EXHIBIT (h)(iii)
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of _____, 2003,
by and between Xxxxxxxx Funds, Inc., a Maryland corporation (the "Company") and
U.S. Bancorp Fund Services, LLC, a Wisconsin limited liability company
("USBFS").
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and is authorized to issue shares of beneficial interest in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, USBFS is, among other things, in the business of providing mutual
fund accounting services to investment companies; and
WHEREAS, the Company desires to retain USBFS to provide accounting services
to each series of the Company listed on Exhibit A hereto (as amended from time
to time) (each a "Fund", collectively the "Funds").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. Appointment of USBFS as Fund Accountant
The Company hereby appoints USBFS as fund accountant of the Company on the
terms and conditions set forth in this Agreement, and USBFS hereby accepts
such appointment and agrees to perform the services and duties set forth in
this Agreement.
2. Services and Duties of USBFS
USBFS shall provide the following fund accounting services for the Funds,
including but not limited to:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using security
trade information communicated from the investment adviser.
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Directors of the Company (the "Board of
Directors" or the "Directors") and apply those prices to the
portfolio positions. For those securities where market quotations
are not readily available, the Board of Directors shall approve,
in good faith, procedures for determining the fair value for such
securities.
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(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
short-term or long-term; 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 Company as to methodology, rate or dollar amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from the Company.
(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by
USBFS and the Company.
(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 Fund's transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Company.
(3) Determine net investment income (earnings) for the Fund 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 and other accounts, books, and
financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the Fund's
Prospectus.
(6) Calculate per share net asset value, per share net earnings, and
other per share amounts reflective of Fund operations at such
time as required by the nature and characteristics of the Fund.
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(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 that 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
Fund to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the Fund's 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 Fund's 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's accounting records
available to the Company, the Securities and Exchange Commission
(the "SEC"), and the outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
F. USBFS will perform the following accounting functions on a daily
basis:
(1) Reconcile cash and investment balances of each Fund with the
Fund's custodian, and provide the Fund's investment adviser with
the beginning cash balance available for investment purposes.
(2) Transmit or mail a copy of the portfolio valuation to the Fund's
investment adviser.
(3) Review the impact of current day's activity on a per share basis,
and review changes in market value.
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G. In addition, USBFS will:
(1) Prepare monthly security transactions listings.
(2) Supply various Company, Fund and class statistical data as
requested by the Company on an ongoing basis.
3. Pricing of Securities
For each valuation date, USBFS shall obtain prices from a pricing source
recommended by USBFS and approved by the Board of Directors and apply those
prices to the portfolio positions of the Fund. For those securities where
market quotations are not readily available, the Board of Directors shall
approve, in good faith, procedures for determining the fair value for such
securities.
If the Company desires to provide a price that varies from the pricing
source, the Company shall promptly notify and supply USBFS 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.
4. Changes in Accounting Procedures
Any resolution passed by the Board of Directors that affects accounting
practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by USBFS.
5. Changes in Equipment, Systems, Service, Etc.
USBFS 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.
6. Compensation
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit B hereto
(as amended from time to time). The Company shall pay all fees and
reimbursable expenses within thirty (30) calendar days following receipt of
the billing notice, except for any fee or expense subject to a good faith
dispute. The Company shall notify USBFS in writing within thirty (30)
calendar days following receipt of each invoice if the Company is disputing
any amounts in good faith. The Company shall settle such disputed amounts
within ten (10) calendar days of the day on which the parties agree to the
amount to be paid. With the exception
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of any fee or expense the Company is disputing in good faith as set forth
above, unpaid invoices shall accrue a finance charge of one and one-half
percent (1 1/2%) per month, after the due date. Notwithstanding anything to
the contrary, amounts owed by the Company to USBFS shall only be paid out
of the assets and property of the particular Fund involved.
7. Indemnification; Limitation of Liability
A. USBFS shall exercise reasonable care in the performance of its duties
under this Agreement. USBFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond USBFS's control, except a loss
arising out of or relating to USBFS'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,
if USBFS has exercised reasonable care in the performance of its
duties under this Agreement, the Company shall indemnify and hold
harmless USBFS from and against any and all claims, demands, losses,
expenses, and liabilities of any and every nature (including
reasonable attorneys' fees) that USBFS may sustain or incur or that
may be asserted against USBFS by any person arising out of any action
taken or omitted to be taken by it in performing the services
hereunder, except for any and all claims, demands, losses, expenses,
and liabilities arising out of or relating to USBFS's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence or from willful misconduct on its part in performance of
its duties under this Agreement, (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction
provided to USBFS by any duly authorized officer of the Company, such
duly authorized officer to be included in a list of authorized
officers furnished to USBFS and as amended from time to time in
writing by resolution of the Board of Directors.
USBFS shall indemnify and hold the Company harmless from and against
any and all claims, demands, losses, expenses, and liabilities of any
and every nature (including reasonable attorneys' fees) that the
Company may sustain or incur or that may be asserted against the
Company by any person arising out of any action taken or omitted to be
taken by USBFS as a result of USBFS's refusal or failure to comply
with the terms of this Agreement, its bad faith, negligence, or
willful misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, USBFS shall take all reasonable
steps to minimize service interruptions for any period that such
interruption continues beyond USBFS's control. USBFS will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the
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expense of USBFS. USBFS 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 Company shall be entitled to inspect USBFS's
premises and operating capabilities at any time during regular
business hours of USBFS, upon reasonable notice to USBFS.
Notwithstanding the above, USBFS 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 indemnitor may
be asked to indemnify or hold the indemnitee harmless, the indemnitor
shall be fully and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood that the
indemnitee will use all reasonable care to notify the indemnitor
promptly concerning any situation that presents or appears likely to
present the probability of a claim for indemnification. The indemnitor
shall have the option to defend the indemnitee against any claim that
may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon
the indemnitor shall take over complete defense of the claim, and the
indemnitee shall in such situation initiate no further legal or other
expenses for which it shall seek indemnification under this section.
Indemnitee shall in no case confess any claim or make any compromise
in any case in which the indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior written consent.
8. Proprietary and Confidential Information
USBFS agrees on behalf of itself and its directors, officers, and employees
to treat confidentially and as proprietary information of the Company all
records and other information relative to the Company and prior, present,
or potential shareholders of the Company (and clients of said
shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld
where USBFS may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
Further, USBFS will adhere to the privacy policies adopted by the Company
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from
time to time (the "Act"). Notwithstanding the foregoing, USBFS will not
share any nonpublic personal information concerning any of the Company's
shareholders to any third party unless specifically directed by the Company
or allowed under one of the exceptions noted under the Act.
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9. Term of Agreement; Amendment
This Agreement shall become effective as of the date first written above
and will continue in effect for a period of three years. Subsequent to the
initial three-year term, 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 agreed upon by the parties. However,
this Agreement may be amended by mutual written consent of the parties.
10. Records
USBFS 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, but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section
31 of the 1940 Act and the rules thereunder. USBFS agrees that all such
records prepared or maintained by USBFS relating to the services to be
performed by USBFS hereunder are the property of the Company and will be
preserved, maintained, and made available in accordance with such
applicable sections and rules of the 1940 Act and will be promptly
surrendered to the Company on and in accordance with its request.
11. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin, without regard to conflicts of law principles. To the extent
that the applicable laws of the State of Wisconsin, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control, and nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or order of the SEC thereunder.
12. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
USBFS's duties or responsibilities hereunder is designated by the Company
by written notice to USBFS, USBFS will promptly, upon such termination and
at the expense of the Company, transfer to such successor all relevant
books, records, correspondence and other data established or maintained by
USBFS under this Agreement in a form reasonably acceptable to the Company
(if such form differs from the form in which USBFS has maintained the same,
the 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 USBFS's personnel
in the establishment of books, records and other data by such successor.
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13. No Agency Relationship
Nothing herein contained shall be deemed to authorize or empower USBFS to
act as agent for the other party to this Agreement, or to conduct business
in the name, or for the account, of the other party to this Agreement.
14. Data Necessary to Perform Services
The Company or its agent shall furnish to USBFS the data necessary to
perform the services described herein at such times and in such form as
mutually agreed upon. If USBFS is also acting in another capacity for the
Company, nothing herein shall be deemed to relieve USBFS of any of its
obligations in such capacity.
15. Notification of Error
The Company will notify USBFS of any discrepancy between USBFS and the
Company, including, but not limited to, failing to account for a security
position in the fund's portfolio, by the later of: within three (3)
business days after receipt of any reports rendered by USBFS to the
Company; 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.
16. Assignment
This Agreement may not be assigned by either party without the prior
written consent of the other party.
17. Notices
Any notice required or permitted to be given by either party to the other
shall be in writing and shall be deemed to have been given on the date
delivered personally or by courier service, or three (3) days after sent by
registered or certified mail, postage prepaid, return receipt requested, or
on the date sent and confirmed received by facsimile transmission to the
other party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
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and notice to the Company shall be sent to:
Xxxxxxxx Funds, Inc.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000X
Xxxxxxxxxxx, XX 00000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.
XXXXXXXX FUNDS, INC. U.S. BANCORP FUND SERVICES, LLC
By: ______________________________ By: ______________________________
Title: _____________________________ Title: _____________________________
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Exhibit A
to the
Fund Accounting Servicing Agreement
Fund Names
Separate Series of Xxxxxxxx Funds, Inc.
Name of Series Date Added
-------------- ----------
Xxxxxxxx Core Investment Fund
Xxxxxxxx Select Industries Fund
Grizzly Short Fund
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Exhibit B
to the
Fund Accounting Servicing Agreement
Fee Schedule
Xxxxxxxx Funds, Inc.
Fund Accounting Services
Annual Fee Schedule
Xxxxxxxx Core Investment Fund:
$33,000 for the first $100 million
1.50 basis points on the next $200 million
1.00 basis point on the balance
Grizzly Short Fund:
$35,000 for the first $100 million (1/1/03-12/31/03)
$39,000 for the first $100 million (1/1/04-12/31/04)
2.00 basis points on the next $200 million
1.00 basis point on the balance
Xxxxxxxx Select Industries Fund:
$30,000 for the first $100 million
1.25 basis points on the next $200 million
0.75 basis points on the balance
All fees are billed monthly plus out-of-pocket expenses, including pricing
service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Govt/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Mutual Funds $125 (per fund per month)
Corporate Actions $2.00 - Not charged
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