merges, consolidates or
otherwise reorganizes with (a "Reorganization")
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any company and immediately thereafter (i) Xxxxx Fargo & Company or its
successor controls or is under common control with any company that provides in
the normal course of business the services listed in Section 2, whether
generally to the mutual fund industry or only to mutual funds advised or
sponsored by its affiliates or (ii) Xxxxx Fargo & Company or an affiliate of it
advises a family of mutual funds for which the services listed in Section 2 are
performed by a company not affiliated with Xxxxx Fargo & Company. Such
termination may be made at any time after the occurrence of the event described
in the preceding sentence by the Board on 90 days' written notice to Forum. In
the event that the Trust elects to terminate this Agreement pursuant to clause
(i) of this subsection with respect to a Fund, the Trust shall pay Forum twelve
(the "multiplier") times the greater of (x) the monthly average fees due to
Forum under this Agreement during the last three whole months prior to the
Reorganization and (y) the monthly average fees paid to Forum during the last
three whole months prior to delivery of the notice of termination ("Termination
Fee"). The multiplier will be reduced one-twelfth for each three full calendar
month period after December 31, 1999 that expires prior to the Reorganization;
provided, however, that the multiplier shall be at least four. If notice of
termination under this subsection is given on or before March 31, 2000 with
respect to a Fund the Termination Fee shall be $6,400,000 divided by the sum of
the number of Funds plus the number of "Funds" as that term is defined in the
Fund Accounting Agreement for Xxxxx Fargo Funds Trust and Xxxxx Fargo Core
Trust. In the event that the Trust elects to terminate this Agreement pursuant
to clause (ii) of this subsection with respect to a Fund, the Trust shall pay
Forum one and one-half times the Termination Fee as calculated above.
(h) Any termination in accordance with Sections 5(c) through 5(g) shall be
without penalty.
(i) The provisions of Sections 2(c), 3, 4, 5(i), 5(j), 7, 8, 9(b), 12, 13
and 14 shall survive any termination of this Agreement.
(j) This Agreement and the rights and duties under this Agreement may not
be assigned by either Forum or the Trust except by the specific written consent
of the other party. Notwithstanding anything in this Agreement to the contrary,
the transfer of ownership of all or part the equity interests in Forum to
Forum's management staff or the heirs of Xxxx Xxxxxx shall not be deemed to be
an assignment. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of
Shares or one or more classes of Shares after the effectiveness of this
Agreement, such series of Shares or classes of Shares, as the case may be, shall
become Funds and Classes under this Agreement if the Trust and Forum shall so
agree.
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SECTION 7. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum is advised by reputable counsel that it may be exposed to civil or
criminal contempt proceedings for failure to release the information (provided,
however, that Forum shall seek the approval of the Trust as promptly as possible
so as to enable the Trust to pursue such legal or other action as it may desire
to prevent the release of such information) or when so requested by the Trust.
SECTION 8. FORCE MAJEURE
D. Forum shall not be responsible or liable for any failure or delay
in performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply; provided, however, that Forum
shall be responsible or liable for any failure or delay in performance of its
obligations under this Agreement due to the failure of Forum to have a
reasonable business continuity plan.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its functions or responsibilities
pursuant to this Agreement to one or more affiliated persons who agree to comply
with the terms of this Agreement; provided, that any such subcontracting shall
not relieve Forum of its responsibilities hereunder. Forum shall be responsible
for the acts and omissions of any such person to the same extent as if Forum had
done such acts or made such omissions itself. Forum may pay those
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persons for their services, but no such payment will increase Forum's
compensation or reimbursement of expenses from the Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require Forum,
in any capacity under this Agreement, to perform any functions or duties on any
day other than a business day of the Trust or of a Fund. Functions or duties
normally scheduled to be performed on any day which is not a business day of the
Trust or of a Fund shall be performed on, and as of, the next business day,
unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. YEAR 2000
Forum confirms that it has taken all reasonable business steps to ensure
that any system or software used in the operation of its business that is an any
way related to the services provided herein: (i) manages and manipulates data
involving all dates from the 20th and 21st centuries without functional or data
abnormality related to such dates; (ii) has user interfaces and data fields
formatted to distinguish between dates from the 20th and 21st centuries; and
(iii) represents all data to include indications of the millennium, century, and
decade, as well as the actual year.
SECTION 14. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement; provided, however,
that any damages suffered by the Trust by virtue of the loss by any Fund of its
status as a registered investment company under the 1940 Act shall in no
circumstances be treated as consequential damages for purposes of this
Agreement; provided, further, that the foregoing proviso shall not create any
implication that, in the absence of such proviso, consequential damages would
include any damages of the type or nature referred to therein.
-12-
(b) Except for Appendix A to add new Funds and Classes in accordance with
Section 6, no provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be illegal,
in conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager of
Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party 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.
(l) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the 1940 Act.
-13-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
XXXXX FARGO VARIABLE TRUST
By:___________________________________
Xxxxxxx X. Xxxxx, Xx.
Assistant Secretary
FORUM ACCOUNTING SERVICES, LLC
By:____________________________________
Xxxxxx X. Xxxx
Director
-14-
XXXXX FARGO VARIABLE TRUST
FUND ACCOUNTING AGREEMENT
Appendix A
(a) Funds of the Trust
as of September 17, 1999
Funds Classes
----- -------
Corporate Bond Fund Single Class
Equity Income Fund Single Class
Large Company Growth Fund Single Class
Small Cap Fund Single Class
Effective as of: 3/1/00
Asset Allocation Fund Single Class
Equity Value Fund Single Class
Growth Fund Single Class
Money Market Fund Single Class
Effective as of: 4/1/00
International Equity Fund Single Class
(i)
-A1-
XXXXX FARGO VARIABLE TRUST
FUND ACCOUNTING AGREEMENT
Appendix B
Service Standards
as of September 17, 1999
(i) Criteria 1: NAV Accuracy - Reporting to Transfer Agent
Number of Accurate NAVs Reported to the Transfer Agent divided by
Total Number of NAVs Required to Report to the Transfer Agent 99.6%
. "NAV" for this purpose is class net assets divided by total class
shares and includes dividend factors. An NAV is accurate if, upon
recalculation, the change in reported extended class NAV is greater
than a full xxxxx and, with respect to dividend factors, any revision
to previously reported data requires the Transfer Agent to reprocess
shareholder account data.
. Numerator and denominator include (i) NAVs affected by "non-
controllable information" and (ii) Gateway funds delayed due to Core
Portfolio accounting issues related to non-controllable information.
. Each NAV error is treated as an NAV error only once (i.e., if an error
lasts more than one business day before it is discovered, it is treated
as one error and excluded from both the numerator and denominator in
the calculation after the first day).
(ii) Criteria 2: NAV Accuracy - Reported to NASDAQ
Number of Accurate NAVs Reported to NASDAQ divided by
Number of Total NAVs Required to be Reported to NASDAQ.............. 99.6%
. "NAV" for this purpose is class net assets divided total class shares
outstanding and includes dividend factors. An NAV is accurate if, upon
recalculation, the NAV Difference is less than a full xxxxx and, with
respect to dividend factors, any revision to previously reported data
requires the Transfer Agent to reprocess shareholder account data.
. Numerator and denominator include (i) NAVs affected by non-controllable
information and (ii) Gateway funds delayed due to Core Portfolio
accounting issues related to non-controllable information.
. Each NAV error is treated as an NAV error only once (i.e., if an error
lasts more than one business day before it is discovered, it is treated
as one error and
-B1-
excluded from both the numerator and denominator in the calculation
after the first day).
(iii) Criteria 3: NAV Timeliness to Transfer Agent
Number of NAV transmissions to Transfer Agent by designated time divided
by
Required Number of NAV transmissions 99.6%
. "NAV" for this purpose is class net assets divided by class total
shares outstanding.
. Designated time is 7:00 p.m., ET.
. Numerator and denominator include (i) NAVs affected by non-
controllable information and (ii) Gateway funds delayed due to
accounting issues related to Core Portfolio non-controllable
information.
(iv) Criteria 4: Cash Availability Reporting
Accurate and Timely Cash Availability Reports ("CAR") to Investment
Adviser divided by Number of Funds Requiring Cash Availability Reporting
99.6%
. Timely CAR means (i) notwithstanding any other clause to the contrary,
with respect to any Fund or Core Portfolio participating in a
"consolidated repurchase agreement," within two hours and fifteen
minutes after receipt of final transfer agency capital transaction
reporting, , (ii) with respect to a stand-alone fund with a single
investment adviser, within one half hour of receipt of final transfer
agency capital transaction reporting; (iii) with respect to a stand-
alone fund with more than one investment adviser, within two hours of
receipt of final transfer agency capital transaction reporting; (iv)
with respect to a non-money market Core Portfolio, within one hour
after receipt of final transfer agency capital transaction reporting,
and (v) with respect to a money market Gateway fund, or Core Portfolio
with no more than three relationships, within one half hour after
receipt of final transfer agency capital transactions reporting.
. Accurate CAR means any CAR wherein the difference between the CAR that
should have been reported and the CAR that was reported divided by the
CAR that should have been reported is greater than 1/2 of 1%.
. Numerator and denominator include (i) funds affected by non-
controllable information and (ii) and Core Portfolios delayed due to
Gateway fund accounting issues related to non-controllable
information.
-B2-
(v) Criteria 5: Monthly Reporting Proof Package Timeliness
Funds for Which Monthly Proofs are Completed by the 15th Calendar Day
of the Month Divided by Number of Funds...........................95%
. Monthly proof means balance sheet review and monthly portfolio
reconciliation.
. Numerator and denominator include (i) funds affected by non-
controllable information and (ii) Gateway funds affected by Core
Portfolio non-controllable information.
(vi) General Definitions
(A) "Transfer Agent" means Boston Financial Data Services, Inc. and does
not include other persons to which Forum communicates fund
information.
(B) The numerator and denominator are calculated daily and the quotient
is reported on a cumulative monthly and rolling twelve month basis.
(C) Denominator includes those NAVs for classes of shares that have
direct shareholder investment for standards (i), (ii) and (iii).
(D) "Non-controllable information" includes the following events:
(I) With Respect to Investment Adviser Reporting for Funds Whose
NAV is Calculated as of the Close of the NYSE (currently, 4:00
p.m., ET):
. "Confirmed future trades" (portfolio investment purchases and
sales with future dated settlement) that are not received by
Forum prior to 11:00 a.m., ET (2:30 p.m. ET for IPOs,
repurchase agreements and trade corrections (cancellations or
changes to previously reported trade details)), on trade date
plus one business day.
. Security identifiers for purchases of securities not held by
the Fund that are not received by Forum prior to 8:00 p.m., ET,
on trade date.
. Post cash availability reporting, i.e., "Confirmed same day
trades" (portfolio investment purchases and sales settling on
trade date), that are not received by Forum prior to 1:00 p.m.,
ET, on trade date.
. "Trades Control" sheets (indicating the number of confirmed
trades accompanying the confirmed future trades) that are not
received by Forum prior to 10:00 a.m., ET, on trade date plus
one business day.
. "Trades Control" sheets (including the number of confirmed same
day trades) that are not received by Forum prior to 1:00 p.m.
ET, on trade date.
. "Trades Control" sheets (indicating the number IPOs, and trade
corrections) that are not received by Forum prior to 2:30 p.m.,
ET, on trade date.
-B3-
. Confirmed future trades and confirmed same day trades
information that is not complete or does not include all
necessary information to enable Forum to properly identify,
record, and account for the security. Required trade ticket
information includes, as applicable: buy, sell, trade date,
settlement date, broker, CUSIP/sedol, ticker, issuer name, face
rate, rate change date, coupon date, credit ratings,
shares/face, price, factor, cost, detail of fees and
commission, and net proceeds.
. Note: Each time requirement with respect to a Fund in this
section (vi)(D)(I) shall be advanced by an amount equal to the
time that day that Forum is late in reporting cash available or
other portfolio related data.
(II) With Respect to Investment Adviser Reporting for Money Market
Funds:
. Confirmed future trades and same day trades that are not
received by Forum prior to one and a half hours after
shareholder trading cutoff.
. "Trades Control" (indicating the number of future and same day
confirmed trades) that are not received by Forum prior to one
and a half hours after shareholder trading cutoff.
. Confirmed future trades and same day trade information that is
not complete or does not include all necessary information to
enable Forum to properly identify, record, and account for the
security. Required trade ticket information includes as
applicable: buy, sell, trade date, settlement date, broker,
CUSIP/sedol, ticker, issuer name, face rate, rate change date,
coupon date, credit ratings, shares/face, price, factor, cost,
detail of fees and commission, and net proceeds.
. Note: Each time requirement with respect to a Fund in this
section (vi)(D)(II) shall be advanced by an amount equal to the
time that day that Forum is late in reporting cash available or
other portfolio related data.
(III) With Respect to Transfer Agent/Shareholder Servicing Reporting
. Capital transaction reporting not received timely by Forum
including:
. Capital transactions reporting "supersheets" and principal
gain loss reporting files not received by Forum prior to
7:00 a.m. ET.
. Capital transaction reporting "WTA" not received by Forum
prior to 9:00 a.m. ET (9:10 a.m. ET for dates before
January 1, 2000).
-B4-
. Capital transaction reporting "estimates" not received by
Forum prior to 9:00 a.m. ET (9:10 a.m. ET for dates
before January 1, 2000).
. Capital transactions reporting not received by Forum due to a
failure of "Connect Direct" hardware, software, and related
technical support.
. Capital transaction reporting that requires interpretation due
to the use of transaction codes not originally agreed upon and
provided by Transfer Agent in advance of transactions reported
by Transfer Agent to the fund.
. Revision to any class information previously reported by
agreed upon deadlines, including "supersheet," "estimates,"
"principal gains and losses," or any other information that
fund accounting would rely on to record capital transactions.
. Transfer Agency does not respond to Forum inquiries regarding
suspect data within thirty minutes of Forum's inquiry.
. For Funds for which Forum reports a second daily dividend
factor after additional shareholder trades are reported to
Forum, any time Forum cannot use the first factor for that
day.
(IV) With Respect to Custody Reporting & Clearing of Items
. Custody reporting of fund cash availability that is not
received by Forum prior to 7:00, a.m., ET.
. Custody not resolving Forum inquires at least 1/2 hour prior
to the calculation of the next business day's cash
availability.
. Custody not communicating corporate actions at least one day
prior to ex-date.
(V) With Respect to Independent Valuation Services
. Security valuations (including those of the Core Portfolios)
not received by Forum prior to 4:45 p.m., ET.
. Corporate action information not disseminated accurately or
that is not received by Forum at least one day prior to ex-
dividend date.
(VI) With Respect to Fair Value Determinations
. For all securities subject to "Fair Value" determinations,
broker quotes or similar pricing information not received by
Forum prior to 4:00 p.m., ET.
(VII) With Respect to Revisions
-B5-
. Revisions to any information reported by the Transfer Agent,
investment advisers, custodians, and independent valuation
services or brokers not received in writing.
. Revisions for which there are no clearly defined escalation
procedures provided by fund management in working with
Transfer Agent, investment advisers, non-proprietary fund
service providers, custodians, and mutual fund or bank
operating areas.
(VIII) With Respect to NAV Timelines Reporting to Transfer Agent
. Transfer Agent requirements for receiving all NAV reporting in
a consolidated file, when information is available and could
be communicated prior to the 7:00 p.m. ET deadline.
(IX) With Respect to Cash Availability Reporting
. Funds participating in asset allocation and consolidated
repurchase agreements whose reporting are delayed due to non-
controllable events described herein attributable to
interdependencies or other funds participating in the asset
allocation and consolidated repurchase agreement process.
-B6-
XXXXX FARGO VARIABLE TRUST
FUND ACCOUNTING AGREEMENT
Appendix C
Fees and Expenses
as of September 17, 1999
(i) Fees
(A) Per Fund Fees
(i) Fee per Fund.......................................... $5,000/month
Fee per Fund not listed on Appendix A as of
September 17, 1999
International/Global Funds and Funds with
10% or more of month-end net assets invested in
asset-backed securities............................ $5,833/month
Other Funds........................................ $4,167/month
(ii) Fee per Gateway Fund (a Fund operating pursuant
to Section 12(d)(1)(E) or 12(d)(1)(G) of the 1940 Act
or in a similar structure)............................ $2,000/month
(iii) Fee per Core Portfolio (a Fund registered under the
1940 Act but whose securities are not registered
under the Securities Act of 1933)..................... $5,500/month
Fee per Core Portfolio not listed on Appendix A as of
September 17, 1999
International/Global Core Portfolios and Core
Portfolios with 10% or more of month-end net
assets invested in asset-backed securities......... $6,333/month
Other Core Portfolios.............................. $4,667/month
(iv) Fee for each additional Class of any Fund above one... $1,000/month
(B) Basis Point Fees
0.0025% of the average annual daily net assets of each Fund (excluding the
net assets of a Fund that are invested in a Core Portfolio (i) which pays
Forum a similar fee and (ii) that the Administrator or an a affiliate of
the Administrator is the investment adviser or a majority of the interests
of which are owned by mutual funds advised by the Administrator or an
affiliate of the Administrator).
(ii) Out-Of-Pocket and Related Expenses
The Trust, on behalf of the applicable Fund, shall reimburse Forum for all out-
of-pocket and ancillary expenses reasonably incurred in providing the services
described in the Fund Accounting Agreement, including but not limited to the
cost of (or appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services (but only to the extent that the
Trust requests that Forum use more than one reporting service with respect to a
service), (ii) taxes, (iii) postage and delivery services, (iv) communications
services, (v)
-C1-
electronic or facsimile transmission services, (vi) reproduction,
(vii) printing and distributing financial statements, (viii) microfilm,
microfiche and other storage medium and (ix) Trust record storage and retention
fees. In addition, any other expenses incurred by Forum at the request or with
the consent of the Trust, will be reimbursed by the Trust on behalf of the
applicable Fund.
-C2-
