Exhibit No. EX-99.h.3
FUND ACCOUNTING SERVICING AGREEMENT
This Agreement between Jacob Internet Fund, a Maryland Corporation
(hereinafter called the "Company"), on behalf of its separate series of shares
("Series") or classes of such Series ("Classes"), all as described herein (as
such part may be amended from time to time), and Firstar Mutual Fund Services,
LLC, a limited liability company organized under the laws of the State of
Wisconsin (hereinafter called "Firstar" ), is effective as of the 27th day of
August, 1999.
WHEREAS, the Company, is an open-ended management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, Firstar is in the business of providing mutual fund accounting
services to investment companies.
NOW, THEREFORE, the Company and Firstar do mutually promise and agree as
follows:
1. Services. Firstar agrees to provide the following mutual fund accounting
services to the Company on a per Series or per Class basis as appropriate:
A. Portfolio Accounting Services:
(1) Maintain portfolio trading records (purchase and sale
journals for each Series) on a trade date +1 basis using security
trade information communicated from the Series' investment
manager on a timely basis.
(2) Monitor corporate action to identify and record interest and
dividend income on portfolio securities and maintain accrual
balances as of each valuation date and calculate gross earnings
on investments for the accounting period.
(3) Determine gain/loss on portfolio 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.
(4) Maintain appropriate records of brokerage activity for
transactions in portfolio securities to enable Firstar to provide
monthly brokerage reports showing brokers and commission amounts.
(5) Maintain a daily listing of portfolio holdings by Series
showing cost, market value, and the percentage of portfolio
comprised of each security.
(6) Reconcile accounting asset listings against custodian's asset
listings on at least a monthly basis and report any securities
balance discrepancies promptly to the Company and Custodian.
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) Upon receipt of written authorization from the Company, make
and record payments for Company expenses.
(3) Account for Company and Series 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) Calculate and maintain daily records of the net asset value
(and offering price if appropriate) of each Series (or class of
such Series if appropriate), at such times (each a "valuation
date") as directed and authorized by the Company through
Firstar's questionnaire and in accordance with: (i) relevant
regulatory requirements; (ii) the Company's Declaration of
Company and By-Laws; (iii) the Company's registration statement
or Form N-1A; and (iv) any procedures approved by the Board of
Directors of the Company and supplied to Firstar in writing.
(2) In connection with the calculation of relevant net asset
values, Firstar shall obtain prices for portfolio securities from
pricing services approved by the Company, and will apply those
prices to the portfolio securities. For these securities where
market quotations are not readily available, the 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.
(3) On trade date +1, account for and record purchases, sales,
exchanges, transfers, dividend reinvestments, and other
transactions in shares of the Company, its Series as reported by
the transfer agent on a timely basis.
(4) Apply equalization accounting as directed by the Company.
(5) Determine net investment income (earnings) for each Series of
the Company as of each valuation date. Account for periodic
distributions of
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earnings to shareholders and maintain undistributed net
investment income balances as of each valuation date.
(6) Maintain a general ledger for the Company and each of its
Series in the form as agreed upon.
(7) Communicate, at an agreed upon time, the per share price for
each valuation date to the Company and its investment advises as
agreed upon from time to time.
D. Tax Accounting Services:
(1) Maintain accounting records for each Series' investment
portfolio to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for each Series' 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.
(5) Maintain schedules of dividends paid and payable.
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 investment manager, the
Securities and Exchange Commission, and the outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
2. 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.
3. 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.
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4. 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.
5. Performance of Service.
A. Firstar shall exercise reasonable care in the performance of its
duties under this Agreement. Firstar shall not be liable 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 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 Fund 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 Fund,
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 Fund.
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 Fund 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 Company may be
asked to indemnify or hold Firstar harmless, the Company shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that Firstar will use all reasonable care to notify
the Company promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification against the
Company. The Company shall have the option to defend Firstar against any claim
which may be the subject of this indemnification. In the event that the Fund so
elects, it will so notify Firstar and thereupon the Company shall take over
complete defense of the claim, and Firstar shall in such situation initiate no
further legal or other expenses for which it shall seek indemnification under
this section. Firstar shall in
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no case confess any claim or make any compromise in any case in which the
Company will be asked to indemnify Firstar except with the Company's prior
written consent.
C. 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 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.
6. 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 and s required by the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the 1940 Act and the rules thereunder. Firstar agrees that such records prepared
or maintain 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 with such section and rules of the 1940 Act and will be promptly
surrendered to the Company on and in accordance with its request.
7. Confidentiality. Firstar shall handle in confidence all information
relating to the Company's or its investment manager's business, which is
received by Firstar during the course of rendering any service hereunder.
8. 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 times and in such form as mutually agreed upon.
9. 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.
10. Additional Series. In the event that the Company establishes one or
more Series or Classes of shares with respect to which it desires to have
Firstar render accounting services, under the terms hereof, it shall so notify
Firstar in writing, and if Firstar 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 Firstar on a discrete basis. The series
and classes currently covered by this Agreement are: "Jacob Internet Fund."
11. Term of Agreement. This Agreement shall become effective on August 27,
1999 and, unless sooner terminated as provided herein, shall continue
automatically in effect for successive two year periods, provided that the
continuance of the Agreement is approved by a majority of the board of directors
of the Company. The Agreement may also 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 and will terminate automatically upon
its
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assignment unless the parties offer consent in writing. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
12. 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 Company by written notice to Firstar, Firstar will
promptly, upon such termination and at the expense of 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
Company (if such form differs from the form in which Firstar has maintained the
same, 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.
13. 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:
Jacob Internet Fund
Jacob Asset Management, LLC
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
14. Choice of Law. This Agreement shall be construed in accordance with the
laws of the State of Wisconsin.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
JACOB INTERNET FUND FIRSTAR MUTUAL FUND SERVICES, LLC
By: /s/Xxxx Xxxxx By: /s/Xxxx Rock
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Print: Xxxx Xxxxx Print: Xxxx Rock
Title: Chairman Title: Sr. Vice President
Date: 7-13-99 Date: 7-13-99
Attest: /s/Xxxxxxx Xxxxxx Attest:
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Attest: Attest:
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