Exhibit (h)(iii)
THIS
FUND ACCOUNTING SERVICING AGREEMENT (this “Agreement”) is made and entered into
as of this 7th day of August, 2004, by and between Xxxxxxx Funds, Inc., a Maryland
corporation (the “Corporation”) and U.S. Bancorp Fund Services, LLC, a Wisconsin
limited liability company (“USBFS”).
RECITALS
WHEREAS,
the Corporation 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 common stock 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 Corporation desires to retain USBFS to provide accounting services to each series of
the Corporation listed on Exhibit A hereto (as amended from time to time) (each a
“Fund”, collectively the “Funds”).
AGREEMENT
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
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The
Corporation hereby appoints USBFS as fund accountant for each Fund 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
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USBFS
shall provide the following fund accounting services for each Fund, including but not
limited to: |
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A. |
Portfolio
Accounting Services: |
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(1) |
Maintain portfolio records on a trade date+1 basis using security trade
information communicated from the investment adviser of the Fund in question. |
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(2) |
For each valuation date, obtain prices pursuant to the provisions of Section 3
hereof. |
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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. |
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(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. |
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B. |
Expense
Accrual and Payment Services: |
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(1) |
For each valuation date, calculate the expense accrual amounts as directed by
the Corporation as to methodology, rate or dollar amount. |
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(2) |
Record payments for Fund expenses upon receipt of written authorization from the
Corporation. |
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(3) |
Account for Fund expenditures and maintain expense accrual balances at the level
of accounting detail, as agreed upon by USBFS and the Corporation. |
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(4) |
Provide expense accrual and payment reporting. |
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C. |
Fund
Valuation and Financial Reporting Services: |
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(1) |
Account for Fund share purchases, sales, exchanges, transfers, dividend
reinvestments, and other Fund share activity as reported by such Fund’s
transfer agent on a timely basis. |
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(2) |
Apply equalization accounting as directed by the Corporation. |
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(3) |
Determine net investment income (earnings) for each 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. |
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(4) |
Maintain a general ledger and other accounts, books, and financial records for
each Fund in the form as agreed upon. |
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(5) |
Determine the net asset value of each Fund according to the accounting policies
and procedures set forth in such Fund’s Prospectus. |
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(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 such 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. |
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(8) |
Prepare monthly reports that document the adequacy of accounting detail to
support month-end ledger balances. |
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D. |
Tax
Accounting Services: |
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(1) |
Maintain accounting records for the investment portfolio of each Fund to support
the tax reporting required for IRS-defined regulated investment companies. |
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(2) |
Maintain tax lot detail for each Fund’s investment portfolio. |
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(3) |
Calculate taxable gain/loss on security sales using the tax lot relief method
designated by the Corporation. |
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(4) |
Provide the necessary financial information to support the taxable components of
income and capital gains distributions to each Fund’s transfer agent to
support tax reporting to the shareholders. |
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E. |
Compliance
Control Services: |
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(1) |
Support reporting to regulatory bodies and support financial statement
preparation by making each Fund’s accounting records available to the
Securities and Exchange Commission (the “SEC”) and the outside
auditors. |
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(2) |
Maintain accounting records according to the 1940 Act and regulations provided
thereunder. |
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F. |
USBFS
will perform the following accounting functions on a daily basis: |
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(1) |
Reconcile cash and investment balances of each Fund with such Fund’s
custodian, and provide such Fund’s investment adviser with the beginning
cash balance available for investment purposes. |
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(2) |
Transmit or mail a copy of the portfolio valuation to each Fund’s
investment adviser. |
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(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: |
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(1) |
Prepare monthly security transactions listings. |
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(2) |
Supply various Corporation, Fund and class statistical data as requested by the
Corporation or a Fund on an ongoing basis. |
3. Pricing
of Securities
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For
each valuation date, USBFS shall obtain prices from a pricing source recommended by USBFS
and approved by the Board of Directors of the Corporation (the “Board of
Directors”) and apply those prices to the portfolio positions of the Fund in
question. 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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If
the Corporation desires to provide a price that varies from the pricing source, the
Corporation shall promptly notify and supply USBFS with the valuation of any such security
on each valuation date. All pricing changes made by the Corporation 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
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Any
resolution passed by the Board of Directors that affects accounting practices and
procedures under this Agreement shall be effective upon written receipt by USBFS, in
accordance with Section 17. |
5. Changes
in Equipment, Systems, Service, Etc.
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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 Corporation or any Fund under
this Agreement. |
6. Compensation
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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
Corporation 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 Corporation shall notify USBFS in writing within thirty (30) calendar
days following receipt of each invoice if the Corporation is disputing any amounts in good
faith. The Corporation 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 of any fee
or expense the Corporation is disputing in good faith as set forth above, unpaid invoices
shall accrue a finance charge of one and one-half percent (1½%) per month, after
the due date. Notwithstanding anything to the contrary, amounts owed by the Corporation to
USBFS shall only be paid out of the assets and property of the particular Fund involved. |
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7. Indemnification;
Limitation of Liability
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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 Corporation or any 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
USBFS’ control, except a loss arising out of or relating to USBFS’
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 Corporation 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’ 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 Corporation, 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. Notwithstanding anything to
the contrary, any such indemnification payment shall be made only from the
assets of the particular Fund to which the indemnification obligation relates. |
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USBFS
shall indemnify and hold the Corporation and the Funds harmless from and against any and
all claims, demands, losses, expenses, and liabilities of any and every nature (including
reasonable attorneys’ fees) that the Corporation or any Fund may sustain or incur or
that may be asserted against the Corporation by any person arising out of any action taken
or omitted to be taken by USBFS as a result of USBFS’ refusal or failure to comply
with the terms of this Agreement, its bad faith, negligence, or willful misconduct.
Notwithstanding anything to the contrary, any such indemnification payment shall be made
only to the particular Fund to which the indemnification obligation relates.
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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’ 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 expense of USBFS. USBFS will maintain a disaster
recovery plan and procedures, including provisions for emergency use of electronic data
processing equipment, which is reasonable in light of the services to be provided under
this Agreement. Representatives of the Corporation shall be entitled to inspect
USBFS’ premises and operating capabilities at any time during regular business hours
of USBFS, upon reasonable notice to USBFS.
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Notwithstanding
the above, USBFS reserves the right to reprocess and correct administrative errors at its
own expense.
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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
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USBFS
agrees on behalf of itself and its directors, officers, and employees to treat
confidentially and as proprietary information of the Corporation and the Funds all records
and other information relative to the Corporation and the Funds and prior, present, or
potential shareholders of the Corporation and the Funds (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 Corporation, 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 Corporation. |
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Further,
USBFS will adhere to the privacy policies adopted by the Corporation and the Funds
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from time to time
(the “Xxxxx-Xxxxx Act”). Notwithstanding the foregoing, USBFS will not share any
nonpublic personal information concerning any of the Corporation’s shareholders to
any third party unless specifically directed by the Corporation or allowed under one of
the exceptions noted under the Xxxxx-Xxxxx Act. |
9. Term of
Agreement; Amendment
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This
Agreement shall become effective as of the date first written above and, unless sooner
terminated as provided herein, will continue in effect for a period of two years.
Subsequent to the two year term, this Agreement will renew automatically for an annual
period, subject to the approval of the Board of Directors of the Corporation. 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. This Agreement may be amended by mutual written consent of the parties.
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10. Records
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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 Corporation,
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 Corporation 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 Corporation on and in accordance with its request. |
11. Governing
Law
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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
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In
the event that, in connection with termination, a successor to any of USBFS’ duties
or responsibilities hereunder is designated by the Corporation by written notice to USBFS,
USBFS will promptly, upon such termination and at the expense of the Corporation, 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
Corporation (if such form differs from the form in which USBFS has maintained the same,
the Corporation 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’ personnel in the establishment of books, records
and other data by such successor. |
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13. No
Agency Relationship
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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
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The
Corporation or its agent, which may be USBFS, 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 Corporation, nothing herein
shall be deemed to relieve USBFS of any of its obligations in such capacity. |
15. Notification
of Error
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The
Corporation will notify USBFS of any discrepancy between USBFS and the Corporation,
including, but not limited to, failing to account for a security position in a Fund’s
portfolio, by the later of: within three (3) business days after receipt of any reports
rendered by USBFS to the Corporation; 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
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This
Agreement may not be assigned by either party without the prior written consent of the
other party. |
17. Notices
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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) calendar days after sent by registered or certified mail, postage
prepaid, return receipt requested, to the other party’s address set forth below: |
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Notice
to USBFS shall be sent to: |
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U.S.
Bancorp Fund Services, LLC Attention: President 000 Xxxx Xxxxxxxx Xxxxxx Xxxxxxxxx, XX 00000 |
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and
notice to the Corporation prior to September 1, 2004 shall be sent to: |
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Xxxxxxx
Capital Management, Inc. Attention: President 00 X. Xxxxxxxxx Xxxxx, Xxxxx 0000 Xxxxxxx, XX 00000 |
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and
notice to the Corporation after September 1, 2004 shall be sent to: |
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Xxxxxxx
Capital Management, Inc. Attention: President 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000 |
18. Miscellaneous
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A. |
Headings
in this Agreement are included for convenience only and are not to be used to
construe or interpret this Agreement. |
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B. |
This
Agreement constitutes the complete agreement of the parties hereto as to the
subject matter covered by this Agreement, and supersedes all prior
negotiations, understandings and agreements bearing upon the subject matter
covered herein. |
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C. |
This
Agreement may be executed in counterparts, each of which shall be an original,
but all of which, taken together, shall constitute one and the same agreement. |
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D. |
Every
reference to a Fund will be deemed a reference solely to the particular Fund in
question. Under no circumstances shall the rights, obligations or remedies with
respect to a particular Fund constitute a right, obligation or remedy
applicable to any other Fund. In particular, USBFS shall not have any right to
set off claims of a Fund by applying the property of any other Fund. |
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IN WITNESS WHEREOF, the parties hereto have caused this Fund Accounting Servicing Agreement
to be executed by a duly authorized officer on one or more counterparts as of the date
first above written.
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XXXXXXX FUNDS, INC |
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U.S. BANCORP FUND SERVICES, LLC |
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By: /s/ Xxxxxxx X. Xxxxxxx
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By: /s/ Xxx X. Xxxxxxx
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Xxx X. Xxxxxxx | | |
Title: President
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Title: President
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Exhibit A
to the
Fund Accounting Servicing Agreement
Fund Names
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Name of Series |
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Date Added |
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Xxxxxxx Emerging Opportunities Fund, a series of Xxxxxxx Funds, Inc. | | |
August 7, 2004 | | |
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Exhibit B
to the
Fund Accounting Servicing Agreement
FUND ACCOUNTING
SERVICES ANNUAL FEE SCHEDULE
Xxxxxxx Funds, Inc.
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Domestic Equity Funds* |
Multiple Classes |
$25,000 for the first $100 million - increases to |
Each class is an additional 25% of the charge of the initial class. |
$30,000 after 12 months, Xxxxxxx Emerging Opportunities Fund. |
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1.25 basis point on the next $200 million |
.75 basis point on the balance |
Extraordinary services - quoted separately |
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Conversion Estimate - one month's fee (if necessary) |
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NOTE - All schedules subject to change depending upon the use |
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of derivatives - options, futures, short sales, etc. |
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All fees are billed monthly plus out-of-pocket expenses, |
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including pricing service: |
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$.15 Domestic and Canadian Equities |
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$.15 Options |
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$.50 Corp/Gov/Agency Bonds |
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$.80 CMO's |
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$.50 International Equities and Bonds |
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$.80 Municipal Bonds |
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$.80 Money Market Instruments |
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$125 Per fund per month - Mutual Funds |
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Corporate Action Services |
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$ 2.00 Per equity security per month |
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Manual Security Pricing |
* Subject to CPI increase |
$125 per month - greater than 10/day |
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Factor Services (BondBuyer) |
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Per CMO - $1.50/month |
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Per Mortgage Backed - $0.25/month |
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Minimum - $300/month |
*Effective with the first day after
expiration of the first twelve (12) months of service, the fees and charges set forth in
this Schedule shall be increased over the fees and charges during the previous twelve (12)
months in the amount equal to the change in the Consumer Price Index for all Urban
Consumers in the Milwaukee, Wisconsin Metropolitan Statistical Area, All Terms, Based
1982-1984 = 100, as last reported by the U.S. Bureau of Labor Statistics
(“CPI-U”) during the five (5) year period immediately preceding expiration of
the first 12 month service period. Thereafter, all of the fees and charges in this fee
schedule (except for out-of-pocket expenses) shall increase annually upon each anniversary
of this Schedule in an amount equal to the percentage change in the CPI-U for the
proceeding twelve (12) months.
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