1
EXHIBIT (h)(3)
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 1st day of August, 2000, between AMBASSADOR FUNDS (the
"Company"), a Delaware business trust, having its principal place of business at
0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, and BISYS FUND SERVICES OHIO, INC.
("Fund Accountant"), a corporation organized under the laws of the State of Ohio
and having its principal place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000.
WHEREAS, the Company desires that Fund Accountant perform certain fund
accounting services for each investment portfolio of the Company, all as now or
hereafter may be established from time to time (individually referred to herein
as the "Fund" and collectively as the "Funds"); and
WHEREAS, Fund Accountant is willing to perform such services on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS FUND ACCOUNTANT
(a) Maintenance of Books and Records. Fund Accountant will keep and
maintain the following books and records of each Fund pursuant to Rule 31a-1
under the Investment Company Act of 1940 (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, including interest accrued
and interest received, as required by subsection (b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by subsection (b)(2)(ii) and
(iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule.
(b) Performance of Daily Accounting Services. In addition to the
maintenance of the books and records specified above, Fund Accountant shall
perform the following accounting services daily for each Fund:
2
(i) Calculate the net asset value per share utilizing prices
obtained from the sources described in subsection 1(b)(ii) below;
(ii) Obtain security prices from independent pricing services, or
if such quotes are unavailable, then obtain such prices in accordance with
the Company's Pricing Policy then in effect;
(iii) Verify and reconcile with the Funds' custodian all daily
trade activity;
(iv) Compute, as appropriate, each Fund's net income and capital
gains, dividend payables, dividend factors, 7-day yields, 7-day effective
yields, 30-day yields, and weighted average portfolio maturity;
(v) Review daily the net asset value calculation and dividend
factor (if any) for each Fund prior to release to shareholders, check and
confirm the net asset values and dividend factors for reasonableness and
deviations, and distribute net asset values and yields to NASDAQ;
(vi) Report to the Company the daily market pricing of securities
in any money market Funds, with the comparison to the amortized cost
basis;
(vii) Determine unrealized appreciation and depreciation on
securities held in variable net asset value Funds;
(viii) Amortize premiums and accrete discounts on securities
purchased at a price other than face value, if requested by the Company;
(ix) Update fund accounting system to reflect rate changes, as
received from a Fund's investment adviser, on variable interest rate
instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to instructions
received from the Company's Administrator;
(xii) Determine the outstanding receivables and payables for all
(1) security trades, (2) Fund share transactions and (3) income and
expense accounts;
(xiii) Provide accounting reports in connection with the Company's
regular annual audit and other audits and examinations by regulatory
agencies; and
(xiv) Provide such periodic reports as the parties shall agree
upon, as set forth in a separate schedule.
2
3
(c) Special Reports and Services
(i) Fund Accountant may provide additional special reports upon
the request of the Company or a Fund's investment adviser, which may
result in an additional charge, the amount of which shall be agreed upon
between the parties.
(ii) Fund Accountant may provide such other similar services with
respect to a Fund as may be reasonably requested by the Company, which may
result in an additional charge, the amount of which shall be agreed upon
between the parties.
(d) Additional Accounting Services. Fund Accountant shall also perform the
following additional accounting services for each Fund:
(i) Provide monthly a download (and hard copy thereof) of the
financial statements described below, upon request of the Company. The
download will include the following items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the following:
(A) federal and state income tax returns and federal excise
tax returns;
(B) the Company's annual and semi-annual reports with the
Securities and Exchange Commission ("SEC") on Form N-SAR;
(C) the Company's annual, semi-annual and quarterly (if any)
shareholder reports;
(D) registration statements on Form N-1A and other filings
relating to the registration of shares;
(E) the Administrator's monitoring of the Company's status as
a regulated investment company under Subchapter M of the
Internal Revenue Code, as amended;
(F) annual audit by the Company's auditors; and
(G) examinations performed by the SEC.
3
4
2. SUBCONTRACTING
Fund Accountant may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder subject to
approval by the Company's Board of Trustees, which approval shall not be
unreasonably withheld; provided, however, that Fund Accountant shall not be
relieved of any of its obligations under this Agreement by the appointment of
such subcontractor and provided further, that Fund Accountant shall be
responsible, to the extent provided in Section 7 hereof, for all acts of such
subcontractor as if such acts were its own.
3. COMPENSATION
The Company shall pay Fund Accountant for the services to be provided by
Fund Accountant under this Agreement in accordance with, and in the manner set
forth in the Omnibus Fee Agreement among the Company, BISYS Fund Services
Limited Partnership and Fund Accountant dated as of August 1, 2000 (the "Fee
Agreement").
4. REIMBURSEMENT OF EXPENSES
In addition to paying Fund Accountant the fees described in the Fee
Agreement, the Company agrees to reimburse Fund Accountant for its out-of-pocket
expenses in providing services hereunder, including without limitation the
following:
(a) All freight and other delivery and bonding charges incurred by Fund
Accountant in delivering materials to and from the Company;
(b) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by Fund Accountant in communication
with the Company, the Company's investment adviser or custodian, dealers or
others as required for Fund Accountant to perform the services to be provided
hereunder;
(c) The cost of obtaining security market quotes pursuant to Section
l(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other materials;
(e) All systems-related expenses associated with the provision of special
reports and services pursuant to Section 1(c) herein;
(f) Any expenses Fund Accountant shall incur at the written direction of
an officer of the Company thereunto duly authorized; and
(g) Any additional expenses reasonably incurred by Fund Accountant in the
performance of its duties and obligations under this Agreement.
4
5
5. EFFECTIVE DATE
This Agreement shall become effective with respect to a Fund as of the
date first written above (or, if a particular Fund is not in existence on that
date, on the date such Fund commences operation) (the "Effective Date").
6. TERM
The term of this Agreement shall be as specified in the Fee Agreement.
7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS; INDEMNIFICATION
Fund Accountant shall use its best efforts to insure the accuracy of all
services performed under this Agreement, but shall not be liable to the Company
for any action taken or omitted by Fund Accountant in the absence of bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties. The Company agrees to indemnify and hold harmless Fund
Accountant, its employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other reasonable expenses
of every nature and character arising out of or in any way relating to Fund
Accountant's actions taken or nonactions with respect to the performance of
services under this Agreement or based, if applicable, upon reasonable reliance
on information, records, instructions or requests given or made to Fund
Accountant by a duly authorized representative of the Company; provided that
this indemnification shall not apply to actions or omissions of Fund Accountant
in cases of its own bad faith, willful misfeasance, negligence or from reckless
disregard by it of its obligations and duties, and further provided that prior
to confessing any claim against it which may be the subject of this
indemnification, Fund Accountant shall give the Company written notice of and
reasonable opportunity to defend against said claim in its own name or in the
name of Fund Accountant.
8. RECORD RETENTION AND CONFIDENTIALITY
Fund Accountant shall keep and maintain on behalf of the Company all books
and records which the Company and Fund Accountant is, or may be, required to
keep and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"), relating to the maintenance of books
and records in connection with the services to be provided hereunder. Fund
Accountant further agrees that all such books and records shall be the property
of the Company and to make such books and records available for inspection by
the Company or by the Securities and Exchange Commission at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Company and its shareholders; except when requested to divulge
such information by duly-constituted authorities or court process.
5
6
9. UNCONTROLLABLE EVENTS
Fund Accountant assumes no responsibility hereunder, and shall not be
liable, for any damage, loss of data, delay or any other loss whatsoever caused
by events beyond its reasonable control; provided that Fund Accountant has taken
reasonable measures to prevent or mitigate such losses.
10. REPORTS
Fund Accountant will furnish to the Company and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports and at such times as are prescribed pursuant to the terms and the
conditions of this Agreement to be provided or completed by Fund Accountant, or
as subsequently agreed upon by the parties pursuant to an amendment hereto. The
Company agrees to examine each such report or copy promptly and will report or
cause to be reported any errors or discrepancies therein.
11. RIGHTS OF OWNERSHIP
All computer programs and procedures developed to perform services
required to be provided by Fund Accountant under this Agreement are the property
of Fund Accountant. All records and other data except such computer programs and
procedures are the exclusive property of the Company and all such other records
and data will be furnished to the Company in appropriate form as soon as
practicable after termination of this Agreement for any reason.
12. RETURN OF RECORDS
Fund Accountant may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company and cease to retain files, records
and documents created and maintained by Fund Accountant pursuant to this
Agreement which are no longer needed by Fund Accountant in the performance of
its services or for its legal protection. If not so turned over to the Company,
such documents and records will be retained by Fund Accountant for six years
from the year of creation. At the end of such six-year period, such records and
documents will be turned over to the Company unless the Company authorizes in
writing the destruction of such records and documents.
13. REPRESENTATIONS OF THE COMPANY
The Company certifies to Fund Accountant that: (1) as of the close of
business on the Effective Date, each Fund that is in existence as of the
Effective Date has authorized unlimited shares, and (2) this Agreement has been
duly authorized by the Company and, when executed and delivered by the Company,
will constitute a legal, valid and binding obligation of the Company,
enforceable against the Company 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.
6
7
14. REPRESENTATIONS OF FUND ACCOUNTANT
Fund Accountant represents and warrants that: (1) the various procedures
and systems which Fund Accountant has implemented with regard to safeguarding
from loss or damage attributable to fire, theft, or any other cause the records,
and other data of the Company and Fund Accountant's records, data, equipment
facilities and other property used in the performance of its obligations
hereunder are adequate and that it will make such changes therein from time to
time as are required for the secure performance of its obligations hereunder,
and (2) this Agreement has been duly authorized by Fund Accountant and, when
executed and delivered by Fund Accountant, will constitute a legal, valid and
binding obligation of Fund Accountant, enforceable against Fund Accountant 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.
15. INSURANCE
Fund Accountant shall maintain a fidelity bond covering larceny and
embezzlement and an insurance policy with respect to directors and officers
errors and omissions coverage in amounts that are appropriate in light of its
duties and responsibilities hereunder. Fund Accountant shall notify the Company
should any of its insurance coverage be canceled or reduced. Such notification
shall include the date of change and the reasons therefor. Fund Accountant shall
notify the Company of any material claims against it with respect to services
performed under this Agreement, whether or not they may be covered by insurance,
and shall notify the Company from time to time as may be appropriate of the
total outstanding claims made by Fund Accountant under its insurance coverage.
16. INFORMATION TO BE FURNISHED BY THE COMPANY AND FUNDS
The Company has furnished to Fund Accountant and Fund Accountant
acknowledges receipt of the following:
(a) Copies of the Declaration of Trust of the Company and of any
amendments thereto, certified by the proper official of the state in which such
document has been filed.
(b) Copies of the following documents:
(i) The Company's Bylaws and any amendments thereto; and
(ii) Certified copies of resolutions of the Trustees covering the
approval of this Agreement, authorization of a specified officer of the
Company to execute and deliver this Agreement and authorization for
specified officers of the Company to instruct Fund Accountant thereunder.
7
8
(c) A list of all the officers of the Company, together with specimen
signatures of those officers who are authorized to instruct Fund Accountant in
all matters.
(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.
17. INFORMATION FURNISHED BY FUND ACCOUNTANT
(a) Fund Accountant has furnished to the Company and the Company
acknowledges receipt of the following:
(i) Fund Accountant's Articles of Incorporation; and
(ii) Fund Accountant's Bylaws and any amendments thereto.
(b) Fund Accountant shall, upon request, furnish certified copies of
corporate actions covering the following matters:
(i) Approval of this Agreement, and authorization of a specified
officer of Fund Accountant to execute and deliver this Agreement; and
(ii) Authorization of Fund Accountant to act as fund accountant for
the Company and to provide accounting services for the Company.
18. AMENDMENTS TO DOCUMENTS
The Company shall furnish Fund Accountant written copies of any amendments
to, or changes in, any of the items referred to in Section 16 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Company
agrees that no amendments will be made to the Prospectuses or Statements of
Additional Information of the Company which might have the effect of changing
the procedures employed by Fund Accountant in providing the services agreed to
hereunder or which amendment might affect the duties of Fund Accountant
hereunder unless the Company first obtains Fund Accountant's approval of such
amendments or changes.
19. COMPLIANCE WITH LAW
Except for the obligations of Fund Accountant set forth in Section 8
hereof, the Company assumes full responsibility for the preparation, contents
and distribution of each prospectus of the Company as to compliance with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. The Company represents and
warrants that no shares of the Company will be offered to the public until the
Company's registration statement under the Securities Act and the 1940 Act has
been declared or becomes effective.
8
9
20. NOTICES
Any notice required or permitted to be given by either party to the other
shall be deemed sufficient if sent by registered or certified mail, postage
prepaid, addressed by the party giving notice to the other party at the
following addresses: if to the Company, at 000 Xxxx Xxxx Xxxxxx, Xxxxx 000 c/o
Ambassador Capital Management, Inc.; if to Fund Accountant, at 0000 Xxxxxxx
Xxxx, Xxxxxxxx, Xxxx 00000; or at such other address as such party may from time
to time specify in writing to the other party pursuant to this Section.
21. HEADINGS
Paragraph headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
22. ASSIGNMENT
This Agreement and the rights and duties hereunder shall not be assignable
with respect to a Fund by either of the parties hereto except by the specific
written consent of the other party. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and permitted assigns.
23. GOVERNING LAW
This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
AMBASSADOR FUNDS
BY: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
TITLE: President
------------------------------------
BISYS FUND SERVICES OHIO, INC.
BY: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
TITLE: President
-----------------------------------
9
