FUND ACCOUNTING SERVICING AGREEMENT
This contract between The HomeState Group, a Pennsylvania common trust,
hereinafter called the "Trust," and Firstar Trust Company, a Wisconsin
corporation, hereinafter called "FTC," is entered into on this 1st day of March,
1998.
WHEREAS, The HomeState Group, is an open-ended management investment
company registered under the Investment Company Act of 1940; and
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. SERVICES. FTC agrees to provide the mutual fund accounting services
described on Schedule A and herein to the Fund:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date + 1 basis using
security trade information communicated from the investment manager on
a timely basis.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Trustees and apply those prices to the
portfolio positions. For those securities where market quotations are
not readily available, the Board of Trustees shall approve the method
for determining the fair value for such securities in accordance with
the then-current prospectus for the portfolios.
(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
to short-short, short- or long-term status; 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 Trust as to methodology, rate or dollar
amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from the Trust.
(3) Account for fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by FTC and
the Trust.
(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 Trust.
(3) Determine net investment income/earnings for the Trust 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 for the Trust in the form as
agreed upon.
(5) For each day the Trust is open as defined in the prospectus,
determine the net asset value of the according to the accounting
policies and procedures set forth in the prospectus.
(6) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of fund operation at such time
as required by the nature and characteristics of the Trust and in
accordance with the then-current prospectus for the portfolios.
(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 Trust to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
-2-
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method designated by the Trust.
(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 accounting records available
to The HomeState Group, the Securities and Exchange Commission, and
the outside auditors.
(2) Maintain accounting records according to the Investment
Company Act of 1940 and regulations provided thereunder.
2. PRICING OF SECURITIES. For each valuation date, obtain prices from a
pricing source selected by FTC but approved by the Trust's Board and apply those
prices to the portfolio positions. For those securities where market quotations
are not readily available, the Fund's Board shall approve the method for
determining the fair value for such securities in accordance with the then-
current prospectus for the portfolios.
If the Trust desires to provide a price which varies from the pricing
source, the Trust shall promptly notify and supply FTC with the valuation of any
such security on each valuation date. All pricing changes made by the Trust 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.
3. CHANGES IN ACCOUNTING PROCEDURES. Any resolution passed by the Board
of Trustees that affects accounting practices and procedures under this
Agreement shall be effective upon written receipt and acceptance by the FTC.
4. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC. FTC 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 Trust under this
Agreement.
5. COMPENSATION. FTC shall be compensated for providing the services set
forth in this Agreement in accordance with the Fee Schedule attached hereto as
Schedule B and as mutually agreed upon and amended from time to time.
6. PERFORMANCE OF SERVICE.
-3-
A. FTC shall exercise reasonable care in the performance of its
duties under this Agreement. FTC shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FTC's control, except a loss
resulting from FTC'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 Fund shall
indemnify and hold harmless FTC 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 FTC may sustain or incur or which may be
asserted against FTC 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 FTC by any duly authorized
officer of the Fund, such duly authorized officer to be included in a
list of authorized officers furnished to FTC and as amended from time
to time in writing by resolution of the Board of Directors of the
Fund.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FTC's control. FTC 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 FTC. FTC
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 Fund shall be entitled
to inspect FTC's premises and operating capabilities at any time
during regular business hours of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC 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
Fund may be asked to indemnify or hold FTC harmless, the Fund shall be
fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that FTC will use
all reasonable care to notify the Fund promptly concerning any
situation which presents or appears likely to present the probability
of such a claim for indemnification against the Fund. The Fund shall
have the option to defend FTC against any claim which may be the
subject of this indemnification. In the event that the Fund so elects,
it will so notify FTC and thereupon the Fund shall take over complete
defense of the claim, and FTC shall in such situation initiate no
further
-4-
legal or other expenses for which it shall seek indemnification under
this section. FTC shall in no case confess any claim or make any
compromise in any case in which the Fund will be asked to indemnify
FTC except with the Fund's prior written consent.
C. FTC shall indemnify and hold the Fund 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 may be asserted against
the Fund by any person arising out of any action taken or omitted to
be taken by FTC as a result of FTC's refusal or failure to comply with
the terms of this Agreement, its bad faith, negligence, or willful
misconduct.
7. RECORDS. FTC 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 Trust but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the "Investment Company Act"),
and the rules thereunder. FTC agrees that all such records prepared or
maintained by FTC relating to the services to be performed by FTC hereunder are
the property of the Trust and will be preserved, maintained, and made available
with such section and rules of the Investment Company Act and will be promptly
surrendered to the Trust on and in accordance with its request.
YEAR 2000. FIRSTAR WARRANTS THAT:
(a) Occurrence in or use by Firstar's internal computing system and all
systems utilized by Firstar in servicing the Trust (collectively the
"Systems") of dates on or after January 1, 2000 ("Millennium Dates")
or the occurrence of the year 2000 will not adversely affect the
performance of Firstar's services hereunder in any manner including,
but not limited to, performance of Firstar's services hereunder in any
manner including, but not limited to, performance with respect to
date-dependent data, computations, output, calculating, comparing, and
sequencing. The core systems to which this warranty relates are:
The PAR System - Transfer agent shareholder accounting and shareholder
servicing
The CPORT System - Fund Accounting
The AMtrust System - Custody
The Blue2 System - Blue Sky
The Mutual Direct System - Fulfillment
(b) The Systems will create, store, process, and output information
related to or including Millennium Dates without errors or omissions
and at no additional cost to the Trust.
-5-
(c) The Systems will be Year 2000 compliant on or before January 31, 1999
and, if such compliance will not be achieved by such date, Firstar
will provide written notice of such noncompliance to the Trust on or
before January 31, 1999 along with a detailed description of the
status of such Y2K remediation and an expected date of compliance,
which the Trust shall consider and determine in its sole discretion
whether to terminate the Agreement. If the Trust determines to
terminate the Agreement for such noncompliance, there shall be no
additional cost or expense to the Trust related to such termination.
(d) The Systems will not disturb the Trust's computer system regarding
date-related issues.
At the Trust's request, Firstar will provide evidence sufficient to
demonstrate that the Systems meet the foregoing requirements including, but not
limited to, evidence of testing and performance. This warranty and covenant
shall remain in effect during the term of this Agreement. In the event of a
breach of this warranty, the Trust shall have available all remedies under the
law or equity, including, but not limited to, direct, incidental, and/or
consequential damages. This warranty and this remedy provision shall supersede
other clauses in this Agreement or other agreements between the Trust and
Firstar which are inconsistent with this clause and in the case of
inconsistency, the warranty and remedy provisions in this clause shall be
controlling.
8. CONFIDENTIALITY. FTC shall handle in confidence all information
relating to the Trust business, which is received by FTC during the course of
rendering any service hereunder.
9. DATA NECESSARY TO PERFORM SERVICES. The Trust or its agent, which may
be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
10. NOTIFICATION OF ERROR. The Trust will notify FTC of any balancing or
control error caused by FTC within three (3) business days after receipt of any
reports rendered by FTC to the Trust, 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.
11. ADDITIONAL SERIES. In the event that The HomeState Group establishes
one or more series of shares with respect to which it desires to have FTC render
accounting services, under the terms hereof, it shall so notify FTC in writing,
and if FTC agrees in writing to provide such services, such series will be
subject to the terms and conditions of this Agreement, and shall be maintained
and accounted for by the FTC on a discrete basis. The portfolios currently
covered by this Agreement are: The Pennsylvania Growth Fund; The Select
Opportunities Fund; The Y2K Fund.
12. TERM OF AGREEMENT. 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
-6-
agreed upon by the parties. However, this Agreement may be replaced or modified
by a subsequent agreement between the parties.
13. DUTIES IN THE EVENT OF TERMINATION. In the event that in connection
with termination a Successor to any of FTC's duties or responsibilities
hereunder is designated by The HomeState Group by written notice to FTC, FTC
will promptly, upon such termination and at the expense of The HomeState Group,
transfer to such Successor all relevant books, records, correspondence and other
data established or maintained by FTC under this Agreement in a form reasonably
acceptable to The HomeState Group (if such form differs from the form in which
FTC has maintained the same, The HomeState Group 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 FTC's personnel in the establishment of books, records and other data by
such successor.
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 FTC shall be sent to:
Firstar Trust Company
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to Trust shall be sent to:
0000 Xxxxxxx Xxxx Xxx, Xxxxx 000
Xxxxxxxxx, XX 00000
15. CHOICE OF LAW. This Agreement shall be construed in accordance with
the laws of the State of Wisconsin.
16. LIMITATION OF LIABILITY. FTC hereby acknowledges that it has received
notice of and accepts the limitations of the Trust's liability set forth in
Section 13 of its Declaration of Trust. FTC agrees that the Fund's obligations
under this Agreement with respect to the Trust and any other specific funds
shall be limited to such Trust and to its assets, and that FTC shall not seek
satisfaction of any such obligation from the shareholders of the Trust nor from
any trustee, officer, employee or agent of the Trust, nor from the assets of
shareholders of any other funds.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
ATTEST: FIRSTAR TRUST COMPANY
Xxxx Xxxx By: Xxxxxxx X. XxXxx
---------------------------- ------------------------------
-7-
ATTEST: THE HOMESTATE GROUP
Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxx
---------------------------- ------------------------------
Xxxxx X. Xxxx
-8-
