Exhibit (k.3)
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
15th day of October, 1999, by and between LCM Internet
Growth Fund, Inc., a Maryland corporation (hereinafter
referred to as the "Company") and Firstar Mutual Fund
Services, LLC, a corporation organized under the laws
of the State of Wisconsin (hereinafter referred to as
"FMFS").
WHEREAS, the Company is a closed-end management
investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, FMFS is in the business of providing,
among other things, mutual fund accounting services to
investment companies; and
WHEREAS, the Company desires to retain FMFS to
provide accounting services to the Company.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and FMFS agree as
follows:
1. Appointment of Fund Accountant
The Company hereby appoints FMFS as Fund
Accountant of the Company on the terms and conditions
set forth in this Agreement, and FMFS hereby accepts
such appointment and agrees to perform the services and
duties set forth in this Agreement in consideration of
the compensation provided for herein.
2. Duties and Responsibilities of FMFS
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated
from the investment manager.
(2) For each valuation date, obtain prices
from a pricing source approved by the Board of
Directors of the Company and apply those
prices to the portfolio positions. For those
securities where market quotations are not
readily available, the Board of Directors of
the Company shall approve, in good faith, the
method for determining the fair value for such
securities.
(3) Identify interest and dividend accrual balances
as of each valuation date and calculate gross
earnings on investments for the accounting
period.
(4) Determine gain/loss on security sales and identify
them as, short-term or long-term; account for
periodic distributions of gains or losses to
shareholders and maintain undistributed gain
or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense
accrual amounts as directed by the Company as
to methodology, rate or dollar amount.
(2) Record payments for Company expenses upon receipt
of written authorization from the Company.
(3) Account for Company expenditures and maintain
expense accrual balances at the level of
accounting detail, as agreed upon by FMFS and
the Company.
(4) Provide expense accrual and payment reporting.
C. Valuation and Financial Reporting Services:
(1) Account for Company share purchases, sales,
exchanges, transfers, dividend reinvestments,
and other Company share activity as reported
by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Company.
(3) Determine net investment income (earnings) for the
Company as of each valuation date. Account
for periodic distributions of earnings to
shareholders and maintain undistributed net
investment income balances as of each
valuation date.
(4) Maintain a general ledger and other accounts,
books, and financial records for the Company
in the form as agreed upon.
(5) Determine the net asset value of the Company
according to the accounting policies and
procedures set forth in the Company's current
Prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts
reflective of Company operations at such time
as required by the nature and characteristics
of the Company.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as
agreed upon from time to time.
(8) Prepare monthly reports which document the
adequacy of accounting detail to support month-
end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment
portfolio of the Company to support the tax
reporting required for IRS-defined regulated
investment companies.
(2) Maintain tax lot detail for the investment
portfolio.
(3) Calculate taxable gain/loss on security sales
using the tax lot relief method designated by
the Company.
(4) Provide the necessary financial information to
support the taxable components of income and
capital gains distributions to the transfer
agent to support tax reporting to the
shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the
Company's accounting records available to the
Company and its advisers, the Securities and
Exchange Commission, and the outside auditors.
(2) Maintain accounting records according to the 1940
Act and regulations provided thereunder.
3. Pricing of Securities
For each valuation date, obtain prices from a
pricing source selected by FMFS but approved by the
Company's Board of Directors and apply those prices to
the portfolio positions of the Company. For those
securities where market quotations are not readily
available, the Company's Board of Directors shall
approve, in good faith, the method for determining the
fair value for such securities.
If the Company desires to provide a price which
varies from the pricing source, the Company shall
promptly notify and supply FMFS with the valuation of
any such security on each valuation date. All pricing
changes made by the Company will be in writing and must
specifically identify the securities to be changed by
CUSIP, name of security, new price or rate to be
applied, and, if applicable, the time period for which
the new price(s) is/are effective.
4. Changes in Accounting Procedures
Any resolution passed by the Board of Directors of
the Company that affects accounting practices and
procedures under this Agreement shall be effective upon
written receipt and acceptance by the FMFS.
5. Changes in Equipment, Systems, Service, Etc.
FMFS reserves the right to make changes from time
to time, as it deems advisable, relating to its
services, systems, programs, rules, operating schedules
and equipment, so long as such changes do not adversely
affect the service provided to the Company under this
Agreement.
6. Compensation
FMFS shall be compensated for providing the
services set forth in this Agreement in accordance with
the Fee Schedule attached hereto as Exhibit A and as
mutually agreed upon and amended from time to time.
The Company agrees to pay all fees and reimbursable
expenses within ten (10) business days following the
receipt of the billing notice.
7. Performance of Service; Limitation of Liability
A. FMFS shall exercise reasonable care in the
performance of its duties under this Agreement.
FMFS shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the
Company in connection with matters to which this
Agreement relates, including losses resulting from
mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's
control, except a loss resulting from FMFS's
refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance
of its duties under this Agreement.
Notwithstanding any other provision of this
Agreement, the Company shall indemnify and hold
harmless FMFS from and against any and all claims,
demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which FMFS may sustain or incur
or which may be asserted against FMFS by any
person arising out of any action taken or omitted
to be taken by it in performing the services
hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or
oral instruction provided to FMFS by any duly
authorized officer of the Company, such duly
authorized officer to be included in a list of
authorized officers furnished to FMFS and as
amended from time to time in writing by resolution
of the Board of Directors of the Company.
FMFS shall indemnify and hold the Company
harmless from and against any and all claims,
demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which the Company may sustain or
incur or which may be asserted against the Company
by any person arising out of any action taken or
omitted to be taken by FMFS as a result of FMFS's
refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or
willful misconduct.
In the event of a mechanical breakdown or
failure of communication or power supplies beyond
its control, FMFS shall take all reasonable steps
to minimize service interruptions for any period
that such interruption continues beyond FMFS's
control. FMFS will make every reasonable effort
to restore any lost or damaged data and correct
any errors resulting from such a breakdown at the
expense of FMFS. FMFS agrees that it
shall, at all times, have reasonable contingency plans with
appropriate parties, making reasonable provision
for emergency use of electrical data processing
equipment to the extent appropriate equipment is
available. Representatives of the Company shall
be entitled to inspect FMFS's premises and
operating capabilities at any time during regular
business hours of FMFS, upon reasonable notice to
FMFS.
Regardless of the above, FMFS reserves the
right to reprocess and correct administrative
errors at its own expense.
B. In order that the indemnification
provisions contained in this section shall apply,
it is understood that if in any case the
indemnitor may be asked to indemnify or hold the
indemnitee harmless, the indemnitor shall be fully
and promptly advised of all pertinent facts
concerning the situation in question, and it is
further understood that the indemnitee will use
all reasonable care to notify the indemnitor
promptly concerning any situation which presents
or appears likely to present the probability of a
claim for indemnification. The indemnitor shall
have the option to defend the indemnitee against
any claim which may be the subject of this
indemnification. In the event that the indemnitor
so elects, it will so notify the indemnitee and
thereupon the indemnitor shall take over complete
defense of the claim, and the indemnitee shall in
such situation initiate no further legal or other
expenses for which it shall seek indemnification
under this section. Indemnitee shall in no case
confess any claim or make any compromise in any
case in which the indemnitor will be asked to
indemnify the indemnitee except with the
indemnitor's prior written consent.
8. No Agency Relationship
Nothing herein contained shall be deemed to
authorize or empower FMFS to act as agent for the other
party to this Agreement, or to conduct business in the
name of, or for the account of the other party to this
Agreement.
9. Records
FMFS shall keep records relating to the services to
be performed hereunder, in the form and manner, and for
such period as it may deem advisable and is agreeable
to the Company but not inconsistent with the rules and
regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act, and the rules
thereunder. FMFS agrees that all such records prepared
or maintained by FMFS relating to the services to be
performed by FMFS hereunder are the property of the
Company and will be preserved, maintained, and made
available in accordance with such section and rules of
the 1940 Act and will be promptly surrendered to the
Company on and in accordance with its request.
10. Data Necessary to Perform Services
The Company or its agent, which may be FMFS, shall
furnish to FMFS the data necessary to perform the
services described herein at such times and in such
form as mutually agreed upon. If FMFS is also acting
in another capacity for the Company, nothing herein
shall be deemed to relieve FMFS of any of its
obligations in such capacity.
11. Notification of Error
The Company will notify FMFS of any balancing or
control error caused by FMFS within three (3) business
days after receipt of any reports rendered by FMFS to
the Company, or within three (3) business days after
discovery of any error or omission not covered in the
balancing or control procedure, or within three (3)
business days of receiving notice from any shareholder.
12. Proprietary and Confidential Information
FMFS agrees on behalf of itself and its directors,
officers, and employees to treat confidentially and as
proprietary information of the Company all records and
other information relative to the Company and prior,
present, or potential shareholders of the Company (and
clients of said shareholders), and not to use such
records and information for any purpose other than the
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where FMFS may be exposed to civil or criminal
contempt proceedings for failure to comply, when
requested to divulge such information by duly
constituted authorities, or when so requested by the
Company.
13. Term of Agreement
This Agreement shall become effective as of the
date hereof and, unless sooner terminated as provided
herein, shall continue automatically in effect for
successive annual periods. This Agreement may be
terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties.
However, this Agreement may be replaced or modified by
a subsequent agreement between the parties.
14. Notices
Notices of any kind to be given by either party to
the other party shall be in writing and shall be duly
given if mailed or delivered as follows: Notice to
FMFS shall be sent to:
Xx. Xxxxx X. Xxxxx
Firstar Mutual Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Company shall be sent to:
Xx. Xxxxx X. Xxxxxxx
LCM Internet Growth Fund, Inc.
000 X. Xxxxxxxxxx Xxxx.
Xxxxxxx, XX 00000
15. Duties in the Event of Termination
In the event that in connection with termination, a
successor to any of FMFS's duties or responsibilities
hereunder is designated by the Company by written
notice to FMFS, FMFS will promptly, upon such
termination and at the expense of the Company transfer
to such successor all relevant books, records,
correspondence and other data established or maintained
by FMFS under this Agreement in a form reasonably
acceptable to the Company (if such form differs from
the form in which FMFS has maintained the same, the
Company shall pay any expenses associated with
transferring the same to such form), and will cooperate
in the transfer of such duties and responsibilities,
including provision for assistance from FMFS's
personnel in the establishment of books, records and
other data by such successor.
16. Governing Law
This Agreement shall be construed in accordance
with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the SEC thereunder.
17.Year 2000 Representation
FMFS hereby represents and warrants that it does
not anticipate that the "Year 2000 Problem" will have a
material impact on its ability to perform its duties
under this Agreement. The "Year 2000 Problem" refers
to the inability of computer systems to properly
process and calculate date-related information and data
from and after January 1, 2000.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer on one or more counterparts as of the day and
year first written above.
LCM INTERNET GROWTH FUND, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: /s/ Xxxxxxx X. Xxxxx, Xx. By: /s/ Xxxxxx Xxxxxxxxx
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Attest: /s/ Xxxxxxx X. Xxxxxx Attest: /s/ Xxxxxxxx X. Xxxxx
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Fund Accounting Services
Annual Fee Schedule
Exhibit A
Domestic Equity Funds
$22,000 for the first $40 million
1 basis point on the next $200 million
.5 basis point on average net assets exceeding $240 million
Plus reasonable out-of-pocket expenses, including pricing service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Fees and reasonable out-of-pocket expenses are billed
to the Company monthly
