EXHIBIT 23(H)(2)
FUND ACCOUNTING SERVICING AGREEMENT
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 2nd day of
August, 1999, by and between XYZ Funds, Inc., a Maryland corporation
(hereinafter referred to as the "Company"), and Firstar Mutual Fund Services,
LLC, a Wisconsin limited liability company (hereinafter referred to as
"Firstar").
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create separate series, each
with its own separate investment portfolio;
WHEREAS, Firstar is in the business of providing, among other
things, mutual fund accounting services to investment companies; and
WHEREAS, the Company desires to retain Firstar to provide accounting
services to the XYZ Fund and each additional series of the Company listed on
Exhibit A attached hereto (each, a "Fund"), as it may be amended from time to
time.
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Company and Firstar agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
The Company hereby appoints Firstar as Fund Accountant of the Company on
the terms and conditions set forth in this Agreement, and Firstar 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 FIRSTAR
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 Fund expenses upon receipt of written
authorization from the Company.
(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by Firstar and
the Company.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund 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 Fund 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 Fund in the form as agreed upon.
(5) Determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the Fund's Prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of Fund operations at
such time as required by the nature and characteristics of the Fund.
(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 Fund 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 Fund's accounting records
available to the Company, 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
Firstar but approved by the Company's Board of Directors and apply those prices
to the portfolio positions of the Fund. 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 Firstar 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 Firstar.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
Firstar 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
Firstar 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. Firstar shall exercise reasonable care in the performance of its
duties under this Agreement. Firstar 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 Firstar's control, except a loss resulting from
Firstar'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
Firstar 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 Firstar may
sustain or incur or which may be asserted against Firstar 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 Firstar
by any duly authorized officer of the Company, such duly authorized
officer to be included in a list of authorized officers furnished to
Firstar and as amended from time to time in writing by resolution of the
Board of Directors of the Company.
Firstar 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 Firstar as a result of
Firstar'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, Firstar shall take all reasonable
steps to minimize service interruptions for any period that such
interruption continues beyond Firstar's control. Firstar 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 Firstar. Firstar
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
Firstar's premises and operating capabilities at any time during regular
business hours of Firstar, upon reasonable notice to Firstar.
Regardless of the above, Firstar 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 Firstar
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
Firstar 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. Firstar agrees that all such records
prepared or maintained by Firstar relating to the services to be performed by
Firstar 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 Firstar, shall furnish to Firstar
the data necessary to perform the services described herein at such times and in
such form as mutually agreed upon. If Firstar is also acting as the transfer
agent for the Company, nothing herein shall be deemed to relieve Firstar of any
of its obligations under the Transfer Agent Servicing Agreement.
11. NOTIFICATION OF ERROR
The Company will notify Firstar of any balancing or control error caused
by Firstar within three (3) business days after receipt of any reports rendered
by Firstar 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
Firstar 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 Firstar 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 two year periods. This Agreement may be terminated by either party
upon giving ninety (90) days prior written notice to the two year anniversary to
the other party.
If the Company elects to terminate this Agreement prior to the two year
anniversary date of this Agreement, for reasons other than unacceptable service
levels, the Company agrees to reimburse Firstar for the difference between the
termination date and the anniversary date in the two year fees based on the
current fees of the Company.
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 Firstar shall be sent to:
Firstar Mutual Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Company shall be sent to:
Legacy Funds, Inc.
00 Xxxxxxxx
Xxx Xxxx, X.X. 00000-0000
Attn: Corporate Secretary
15. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any of
Firstar's duties or responsibilities hereunder is designated by the Company by
written notice to Firstar, Firstar 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 Firstar
under this Agreement in a form reasonably acceptable to the Company (if such
form differs from the form in which Firstar 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 Firstar'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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer in one or more counterparts as of the
day and year first written above.
XYZ FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
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Print: Print:
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Title: Title:
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Date: Date:
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Attest: Attest:
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FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
EXHIBIT A
Separate Series of XYZ Funds, Inc.
NAME OF SERIES DATE ADDED
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XYZ Fund August 2, 1999
Domestic Equity Funds
$22,000 for the first $40 million
1 basis point on the next $200 million
1/2 basis point on the balance
Each class is an additional 25% of the charge of the initial class.
Fees and out-of-pocket expenses are billed to the Fund monthly.
