Exhibit 9(c)
THE HIGHLAND FAMILY OF FUNDS
FUND ACCOUNTING AGREEMENT
AGREEMENT made the 14th day of March 1997, between The Highland Family of
Funds (the "Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts with its principal place of business at Two
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000, and Forum Financial Corp. ("FFC"), a
corporation organized under the laws of the State of Delaware with its
principal place of business at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company and
may issue its shares of beneficial interest, par value $0.0001 per share (the
"Shares"), in separate series and classes; and
WHEREAS, the Trust intends initially to offer shares in two (2) series as
listed in Appendix A hereto (each such series, together with all other series
subsequently established by the Trust and made subject to this Agreement, being
herein referred to as a "Fund," and collectively as the "Funds");
WHEREAS, the Trust desires that FFC perform certain fund accounting
services for each Fund and for any class of shares thereof that may be
subsequently established by the Trust (a "Class"), and FFC is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and FFC do hereby agree as follows:
SECTION 1. APPOINTMENT
The Trust hereby appoints FFC, and FFC hereby agrees, to act as fund
accountant of the Trust for the period and on the terms set forth in this
Agreement. In connection therewith, the Trust has delivered to FFC copies of
its Declaration of Trust and Bylaws, the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), (the "Registration Statement") and the current Prospectus and Statement
of Additional Information of each Fund (collectively, as currently in effect
and as amended or supplemented, the "Prospectus") and shall promptly furnish
FFC with all amendments of or supplements to the foregoing.
SECTION 2. SERVICES TO BE PERFORMED
For each Fund, FFC shall perform the services listed in this Section. FFC
and the Trust's administrator, Forum Administrative Services LLC (the
"Administrator"), may from time to time adopt such procedures as they agree
upon to implement the terms of this Section.
(a) Books and Records. FFC shall prepare and maintain on behalf of the
Trust the following books and records of each Fund, and each Class thereof,
pursuant to Rule 31a-1 under the Act (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) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers
required by subsection (b)(2)(iv);
(iii)A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of
securities, and all other portfolio purchases or sales, as required
by subsections (b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any
direct or indirect interest or which the Trust has granted or
guaranteed and a record of any contractual commitments to purchase,
sell, receive or deliver any property as required by subsection
(b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of the Rule;
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end
management investment companies, but limited to these provisions of
the Rule applicable to portfolio transactions; and
(vii)Other records as agreed upon between the parties hereto.
The forgoing books and records shall be prepared and maintained in such
form, for such periods and in such locations as may be required by applicable
regulation and shall be the property of the Trust. FFC agrees to make such
books and records available for inspection by the Trust or by the SEC at
reasonable times and as otherwise directed by the Administrator.
(b) Accounting Services. FFC shall:
(i) Calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) Calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's
Regulation S-X (or any successor regulation) and the Internal
Revenue Code of 1986, as amended (the "Code");
(iii)Calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable,
and such other measure of performance as may be agreed upon between
the parties hereto;
(iv) Provide the Trust and such other persons as the Administrator
may direct with the following reports:
(A) a current security position report,
(B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each
portfolio security in maturity date order), and
(C) a current cash position and projection report;
(v) Prepare and record, as of each time when the net asset value of
a Fund is calculated or as otherwise directed by the Administrator,
either
(A) a valuation of the assets in the Fund (based upon the use
of outside services normally used and contracted for this
purpose by FFC in the case of securities for which information
and market price or yield quotations are readily available and
based upon evaluations conducted in accordance with the
Administrator's instructions in the case of all other assets)
or
(B) a calculation confirming that the market value of the
Fund's assets does not deviate from the amortized cost value of
those assets by more than a specified percentage agreed to from
time to time by FFC and the Administrator;
(vi) Make such adjustments over such periods as FFC deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income; and
(vii)Obtain necessary information from the Administrator and the
Trust's transfer agent in order to prepare, and prepare and file or
cause to be filed, the Trust's Form N-SAR.
(c) Other Services. FFC shall:
(i) Assist the Trust's independent accountants and, upon approval of
the Trust or the Administrator, any regulatory body in any requested
review of the Trust's books and records maintained by FFC; and
(ii) Prepare and produce or oversee the production of semi-annual
financial statements and the related reports to shareholders and the
SEC;
(iii)provide information typically supplied in the investment
company industry to companies that track or report price,
performance or other information with respect to investment
companies;
(iv) provide the Administrator with the data requested by the
Administrator that is required to update the Trust's registration
statement;
(v) provide the Administrator or auditor with all information
required to prepare the Trust's income, excise and other tax
returns;
(vi) produce quarterly compliance reports for investment advisers to
the Trust and the Trust's Board of Trustees (the Board") and provide
information to the Administrator, investment advisers to the Trust
and other appropriate persons with respect to questions of Fund
compliance;
(vii)determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare
and distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to shareholders;
(viii) transmit appropriate data to each Fund's transfer agent on a
daily basis and daily reconcile net asset value per share and other
data with the transfer agent;
(ix) periodically reconcile all appropriate data with each Fund's
custodian; and
(x) perform the recordkeeping, reporting and other tasks required to
be performed by the Funds' fund accountant as specified in the
various procedures adopted by the Board; provided, that Forum need
not perform any such task except upon 60 days notice.
SECTION 3. COMPENSATION AND EXPENSES
(a) Fee. In consideration of the services provided by FFC pursuant to
this Agreement, the Trust shall pay FFC, with respect to each Fund, the fees
set forth in Clause (i) of Appendix B hereto. These fees shall be accrued by
the Trust daily and shall be payable monthly in advance on the first day of
each calendar month for services performed under this Agreement during the
prior calendar month. Fees will begin to accrue for each Fund on the latter of
the effective date of this Agreement or the date of commencement of operations
of the Fund. If fees begin to accrue before the end of any month or if this
Agreement terminates before the end of any month, all fees for the period from
that date to the end of that month or from the beginning of that month to the
date of termination, as the case may be, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness
or termination occurs. Upon the termination of this Agreement with respect to a
Fund, the Trust shall pay to FFC such compensation as shall be payable prior to
the effective date of termination.
(b) Reimbursement of Expenses. In connection with the services provided
by FFC pursuant to this Agreement, the Trust, on behalf of each Fund, agrees to
reimburse FFC for the expenses set forth in Clause (ii) of Appendix B hereto.
In addition, the Trust, on behalf of the applicable Fund, shall reimburse FFC
for all expenses and employee time attributable to any review of the Trust's
accounts and records by the Trust's independent public accountants or any
regulatory body outside of routine and normal periodic reviews. Should the
Trust exercise its right to terminate this Agreement, all out-of-pocket
expenses associated with the copying and movement of records and material to
any successor person shall be borne by the Trust on behalf of the applicable
Funds and FFC may, in its discretion, charge for any other reasonable expenses
associated with such termination, including the employee time to copy and move
records and material and in cooperating with, and providing assistance to,
FFC's successor in the establishment of the accounts and records necessary to
carry out the successor's responsibilities.
SECTION 4. EFFECTIVENESS, DURATION AND TERMINATION
This Agreement shall become effective as of the date first above written
and shall remain in effect indefinitely. Notwithstanding the foregoing, this
Agreement may be terminated at any time with respect to any Fund, or Class
thereof, without the payment of any penalty, (i) by a vote of a majority of the
Trust's Board of Trustees on not less than 60 days' written notice to FFC or
(ii) by FFC on not less than 60 days' written notice to the Trust. For so long
as FFC continues to perform any of the services contemplated by this Agreement
after termination of this Agreement (as agreed to by the Trust and FFC), the
provisions of Sections 3 and 5 hereof shall continue in full force and effect.
SECTION 5. STANDARD OF CARE; LIMITATION OF LIABILITY
(a) FFC shall use its best judgment and efforts in rendering the services
described in this Agreement. FFC shall not be liable to the Trust for any
action or inaction of FFC in the absence of bad faith, willful misconduct or
gross negligence or based upon information, instructions or requests made to
FFC by a duly authorized officer of the Trust who is not an officer or employee
of FFC or its affiliates. FFC shall not be responsible or liable for any
failure or delay in performance of its obligations under this Agreement caused
by circumstances beyond its reasonable control.
(b) The Trust agrees to indemnify and hold harmless FFC, its employees,
agents, officers and directors against and from any and all claims, demands,
actions, suits, judgments, losses, charges (including attorneys' fees) and
other reasonable expenses arising out of FFC's actions or omissions that are
consistent with the standard of care set forth in paragraph (a) of this
section.
(c) FFC agrees to indemnify and hold harmless the Trust, its employees,
agents, officers and directors against and from any and all claims, demands,
actions, suits, judgments, losses, charges (including attorneys' fees) and
other reasonable expenses arising out of FFC's actions or omissions that are
not consistent with the standard of care set forth in paragraph (a) of this
section.
(d) Neither party shall be required to indemnify the other if, prior to
confessing any claim against it which may be subject to indemnification, the
indemnified party does not give the indemnifying party written notice of, and
reasonable opportunity to defend against, the claim.
SECTION 6. ASSIGNMENT
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. All terms and provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
SECTION 7. FORCE MAJEURE
FFC shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent FFC's
obligations hereunder are to oversee or monitor the activities of third
parties, FFC shall not be liable for any failure or delay in the performance of
FFC's duties caused, directly or indirectly, by the failure or delay of such
third parties in performing their respective duties or cooperating reasonably
and in a timely manner with FFC.
SECTION 8. ACTIVITIES OF FFC
(a) Except to the extent necessary to perform FFC's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict FFC's
right, or the right of any of FFC's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are
otherwise affiliated persons of the Trust to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, trust, firm, individual or association.
(b) FFC may subcontract any or all of its functions or responsibilities
pursuant to this Agreement to one or more corporations, trusts, firms,
individuals or associations, which may be affiliates of FFC, who agree to
comply with the terms of this Agreement. FFC may pay those persons for their
services, but no such payment will increase FFC's compensation from the Trust.
Any subcontract by FFC of its functions or responsibilities hereunder does not
affect FFC's obligations or rights under this agreement.
SECTION 9. COOPERATION WITH INDEPENDENT ACCOUNTANTS
FFC shall cooperate, if applicable, with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
SECTION 10. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require FFC,
in any capacity under this Agreement, to perform any functions or duties on any
day other than a business day of the Trust or of a Fund. Functions or duties
normally scheduled to be performed on any day which is not a business day of
the Trust or of a Fund shall be performed on, and as of, the next business day,
unless otherwise required by law.
SECTION 11. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not be
liable for any obligations of the Trust or of the Funds under this Agreement,
and FFC agrees that, in asserting any rights or claims under this Agreement, it
shall look only to the assets and property of the Trust or the Fund to which
FFC's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust, the shareholders of the Funds or any Fund other
than the Fund to which FFC's rights or claims relate.
SECTION 12. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance with
Section 4, no provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required, by the Act, by a vote of a majority of the
outstanding voting securities of the Trust or Fund, as applicable.
(c) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion
or portions shall be considered severable and not be affected, and the rights
and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(d) Section and Paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this
Agreement.
(e) Notices, requests, instructions and communications received by the
parties at their respective principal addresses, or at such other address as a
party may have designated in writing, shall be deemed to have been properly
given.
(f) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of New York.
(g) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(h) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate
and distinct from the assets and liabilities of each other Fund and that no
Fund shall be liable or shall be charged for any debt, obligation or liability
of any other Fund, whether arising under this Agreement or otherwise.
(j) The terms "vote of a majority of the outstanding voting securities"
and "interested person" shall have the meanings ascribed thereto in the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
THE HIGHLAND FAMILY OF FUNDS
Xxxxxx Xxxx III
______________________________________
Xxxxxx Xxxx III
President
FORUM FINANCIAL CORP.
Xxxx X. Xxxxxx
______________________________________
Xxxx X. Xxxxxx
Manager
THE HIGHLAND FAMILY OF FUNDS
FUND ACCOUNTING AGREEMENT
SCHEDULE A
FUNDS OF THE TRUST
AS OF MARCH 14, 1997
Highland Growth Fund
Highland Aggressive Growth Fund
THE HIGHLAND FAMILY OF FUNDS
FUND ACCOUNTING AGREEMENT
SCHEDULE B
FEES
(i) BASE FEE
Standard Fee per Fund with one Class $36,000/year
Fee for each additional Class $12,000/year
Plus additional surcharges for each of:
for portfolios with asset levels exceeding:
$100 million $6,000/year
$250 million $6,000/year
$500 million $6,000/year
$1 billion $6,000/year
Portfolios requiring international custody,
or holding futures, options, forward
contracts, foreign currencies, or other
hedge instruments $12,000/year
Portfolios with more than 30
international positions $12,000/year
Tax Free Money Market Portfolios $12,000/year
Series with more than 25% of net assets
invested in assetbacked securities $12,000/year
Series with more than 50% of net assets
invested in asset backed securities $12,000/year
Series with more than 100 security positions $12,000/year
Series with a monthly portfolio turnover
rate of 10% or greater $12,000/year
Standard Fee per Gateway Fund (a Fund
operating pursuant to Section 12(d)(1)(E)
of the Act) $12,000/year
Fee for each additional Class of a Gateway
Fund above one $12,000/year
Note 1. Surcharges are paid on a monthly basis, and are determined based
upon the total assets or security positions as of the end of the prior
month and on the portfolio turnover rate for the prior month. Portfolio
turnover rate shall have the meaning ascribed thereto in Securities and
Exchange Commission Form N-1A.
Note 2: The rates set forth above shall remain fixed through December 31,
1997. On January 1, 1998, and on each successive January 1, the rates
shall be adjusted to reflect changes in the Consumer Price Index for the
preceding calendar year, as published by the U.S. Department of Labor,
Bureau of Labor Statistics. Forum shall notify the Trust each year of the
new rates.
(II) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse FFC for all
out-of-pocket and ancillary expenses in providing the services described
in this Agreement, including but not limited to the cost of (or
appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) telephone services, (v) electronic or
facsimile transmission services, (vi) reproduction, (vii) printing and
distributing financial statements and (xiii) microfilm and microfiche. In
addition, any other expenses incurred by FFC at the request or with the
consent of the Trust, will be reimbursed by the Trust on behalf of the
applicable Fund.
