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EXHIBIT (h)(3)
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 1st day of August, 1999, by and between
M.S.B. FUND, INC. (the "Company"), a New York corporation having its principal
place of business at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 and BISYS
FUND SERVICES OHIO, INC. ("BISYS"), an Ohio corporation having its principal
place of business at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Company desires that BISYS perform certain fund accounting
services for the current investment portfolio of the Company, and any additional
investment portfolio that may hereafter be created (individually referred to
herein as the "Fund" and collectively as the "Funds"); and
WHEREAS, BISYS 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.
BISYS agrees to perform the services described herein in accordance
with all applicable laws, rules and regulations (including, where applicable,
Generally Acceptable Accounting Principles), and in accordance with any
reasonable instructions of the Company and the Company's Certificate of
Incorporation, Bylaws, Prospectus and Statement of Additional Information.
(a) Maintenance of Books and Records. BISYS 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
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(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, BISYS shall
perform the following accounting services daily for each Fund:
(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 from
each Fund's investment adviser or its
designee, as approved by the Company's Board
of Directors (hereafter referred to as
"Directors");
(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;
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(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.
(c) Special Reports and Services.
(i) BISYS shall provide additional special
reports and other similar services upon the
request of the Company or the Company's
investment adviser.
(ii) To the extent that the provision of any such
reports or services requires BISYS to incur
material additional costs and BISYS notifies
the Company thereof promptly after such
requests, such reports or services shall be
provided in exchange for such additional
compensation that is agreed upon by the
parties.
(d) Additional Accounting Services. BISYS 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 (including
financial statements and schedules and
pertinent statistical information) for the
following:
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(A) federal and state income tax returns
and federal excise tax returns;
(B) the Company's 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 or sale 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.
BISYS shall provide on a timely basis to the Company's investment
adviser, administrator, transfer agent, distributor and custodian and other
persons providing services to the Company such information as such persons may
reasonably request in connection with the performance of their respective duties
and obligations with respect to the Company. BISYS will report to the Board of
Directors of the Company at each meeting of the Board of Directors and will keep
the Board of Directors informed of material developments affecting the Company.
BISYS will comply with any performance standards that may be agreed to
by BISYS and the Company from time to time.
2. Subcontracting.
BISYS may, at its expense, with the prior written consent of the
Company, subcontract with any entity or person concerning the provision of the
services contemplated hereunder; provided, however, that BISYS shall not be
relieved of any of its obligations under this Agreement by the appointment of
such subcontractor and provided further, that BISYS shall be responsible, to the
extent provided in Section 7 hereof, for all acts of such subcontractor as if
such acts were its own; and provided, further, that no such services shall be
subcontracted without the prior written consent of the Company.
3. Compensation.
The Company shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in the
Omnibus Fee Agreement between the Company and BISYS dated as of August 1, 1999
(the "Fee Agreement").
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4. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section 3 hereof,
the Company agrees to reimburse BISYS 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
BISYS in delivering materials to and from the Company;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by BISYS in
communication with the Company, the Company's investment
adviser or custodian, dealers or others as required for BISYS
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 BISYS shall incur at the written direction of an officer
of the Company thereunto duly authorized; and
(g) Any additional expenses reasonably incurred by BISYS in the
performance of its duties and obligations under this Agreement.
5. Effective Date.
This Agreement shall become effective with respect to a Fund as of the
date first written above (the "Effective Date").
6. Term.
This Agreement shall continue in effect with respect to a Fund, unless
earlier terminated by either party hereto as provided hereunder, until July 31,
2004 (the "Initial Term"). Thereafter, unless otherwise terminated as provided
herein, this Agreement shall be renewed automatically for successive one-year
periods ("Rollover Periods"). This Agreement may be terminated without penalty
(i) by provision of 90 days advance written
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notice of nonrenewal prior to the end of the Initial Term or any Rollover
Period, as the case may be, (ii) by mutual agreement of the parties or (iii) for
"cause," as defined below, upon the provision of 90 days advance written notice
by the party alleging cause. Notwithstanding the foregoing, after July 31, 2001,
either party may terminate this Agreement, at any time and without penalty, upon
the provision of 90 days advance written notice to the other party.
For purposes of this Agreement, "cause" shall mean (a) a material
breach of this Agreement that has not been remedied for thirty (30) days
following written notice of such breach from the non-breaching party; (b) a
series of negligent acts or omissions or other breaches of this Agreement which,
in the aggregate, constitute, in the reasonable judgment of the Company's
directors, a serious failure to perform satisfactorily BISYS's obligations
hereunder; (c) a service standard deficiency (as defined by the parties in the
service standards that are agreed to by BISYS and the Company from time to
time); (d) a final, unappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated had been found guilty of criminal
or unethical behavior in the conduct of its business; or (e) financial
difficulties on the part of the party to be terminated which are evidenced by
the authorization or commencement of, or involvement by way of pleading, answer,
consent or acquiescence in, a voluntary or involuntary case under Title 11 of
the United States Code, as from time to time is in effect, or any applicable
law, other than said Title 11, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the rights
of creditors.
After such termination for so long as BISYS, with the written consent
of the Company, in fact continues to perform any one or more of the services
contemplated by this Agreement or any schedule or exhibit hereto, the provisions
of this Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Compensation due BISYS
and unpaid by the Company upon such termination shall be immediately due and
payable upon and notwithstanding such termination. BISYS shall be entitled to
collect from the Company, in addition to the compensation described under
Sections 3 and 4 hereof, the amount of all of BISYS's cash disbursements for
services in connection with BISYS's activities in effecting such termination,
including without limitation, the delivery to the Company and/or its designees
of the Company's property, records, instruments and documents.
If, for any reason other than nonrenewal, mutual agreement of the
parties or "cause," as defined above, during the first two years of the Initial
Term of this Agreement, BISYS is replaced as fund accountant, then the Company
shall make a one-time cash payment, in consideration of the fee structure and
services to be provided under this Agreement, and not as a penalty, to BISYS
equal to the balance due BISYS for the remainder of such two-year period
assuming for purposes of calculation of the payment that such balance shall be
based upon the average amount of the Company's assets for the twelve months
prior to the date BISYS is replaced..
In the event the Company is merged into another legal entity in part
or in whole pursuant to any form of business reorganization (including without
limitation a purchase of assets) or is liquidated in part or in whole prior to
the expiration of the first two years of the Initial Term of this Agreement, the
parties acknowledge and agree that the Company shall be entitled to terminate
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this Agreement; provided, however, that the liquidated damages provision set
forth above shall be applicable in those instances in which BISYS is not
retained by the other party to such business reorganization or any successor
entity to provide fund accounting services consistent with this Agreement. The
one-time cash payment referenced above shall be due and payable on the day prior
to the first day in which BISYS is replaced or a third party is added.
The parties further acknowledge and agree that, in the event BISYS is
replaced, as set forth above, (i) a determination of actual damages incurred by
BISYS would be extremely difficult, and (ii) the liquidated damages provision
contained herein is intended to adequately compensate BISYS for damages incurred
and is not intended to constitute any form of penalty.
In the event either party gives notice of the termination of this
Agreement as provided in this Section, BISYS will cooperate and use all
reasonable efforts to assist with the conversation of the data and records
maintained by it hereunder to, and the assumption of the services provided by it
hereunder by, a replacement provider of fund accounting services.
7. Standard of Care; Reliance on Records and Instructions;
Indemnification.
BISYS 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 BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. A Fund agrees to indemnify and hold harmless BISYS, 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 expenses of every nature and character arising
out of or in any way relating to BISYS's actions taken or nonactions with
respect to the performance of services under this Agreement with respect to such
Fund or based, if applicable, upon reasonable reliance on information, records,
instructions or requests with respect to such Fund given or made to BISYS by a
duly authorized representative of the Company; provided, however, that BISYS
shall not be protected in relying on any information, records, instructions or
requests given or made to or prepared by BISYS or any affiliate of BISYS or any
officer of the Company that is an officer or employee of BISYS or any affiliate
of BISYS; and provided, further, that this indemnification shall not apply to
actions or omissions of BISYS 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, BISYS shall give the Company written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of BISYS.
Notwithstanding the foregoing, BISYS agrees to indemnify and hold
harmless the Company, its employees, agents, directors, officers and nominees
from and against any and all actions, suits, demands and claims, whether
groundless or otherwise, and from and against any and all judgments,
liabilities, losses, damages, costs, charges, reasonable counsel fees and other
expenses of every
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nature and character arising out of or in any way relating to BISYS's bad faith,
willful malfeasance or misfeasance, negligence, or reckless disregard by it of
its obligations and duties with respect to the performance of services under
this Agreement.
The indemnifying party shall be entitled to participate at its own expense
or, if it acknowledges its responsibility to indemnify the other party, it may
elect to assume the defense of any suit brought to enforce any claims subject to
this indemnity provision. If the indemnifying party elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
indemnifying party and satisfactory to the indemnified party, whose approval
shall not be unreasonably withheld. In the event that the indemnifying party
elects to assume the defense of any suit and retain counsel, the indemnified
party shall bear the fees and expenses of any additional counsel retained by it.
If the indemnifying party does not elect to assume the defense of a suit, it
will reimburse the indemnified party for the reasonable fees and expenses of any
counsel retained by the indemnified party.
8. Record Retention and Confidentiality.
BISYS shall keep and maintain on behalf of the Company all books and
records which the Company and BISYS 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. BISYS 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. BISYS will promptly notify the
Company of any such request.
9. Uncontrollable Events.
BISYS shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provisions for emergency use of
electronic data processing equipment and shall, at no additional expense to the
Company, take reasonable steps to minimize service interruptions. BISYS 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 such damage, delay or other loss is not caused by BISYS'
own willful misfeasance, bad faith, negligence reckless disregard of its
obligations under, or other noncompliance with this Agreement.
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10. Reports.
BISYS 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 BISYS, 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 of which the Company is
aware.
11. Rights of Ownership.
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of BISYS.
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.
BISYS may at its option at any time, and shall promptly upon the
Company's demand, turn over to the Company and cease to retain BISYS's files,
records and documents created and maintained by BISYS pursuant to this Agreement
which are no longer needed by BISYS 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 BISYS 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 BISYS that 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.
14. Representations of BISYS.
BISYS represents and warrants that: (1) the various procedures and
systems which BISYS 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 BISYS's records, data, equipment
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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 BISYS and, when executed and
delivered by BISYS, will constitute a legal, valid and binding obligation of
BISYS, enforceable against BISYS 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.
BISYS agrees to perform comprehensive tests on the systems it utilizes to
provide the services hereunder to identify any operational issues caused by the
century change. BISYS agrees to use all commercially reasonable efforts to
implement by December 31, 1999, all necessary updates and changes to such
systems, if any, to accommodate the turn of the century. BISYS agrees to provide
to the Company monthly updates on the status of its Year 2000 readiness project
and to make its personnel reasonably available to address any questions. In
particular and, without limiting the foregoing, BISYS shall notify the Company
of any circumstances known to BISYS which are likely to cause BISYS's systems to
be Year 2000 non-compliant and which would likely have an adverse effect on the
Funds.
In the event that the Company reasonably determines that any of the systems
BISYS utilizes to perform services hereunder will not be Year 2000 compliant and
that such lack of compliance will have an adverse effect on the Company, the
Company shall provide written notice to BISYS describing, in reasonable detail,
any defect or problem relating to such system(s) promptly upon becoming aware of
any such defect or problem. BISYS agrees to use all commercially reasonable
efforts to cure any defect or deficiency that relates to the turn of the century
in any system that BISYS utilizes to provide services hereunder. This paragraph
does not alter the obligations of BISYS under the preceding paragraph.
15. Insurance.
BISYS 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. BISYS 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 BISYS under its
insurance coverage.
16. Information to be Furnished by the Company and Funds.
The Company has furnished to BISYS the following:
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(a) Copies of the Certificate of Incorporation 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 Directors
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 BISYS thereunder.
(c) A list of all the officers of the Company, together with
specimen signatures of those officers who are authorized to
instruct BISYS in all matters.
(d) Two copies of the Prospectuses and Statements of Additional
Information for each Fund.
17. Information Furnished by BISYS.
(a) BISYS has furnished to the Company the following:
(i) BISYS's Articles of Incorporation; and
(ii) BISYS's Bylaws and any amendments thereto.
(b) BISYS 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 BISYS to execute and deliver this
Agreement; and
(ii) Authorization of BISYS to act as fund accountant for the
Company and to provide accounting services for the
Company.
18. Amendments to Documents.
The Company shall furnish BISYS written copies of any 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
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of changing the procedures employed by BISYS in providing the services agreed to
hereunder or which amendment might affect the duties of BISYS hereunder unless
the Company first obtains BISYS's approval of such amendments or changes.
19. Compliance with Law.
Except for the obligations of BISYS set forth in Sections 1, 2, 7, 8
and 10 hereof, BISYS bears no responsibility under this Agreement 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.
20. Notices.
Any notice provided hereunder shall be sufficiently given when
sent by registered or certified mail to the party required to be served with
such notice at the following address: if to the Company at 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxx Xxxxxxxx, 00000 if to BISYS 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. Any assignment not in compliance with this
Agreement shall be void.
23. Governing Law.
This Agreement shall be governed by and provisions shall be construed
in accordance with the laws of the State of Ohio.
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24. Instructions, Approval or Consent by the Company; Imputation.
Any reference herein to any instructions, approval or consent of the
Company shall not include any instructions, approval or consent given by any
officer of the Company that is an officer, employee or agent of BISYS or any
affiliate of BISYS, unless specifically authorized by the Board of Directors of
the Company. No information known to any such officer of the Company shall be
imputed to the Company for purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
M.S.B. FUND, INC.
By: /s/ M.S.B. Fund, Inc.
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Title: Vice President
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BISYS FUND SERVICES OHIO, INC.
By: /s/ BISYS Fund Services Ohio, Inc.
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Title: President
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