INVESTMENT ACCOUNTING AGREEMENT
THIS AGREEMENT is made effective the 30th day of April, 2000, by and
between STATE STREET BANK AND TRUST COMPANY, a trust company chartered under the
laws of the Commonwealth of Massachusetts, having its principal office and place
of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 ("State
Street"), and Firsthand Funds, a Delaware business trust having its principal
office and place of business at 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx,
Xxxxxxxxxx 00000 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint State Street as its agent to perform
certain investment accounting and recordkeeping functions for the assets of the
Fund's investment portfolio or portfolios listed on Schedule A (each a
"Portfolio", and collectively the "Portfolios"); and
WHEREAS, State Street is willing to accept such appointment for the
compensation and on the terms and conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF AGENT. Fund hereby constitutes and appoints State Street
as its agent to perform certain accounting and recordkeeping functions
relating to portfolio transactions required of a duly registered
investment company under Rule 31a of the Investment Company Act of
1940, as amended (the "1940 Act") and to calculate the net asset value
of the Portfolios. Absent written notification to the contrary by the
Fund or State Street, each new investment portfolio established in the
future by the Fund shall automatically become a "Portfolio" for all
purposes hereunder as if listed on Schedule A.
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges to State
Street:
1. That it is a trust duly organized and existing and in
good standing under the laws of its state of
organization, and that it is registered under the
1940 Act; and
2. That it has the requisite power and authority under
applicable law, its bylaws and its declaration of
trust to enter into this Agreement; it has taken all
requisite action necessary to appoint State Street as
investment accounting and recordkeeping agent; this
Agreement has been duly executed and delivered by
Fund; and this Agreement constitutes a legal, valid
and binding obligation of Fund, enforceable in
accordance with its terms.
B. State Street hereby represents, warrants and acknowledges to Fund:
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1. That it is a trust company duly organized and
existing and in good standing under the laws of the
Commonwealth of Massachusetts; and
2. That it has the requisite power and authority under
applicable law, its charter and its bylaws to enter
into and perform this Agreement; this Agreement has
been duly executed and delivered by State Street; and
this Agreement constitutes a legal, valid and binding
obligation of State Street, enforceable in accordance
with its terms; and
3. That all books, records, information and data
pertaining to the business of the Trust and its
prior, present or potential shareholders that are
received by State Street pursuant to the performance
of State Street's duties under this Agreement shall
remain confidential and shall not be disclosed to any
other person, except as specifically authorized by
the Trust or as may be required by law, and shall not
be used for any purpose other than the performance of
State Street's responsibilities and duties hereunder.
3. DUTIES AND RESPONSIBILITIES OF THE PARTIES.
A. DELIVERY OF ACCOUNTS AND RECORDS. Fund will turn over or cause
to be turned over to State Street all accounts and records
needed by State Street to perform its duties and
responsibilities hereunder fully and properly. State Street
may rely conclusively on the completeness and correctness of
such accounts and records.
B. ACCOUNTS AND RECORDS. State Street will prepare and maintain,
under the direction of and as interpreted by Fund, Fund's or
Portfolio's accountants and/or other advisors, in complete,
accurate and current form such accounts and records: (1)
required to be maintained by Fund with respect to portfolio
transactions under Section 31(a) of the 1940 Act and the rules
and regulations from time to time adopted thereunder; (2)
required as a basis for calculation of each Portfolio's net
asset value; and (3) as otherwise agreed upon by the parties.
Fund will advise State Street in writing of all applicable
record retention requirements, other than those set forth in
the 1940 Act. State Street will preserve such accounts and
records in the manner and for the periods prescribed in the
1940 Act or for such longer period as is agreed upon by the
parties. Fund will furnish, in writing or its electronic or
digital equivalent, accurate and timely information needed by
State Street to complete such accounts and records when such
information is not readily available from generally accepted
securities industry services or publications.
C. ACCOUNTS AND RECORDS PROPERTY OF FUND. State Street
acknowledges that all of the accounts and records maintained
by State Street pursuant hereto are the property of Fund, and
will be made available to Fund for inspection or reproduction
within a reasonable period of time, upon demand. State Street
will assist Fund's independent auditors, or upon the prior
written approval of Fund, or upon demand, any regulatory body,
in any requested review of Fund's accounts and records but
Fund will reimburse State Street for all expenses and employee
time
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invested in any such review outside of routine and normal
periodic reviews. Upon receipt from Fund of the necessary
information or instructions, State Street will supply
information from the books and records it maintains for Fund
that Fund may reasonably request for tax returns,
questionnaires, periodic reports to shareholders and such
other reports and information requests as Fund and State
Street may agree upon from time to time.
D. ADOPTION OF PROCEDURES. State Street and Fund may from time to
time adopt such procedures as they agree upon, and State
Street may conclusively assume that no procedure approved or
directed by Fund, Fund's or Portfolio's accountants or other
advisors conflicts with or violates any requirements of the
prospectus, bylaws and declaration of trust, any applicable
law, rule or regulation, or any order, decree or agreement by
which Fund may be bound.
E. VALUATION OF ASSETS. State Street will value the assets of
each Portfolio in accordance with Fund's instructions (defined
below) utilizing the pricing sources designated by Fund
("Pricing Sources") on Exhibit A hereto. State Street will
value the assets of each portfolio using at least two sources
and investigate any discrepancies in such prices. In the event
that Fund specifies Reuters America, Inc., it will enter into
the Agreement attached hereto as Exhibit B. State Street will
calculate each Portfolio's net asset value in accordance with
the Portfolio's prospectus, Statement of Additional
Information, policies and procedures.
4. INSTRUCTIONS.
A. The term "Instructions", as used herein, means written
(including telecopied, telexed, or electronically transmitted)
or oral instructions which State Street reasonably believes
were given by a designated representative of Fund. Fund will
deliver to State Street, on or prior to the date hereof and
thereafter from time to time as changes therein are necessary,
written Instructions naming one or more designated
representatives to give Instructions in the name and on behalf
of Fund, which Instructions may be received and accepted by
State Street as conclusive evidence of the authority of any
designated representative to act for Fund and may be
considered to be in full force and effect until receipt by
State Street of notice to the contrary. Unless such written
Instructions delegating authority to any person to give
Instructions specifically limit such authority to specific
matters or require that the approval of anyone else will first
have been obtained, State Street will be under no obligation
to inquire into the right of such person, acting alone, to
give any Instructions whatsoever. If Fund fails to provide
State Street any such Instructions naming designated
representatives, any Instructions received by State Street
from a person reasonably believed to be an appropriate
representative of Fund will constitute valid and proper
Instructions hereunder. The term "designated representative"
may include Fund's or a Portfolio's employees and agents,
including investment managers and their employees.
B. No later than the next business day immediately following each
oral Instruction, Fund will send State Street written
confirmation of such oral Instruction. At State Street's sole
discretion, State Street may record on tape, or otherwise, any
oral
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Instruction whether given in person or via telephone, each
such recording identifying the date and the time of the
beginning and ending of such oral Instruction. Prior to
recording such oral Instruction State Street shall give the
caller notice that recording is taking place.
C. Fund will provide upon State Street's request a certificate
signed by an officer or designated representative of Fund, as
conclusive proof of any fact or matter required to be
ascertained from Fund hereunder. Fund will also provide State
Street Instructions with respect to any matter concerning this
Agreement requested by State Street. If State Street
reasonably believes that it could not prudently act according
to the Instructions, or the instruction or advice of Fund's or
a Portfolio's accountants or counsel, it may in its
discretion, with notice to Fund, not act according to such
Instructions.
5. LIMITATION OF LIABILITY OF STATE STREET. State Street is not
responsible or liable for, and Fund will indemnify and hold State
Street harmless from and against, any and all costs, expenses, losses,
damages, charges, counsel fees (including, without limitation,
disbursements and the allocable cost of in-house counsel), payments and
liabilities which may be asserted against or incurred by State Street
or for which State Street may be held to be liable provided that in
each case, State Street has acted in good faith and with reasonable
care, arising out of or attributable to:
A. State Street's action or failure to act pursuant hereto;
provided that State will not be liable for consequential,
special, or punitive damages;
B. State Street's payment of money as requested by Fund, or the
taking of any action which might make it or its nominee liable
for payment of monies or in any other way; provided, however,
that nothing herein obligates State Street to take any such
action or expend its own monies except in its sole discretion;
C. State Street's action or failure to act hereunder upon any
Instruction, advice, notice, request, consent, certificate or
other instrument or paper appearing to it to be genuine and to
have been properly executed, including any Instructions,
communications, data or other information received by State
Street by means of the Systems, as hereinafter defined, or any
electronic system of communication;
D. State Street's action or failure to act in good faith reliance
on the advice or opinion of counsel for Fund or of its own
counsel with respect to questions or matters of law, which
advice or opinion may be reasonably obtained by State Street
at the expense of Fund, or on the Instruction, advice or
statements of any officer or employee of Fund, or Fund's
accountants or other authorized individuals, and other persons
believed by it in good faith to be expert in matters upon
which they are consulted;
E. Any error, omission, inaccuracy or other deficiency in any
Portfolio's accounts and records or other information provided
to State Street by or on behalf of a Portfolio, including the
accuracy of the prices quoted by the Pricing Sources or for
the information supplied by Fund to value the assets, or the
failure of Fund to
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provide, or provide in a timely manner, any accounts,
records, or information needed by State Street to perform
its duties hereunder;
F. Fund's refusal or failure to comply with the terms hereof
(including without limitation Fund's failure to pay or
reimburse State Street under Section 5 hereof), Fund's
negligence, bad faith or willful misfeasance, or the failure
of any representation or warranty of Fund hereunder to be and
remain true and correct in all respects at all times;
G. The use or misuse, whether authorized or unauthorized, of the
Systems or any electronic system of communication used
hereunder, by Fund or by any person who acquires access to the
Systems or such other systems through the terminal device,
passwords, access instructions or other means of access to
such Systems or such other system which are utilized by,
assigned to or otherwise made available to Fund, except to the
extent attributable to any negligence or bad faith or willful
misfeasance by State Street;
H. Loss occasioned by the acts, omissions, defaults or insolvency
of any broker, bank, trust company, securities system or any
other person with whom State Street may deal; and
I. The failure or delay in performance of its obligations
hereunder, or those of any entity for which it is responsible
hereunder, arising out of or caused, directly or indirectly,
by circumstances beyond the affected entity's reasonable
control, including, without limitation: any interruption, loss
or malfunction of any utility, transportation, computer
(hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a
delay in mails; governmental or exchange action, statute,
ordinance, rulings, regulations or direction; war, strike,
riot, emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornadoes,
acts of God or public enemy, revolutions, or insurrection.
J. State Street will not confess any claim or settle or make any
compromise in any instance in which the Fund will be asked to
provide indemnification, except with the Fund's prior written
consent. Any amounts payable by the Fund under this Section 5
shall be satisfied only against the assets of the investment
portfolio of the Fund involved in the claim, demand, action or
suit and not against the assets of any other investment
portfolio of the Fund.
6. COMPENSATION. In consideration for its services hereunder, Fund will
pay to State Street the compensation set forth in a separate fee
schedule to be agreed to by Fund and State Street from time to time,
and, upon reasonable demand, reimbursement for State Street's cash
disbursements and reasonable out-of-pocket costs and expenses,
including attorney's fees and disbursements, incurred by State Street
in connection with the performance of services hereunder.
7. TERM AND TERMINATION. This Agreement shall become effective on the date
of its execution and shall remain in full force and effect indefinitely
from the effective date
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unless either party terminates this Agreement by written notice to the
other party, such notice to be in writing, delivered or mailed postage
prepaid, to the other party. For the State Street to terminate this
Agreement, State Street shall give at least one hundred twenty (120)
days' prior notice to the Trust. For the Trust to terminate this
agreement, the Trust shall give at least ninety (90) days' prior notice
to the State Street. Termination of this Agreement with respect to any
given Investment Fund shall in no way affect the continued validity of
this Agreement with respect to any other Investment Fund. Upon
termination of this Agreement, the Trust shall pay to the State Street
such compensation and any reimbursable expenses as may be due under the
terms hereof as of the date of such termination. This Agreement may be
modified or amended from time to time by mutual written agreement of
the parties hereto. Upon termination hereof:
A. Fund will pay State Street its fees and compensation due
hereunder and its reimbursable disbursements, costs and
expenses paid or incurred to such date;
B. Fund will designate a successor (which may be Fund) by
Instruction to State Street; and
C. State Street will, upon payment of all sums due to State
Street from Fund hereunder or otherwise, deliver all accounts
and records and other properties of Fund to the successor, or,
if none, to Fund, at State Street's office.
In the event that accounts, records or other properties remain in the
possession of State Street after the date of termination hereof for any
reason other than State Street's failure to deliver the same, State
Street is entitled to compensation as provided in the then-current fee
schedule for its services during such period, and the provisions hereof
relating to the duties and obligations of State Street will remain in
full force and effect.
8. NOTICES. Notices, requests, instructions and other writings addressed
to Fund at the address set forth above, or at such other address as
Fund may have designated to State Street in writing, will be deemed to
have been properly given to Fund hereunder. Notices, requests,
Instructions and other writings addressed to State Street at the
address set forth above, Attention: Investment Accounting Department,
or to such other address as it may have designated to Fund in writing,
will be deemed to have been properly given to State Street hereunder.
9. THE SYSTEMS; CONFIDENTIALITY.
A. If State Street provides Fund direct access to the
computerized investment portfolio recordkeeping and accounting
systems used by State Street ("Systems") or if State Street
and Fund agree to utilize any electronic system of
communication, Fund agrees to implement and enforce
appropriate security policies and procedures to prevent
unauthorized or improper access to or use of the Systems or
such other system.
B. Fund will preserve the confidentiality of the Systems and the
tapes, books, reference manuals, instructions, records,
programs, documentation and information of, and other
materials relevant to, the Systems and the business of
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Xxxxx Xxxxxx or its affiliates ("Confidential Information").
Fund agrees that it will not voluntarily disclose any such
Confidential Information to any other person other than its
own employees who reasonably have a need to know such
information pursuant hereto. Fund will return all such
Confidential Information to State Street upon termination or
expiration hereof.
C. Fund has been informed that the Systems are licensed for use
by State Street and its affiliates from one or more third
parties ("Licensors"), and Fund acknowledges that State Street
and Licensors have proprietary rights in and to the Systems
and all other State Street or Licensor programs, code,
techniques, know-how, data bases, supporting documentation,
data formats, and procedures, including without limitation any
changes or modifications made at the request or expense or
both of Fund (collectively, the "Protected Information"). Fund
acknowledges that the Protected Information constitutes
confidential material and trade secrets of State Street and
Licensors. Fund will preserve the confidentiality of the
Protected Information, and Fund hereby acknowledges that any
unauthorized use, misuse, disclosure or taking of Protected
Information, residing or existing internal or external to a
computer, computer system, or computer network, or the knowing
and unauthorized accessing or causing to be accessed of any
computer, computer system, or computer network, may be subject
to civil liabilities and criminal penalties under applicable
law. Fund will so inform employees and agents who have access
to the Protected Information or to any computer equipment
capable of accessing the same. Licensors are intended to be
and are third party beneficiaries of Fund's obligations and
undertakings contained in this Section.
D. Fund hereby represents and warrants to State Street that it
has determined to its satisfaction that the Systems are
appropriate and suitable for its use. THE SYSTEMS ARE PROVIDED
ON AN AS IS, AS AVAILABLE BASIS. STATE STREET EXPRESSLY
DISCLAIMS ALL WARRANTIES INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, EXCEPT THOSE WARRANTIES EXPRESSLY STATED
HEREIN.
E. State Street will take reasonable steps to ensure that its
products (and those of its third-party suppliers) reflect the
available state of the art technology to offer products that
are reasonably free from material and serious defects. State
Street will make the changes to its products at no cost to the
Fund and in a commercially reasonable time frame and will
require third-party suppliers to do likewise.
Similarly, Fund will take reasonable steps to ensure that its
electronic systems reflect the available state of the art
technology and are reasonably free from material and serious
defects, and if any changes are required, Fund will make the
changes to its systems at no cost to State Street and in a
commercially reasonable time frame.
10. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio,
the following provision applies:
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Each Portfolio will be regarded for all purposes hereunder as
a separate party apart from each other Portfolio. Unless the
context otherwise requires, with respect to every transaction
covered hereby, every reference herein to Fund is deemed to
relate solely to the particular Portfolio to which such
transaction relates. Under no circumstances will the rights,
obligations or remedies with respect to a particular Portfolio
constitute a right, obligation or remedy applicable to any
other Portfolio. The use of this single document to
memorialize the separate agreement as to each Portfolio is
understood to be for clerical convenience only and will not
constitute any basis for joining the Portfolios for any
reason.
11. MISCELLANEOUS.
A. This Agreement will be construed according to, and the rights
and liabilities of the parties hereto will be governed by, the
laws of the State of Delaware, without reference to the choice
of laws principles thereof.
B. All terms and provisions hereof will be binding upon, inure to
the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, the indemnifications
extended hereunder, and the provisions of Section 9 hereof are
intended to and will continue after and survive the
expiration, termination or cancellation hereof.
D. No provisions hereof may be amended or modified in any manner
except by a written agreement properly authorized and executed
by each party hereto.
E. The failure of either party to insist upon the performance of
any terms or conditions hereof or to enforce any rights
resulting from any breach of any of the terms or conditions
hereof, including the payment of damages, will not be
construed as a continuing or permanent waiver of any such
terms, conditions, rights or privileges, but the same will
continue and remain in full force and effect as if no such
forbearance or waiver had occurred. No waiver, release or
discharge of any party's rights hereunder will be effective
unless contained in a written instrument signed by the party
sought to be charged.
F. The captions herein 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.
G. This Agreement may be executed in two or more counterparts,
each of which is deemed an original but all of which together
constitute one and the same instrument.
H. If any provision hereof is determined to be invalid, illegal,
in conflict with any law or otherwise unenforceable, the
remaining provisions hereof will be considered severable and
will not be affected thereby, and every remaining
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provision hereof will remain in full force and effect and will
remain enforceable to the fullest extent permitted by
applicable law.
I. The benefits of this Agreement may not be assigned by either
party nor may either party delegate all or a portion of its
duties hereunder without the prior written consent of the
other party. Notwithstanding the foregoing, Fund agrees that
State Street may delegate all or a portion of its duties to an
affiliate of State Street, provided that such delegation will
not reduce the obligations of State Street under this
Agreement.
J. Neither the execution nor performance hereof will be deemed to
create a partnership or joint venture by and between State
Street and Fund or any Portfolio.
K. Except as specifically provided herein, this Agreement does
not in any way affect any other agreements entered into among
the parties hereto and any actions taken or omitted by either
party hereunder will not affect any rights or obligations of
the other party hereunder.
L. Notice is hereby given that a copy of Fund's Trust Agreement
and all amendments thereto is on file with the Secretary of
State of the state of its organization; that this Agreement
has been executed on behalf of Fund by the undersigned duly
authorized representative of Fund in his/her capacity as such
and not individually; and that the obligations of this
Agreement are binding only upon the assets and property of
Fund and not upon any trustee, officer of shareholder of Fund
individually.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers.
STATE STREET BANK AND TRUST COMPANY
By:_____________________________
Title:__________________________
FIRSTHAND FUNDS
By:_____________________________
Title:__________________________
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EXHIBIT A--PRICE SOURCE AUTHORIZATION
State Street has agreed to value the assets of the Fund in accordance
with the Funds' Instructions utilizing the pricing sources designated by the
Fund. The Fund hereby Instructs State Street to use the following primary and
back-up sources for each of the following security types:
--------------------------------------- -------------------------------------- -------------------------------------
TYPE OF SECURITY PRIMARY SOURCE BACKUP SOURCE
--------------------------------------- -------------------------------------- -------------------------------------
U.S. TREASURIES
--------------------------------------- -------------------------------------- -------------------------------------
CORPORATE BONDS
--------------------------------------- -------------------------------------- -------------------------------------
MUNICIPAL BONDS
--------------------------------------- -------------------------------------- -------------------------------------
MORTGAGE BACKED
--------------------------------------- -------------------------------------- -------------------------------------
U.S. & CANADIAN EQUITIES
--------------------------------------- -------------------------------------- -------------------------------------
FOREIGN EQUITIES
--------------------------------------- -------------------------------------- -------------------------------------
EMERGING MARKET EQUITIES
--------------------------------------- -------------------------------------- -------------------------------------
AMERICAN DEPOSITORY RECEIPTS
--------------------------------------- -------------------------------------- -------------------------------------
GLOBAL DEPOSITORY RECEIPTS
--------------------------------------- -------------------------------------- -------------------------------------
CANADIAN BONDS
--------------------------------------- -------------------------------------- -------------------------------------
FOREIGN BONDS
--------------------------------------- -------------------------------------- -------------------------------------
OPTIONS
--------------------------------------- -------------------------------------- -------------------------------------
EXCHANGE RATES
--------------------------------------- -------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------- -------------------------------------
These Instructions may be modified from time to time by further written
Instruction to State Street.
(FUND)
-------------------------------
By:
Title: ______________________________
Date: ______________________________
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EXHIBIT B--REUTERS DATA SERVICE AGREEMENT
The undersigned acknowledges and agrees that some of the data being provided in
the service by State Street to Fund contains information supplied to State
Street by Reuters America Inc. ("Reuters") (the "Data"). Fund agrees that:
(i) although Reuters makes every effort to ensure the accuracy and
reliability of the Data, Fund acknowledges that Reuters, its
employees, agents, contractors, subcontractors, contributors
and third party providers will not be liable for any loss,
cost or damage suffered or incurred by Fund arising out of any
fault, interruption or delays in the Data or out of any
inaccuracies, errors or omissions in the Data however such
faults, interruptions, delays, inaccuracies, errors or
omissions arise, unless due to the negligence, bad faith or
willful misfeasance of Reuters;
(ii) it will not transfer, transmit, recirculate by digital or
analogue means, republish or resell all or part of the Data;
and
(iii) certain parts of the Data are proprietary and unique to
Reuters.
The undersigned further agrees that the benefit of this clause will inure to the
benefit of Reuters.
(FUND NAME)
By:
Title: ______________________________
Date: ______________________________
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