Exhibit (h)(2)
FUND ACCOUNTING SERVICE AGREEMENT
BETWEEN
HYPERION BROOKFIELD ASSET MANAGEMENT, INC.
AND
XXXXXX XXXXXX SELECT FUND, INC.
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This Fund Accounting Service Agreement is made this 29th day of July,
2008 (the "Agreement"), between Xxxxxx Xxxxxx Select Fund, Inc., a Maryland
corporation (the "Fund"), and Hyperion Brookfield Asset Management, Inc.
("HBAM"), a Delaware corporation.
WHEREAS, the Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") with distinct series of shares of common stock (each, a "Portfolio",
and collectively, the "Portfolios"); and
WHEREAS, HBAM is investment adviser, and is capable of providing or
causing others to provide, among other things, record keeping and fund
accounting services in accordance with the 1940 Act, and the Securities Exchange
Act of 1934 (the "1934 Act"), and the current prospectus of the Fund as filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "1933 Act"); and
WHEREAS, the Fund wishes to retain HBAM to provide, or cause others to
provide, fund accounting services for its investment portfolios listed on
Exhibit A attached hereto and made a part hereof, as such Exhibit A may be
amended from time to time, and HBAM wishes to furnish, or cause others to
furnish, such services;
NOW, THEREFORE, HBAM and the Fund in consideration of the mutual
agreements contained herein agree as follows:
1. SERVICES. HBAM agrees to provide all mutual fund accounting services
to the Fund on behalf of each Portfolio required to conduct the business of the
Fund or otherwise required under the 1940 Act, except such services as are
normally performed by the Fund's independent accountant, and the officers of the
Fund. Such services shall include, without limitation, the following:
A. Portfolio Accounting Services:
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(1) Maintain each Portfolio's records on a trade date basis
using security trade information.
(2) Update each Portfolio's records, including share or face
positions, with the effect of capital changes and corporate
action announcements as known. Obtain information as to
these announcements by subscribing to announcement
information services that HBAM deems sufficient to remain
current with industry standards. HBAM will regularly review
and update such subscriptions and notify its fund customers
of the changes in the information services it is using. HBAM
will subscribe to additional
information services that are requested in writing by the
Fund, with information from that service used specifically
and solely for the Fund's portfolio accounting and with the
expense of that service charged directly to the Fund.
(3) For each security identified by the Fund on behalf of each
Portfolio for pricing, obtain a price for each valuation
date from a pricing source approved by the Fund's Board of
Directors. Apply the price to the security's portfolio
position to determine its market value as of valuation day.
In the event that a price for a given security identified
for pricing is not available from the normal pricing sources
for a given valuation date, obtain a price from alternative
source or sources.
(4) For each security not identified for pricing, determine its
market value as of each valuation date using a method
identified by the Fund from among the following:
(a) Market value equals book value;
(b) Market value equals face value;
(c) Market value equals book value less any amortization
balance or plus any accretion balance (amortized cost
method);
(d) Another method approved by the Fund's Board of
Directors or HBAM's Valuation Committee.
(5) Identify interest and dividend accrual balances as of each
valuation date and identify gross earnings on investments
for each accounting period. Determine these amounts using:
(a) The security characteristics communicated at the time
of purchase;
(b) Corrections to security characteristics subsequently
provided or subsequently identified by the Fund's
custodian as a result of collection activity and
approved in writing by HBAM;
(c) Published corporate action announcements available to
the public;
(d) For variable and floating rate notes, rate information
from sources identified and approved.
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(6) Determine accretion and amortization balances on each
valuation date for securities which are purchased at a
premium or discount (original issue and secondary market)
and which are identified in the Fund's accounting policy
established by the Fund as requiring that accounting
treatment. Determine these amounts using purchase price and
security characteristics communicated at the time of
purchase or using corrections to the information
subsequently provided in writing. For those securities
identified for this accounting treatment, include the daily
amortization or accretion amount as a component of gross
earnings on investments.
(7) For original issue discount ("OID") debt instruments to
which the Internal Revenue Service OID rules apply,
calculate adjusted issue price as of each valuation date.
For OID bonds also calculate the ratable position of the
original issue discount for the accounting period and
include that amount as part of gross income on investments
for that period. Coordinate the accounting for original
issue discount with the accounting for market premium or
discount (Section 5 above) for those OID debit instruments
purchased on the secondary market at a price other than OID
adjusted issue price. Perform this calculation using the
following information communicated at the time of purchase.
(a) Whether the debt security is one to which the Internal
Revenue Service OID rules apply;
(b) the original issue date;
(c) the original issue price;
(d) the redemption value;
(e) the maturity date;
(f) payment dates, if on irregular intervals or payment
start date and payment cycle, if on regular intervals;
and
(g) the original issue yield to maturity.
(8) Determine gain/loss on security sales and identify them as
to short or long term status under the Internal Revenue
Code, using the tax lot relief policy elected by the Fund or
recognizing sales from lots that may be specifically
identified at the time trade details are communicated.
Account for periodic distributions of gain to shareholders
and maintain undistributed gain or loss balances as of each
valuation date.
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(9) Provide the portfolio-based reports requested in writing by
the Fund in a format as agreed to from time to time. Issue
requested reports to the recipient and with the frequency
identified in the request.
(10) Compare portfolio information in the Fund accounting system
with corresponding information in the Fund's custody
records. Report to the Fund any outstanding receivables of
each Portfolio aged more than 30 days beyond contractual
payment date.
B. Expense Accrual and Payment Services:
-------------------------------------
(1) For each valuation date, calculate the expense accrual
amounts as directed by each Portfolio as to methodology,
rate, or dollar amount.
(2) Initiate payment of each Portfolio's expenses by the Fund's
custodian.
(3) Account for each Portfolio's expenditures and maintain
expense accrual balances at the level of accounting detail
specified by the Fund.
(4) Provide accounting information to the Fund's designated
expense control agent from the Fund's accounting records as
to actual expense activity versus expense accrual amounts
for specified time periods.
(5) Maintain accounting control over payment checks issued and
outstanding.
C. Fund Valuation and Financial Reporting Services:
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(1) Account for share purchases, sales, exchanges, transfers,
dividend reinvestment, and other share activity as reported
on a timely basis by the Fund's transfer agent.
(2) Determine net investment income (earnings) 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.
(3) Maintain a general ledger in the form defined by the Fund
and as of each valuation date produce the set of financial
statements in the format agreed to from time to time. Issue
the statements to the recipients identified in writing by
the Fund on behalf of each Portfolio and with the specified
frequency.
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(4) For each day the Fund is open as defined in the Fund's
prospectus, determine net asset value according to the
accounting policies and procedures set forth in the Fund's
prospectus.
(5) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of Fund and Portfolio
operation at such time as required by the nature and
characteristics of the Fund and each Portfolio. Perform the
calculations using the number of shares outstanding reported
by the Fund's transfer agent to be applicable at the time of
calculation.
(6) Communicate per share price for each valuation date to
newspapers, the Fund's transfer agent, and other parties as
necessary.
(7) Prepare a monthly proof package of reports in the format
agreed to from time to time which documents the adequacy of
accounting detail to support month-end ledger balances and
reports. Distribute this package to the recipients
identified in writing by the Fund behalf of each Portfolio.
D. Tax Accounting Services:
------------------------
(1) Maintain tax accounting records for each Portfolio, for
expense activity and for shareholder distribution activity
sufficient to support federal and state tax reporting
required for Internal Revenue Service ("IRS")-defined
regulated investment companies.
(2) Maintain tax lot detail for each Portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method defined by the Fund and recognizing sales
from lots that are specifically identified.
(4) Calculate and report the taxable components of income and
capital gains distributions to the Fund's transfer agent to
support tax reporting to the shareholders.
(5) Prepare all Federal and State tax returns.
E. Compliance Control Services:
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(1) Make the Fund's accounting records and the requested
portfolio-based reporting identified above available to the
investment adviser upon request in a timely fashion so as to
support its compliance-monitoring review. Provide the
compliance reporting in the format requested by the Fund.
Issue the requested reports to the recipients and with the
frequency identified in this request.
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(2) Make the Fund's accounting records and the requested
portfolio-based and compliance reporting identified above
available upon request in a timely fashion, to the Fund's
financial accountant, so as to support the Fund's compliance
with all applicable regulatory filings including N-1A
filings, N-SAR filing and any applicable IRS filings, and
preparation of the Fund's financial statements.
(3) Make the Fund's accounting records identified above
available upon request to Securities and Exchange Commission
representatives, to the Fund's auditors and to designated
Fund agents for their review as to the propriety of the
Fund's accounting records and the Fund's operations.
(4) Maintain at HBAM's expense, and preserve at the Fund's
expense in accordance with the 1940 Act and the rules
thereunder, all such accounting records, which shall at all
times be the property of the Fund.
2. COMPENSATION. HBAM shall be compensated for providing the
above-referenced services for each Portfolio of the Fund in accordance with the
Fee Schedule listed on Exhibit B, attached hereto and made a part hereof, as
such Exhibit B may be amended from time to time.
3. RESPONSIBILITY OF HBAM. HBAM shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement, but shall be
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence or willful misconduct. HBAM
shall be entitled to rely on, and may act upon, the reasonable advice of the
Fund's auditors or of counsel (who may be counsel of the Fund) on all matters,
and shall not be liable for any action reasonably taken or omitted pursuant to
such advice.
In addition, HBAM shall not be liable for any loss of data or any delay
in its performance under this Agreement to the extent such loss or delay is due
to causes beyond its control, including but not limited to: acts of God;
interruption in, loss of or malfunction in power; significant computer hardware
or systems software or telephone communication service; acts of civil or
military authority; sabotage; war or civil commotion; fire; explosion; or strike
beyond delivery of minimum critical services. HBAM shall use its best efforts to
minimize any such loss or delay by all practical means and to replace any lost
data promptly. HBAM agrees not to discriminate against the Fund in favor of any
other customer of HBAM in making computer time and its personnel available to
input and process the transactions hereunder when a loss or delay occurs.
4. AMENDMENTS. HBAM and the Fund shall regularly consult with each
other regarding HBAM's performance of its obligations hereunder. Any change in
the Fund's registration statements under the 1933 Act, or the 1940 Act or in the
forms relating to any plan, program or service offered by the current prospectus
of the Fund which would require a change in HBAM's obligations hereunder shall
be subject to HBAM's approval, which shall not be
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unreasonably withheld. Neither this Agreement nor any provisions hereof may be
changed, waived, discharged, or terminated orally, but only by written
instrument which shall make specific reference to this Agreement and which shall
be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.
5. TERM OF AGREEMENT. This Agreement shall become effective as of its
execution. Thereafter, the Agreement will be renewed automatically on an annual
basis; provided, however, that this Agreement may be terminated at any time by
either party upon at least sixty days' prior written notice to the other party
and provided further that this Agreement may be terminated immediately at any
time for cause either by the Fund or HBAM. Any such termination shall not affect
the rights and obligations of the parties under paragraph 3 hereof. In the event
that the Fund designates a successor to any of HBAM's obligations hereunder,
HBAM shall, at the expense and direction of the Fund, transfer to such successor
all relevant books, records and other data of the Fund established or maintained
by HBAM hereunder and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from HBAM's cognizant
personnel in the establishment of books, records and other data by such
successor. Historical records will be transferred in accordance with all then
current laws and industry regulations.
6. MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York. The captions in this Agreement
are included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
7. DELEGATION OF RESPONSIBILITIES. HBAM may carry out any of its
obligations or responsibilities under this Agreement by engaging, subject to
HBAM's supervision, a sub-fund accountant ("Sub-Accountant"). The
Sub-Accountant's engagement will be evidenced by a separate written agreement
reviewed by the Board. HBAM shall not be liable hereunder for any act or
omission of any Sub-Accountant, except for failure to exercise good faith in the
engagement of the Sub-Accountant and for failure to exercise appropriate
supervision of such Sub-Accountant, and as may otherwise be agreed in writing.
HBAM shall be solely responsible for compensating any Sub-Accountant for
services rendered under any sub-accounting agreement. HBAM may, from time to
time and at any time, terminate a Sub-Accountant and reassume the
responsibilities assigned to such Sub-Accountant with respect to the Fund or
engage another Sub-Accountant.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
HYPERION BROOKFIELD ASSET MANAGEMENT, INC.
By: _____________________________________
Name:
Title:
XXXXXX XXXXXX SELECT FUND, INC.
By: _____________________________________
Name:
Title:
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EXHIBIT A
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PORTFOLIOS
Regions Xxxxxx Xxxxxx Select Short Term Bond Fund
Regions Xxxxxx Xxxxxx Select Intermediate Bond Fund
Regions Xxxxxx Xxxxxx Select High Income Fund
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EXHIBIT B
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ANNUALIZED % OF AVERAGE
PORTFOLIO DAILY NET ASSETS
--------- ----------------
Regions Xxxxxx Xxxxxx Select Short Term Bond Fund 0.03%
Regions Xxxxxx Xxxxxx Select Intermediate Bond Fund 0.03%
Regions Xxxxxx Xxxxxx Select High Income Fund 0.03%
Fund Accounting Fees include Daily Valuation and Financial Statement
Preparation.
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