Exhibit (g)(xvi)
MASTER FUND ACCOUNTING AND SERVICES AGREEMENT
This AGREEMENT is made as of October 1, 2005 by and among each regulated
management investment company identified on Appendix A hereto (each such
management investment company and each regulated management investment company
made subject to this Agreement in accordance with Section 11.5 below shall
hereinafter be referred to as a "FUND" and are sometimes collectively
hereinafter referred to as the "FUNDS"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, having its principal place of business
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "ACCOUNTING AGENT").
WHEREAS, each Fund desires to retain the Accounting Agent to perform
certain fund accounting and recordkeeping services;
WHEREAS, each Fund may or may not be authorized to issue common stock or
shares of beneficial interest ("SHARES") in separate series, with each such
series representing interests in a separate portfolio of securities and other
assets;
WHEREAS, each Fund so authorized intends that this Agreement be applicable
to its series of Shares (as identified on Appendix A hereto (such series
together with all other series subsequently established by such Fund and made
subject to this Agreement in accordance with Section 11.6 below, shall
hereinafter be referred to as the "PORTFOLIO(s)"));
WHEREAS, each Fund not so authorized intends that this Agreement be
applicable to it and that all references hereinafter to one or more
"Portfolio(s)" shall be deemed to refer to such Fund(s); and
WHEREAS, the Accounting Agent is willing to perform such services upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF ACCOUNTING AGENT.
Each Fund hereby appoints Accounting Agent for purposes of providing
certain fund accounting, recordkeeping and related services for the period and
on the terms set forth in this Agreement. Accounting Agent accepts such
appointment and agrees to render the services stated herein upon the terms and
conditions hereinafter set forth.
SECTION 2. DUTIES OF THE ACCOUNTING AGENT.
SECTION 2.1 BOOKS OF ACCOUNT.
The Accounting Agent shall maintain the books of account of each Fund and
shall perform such other duties set forth on Schedule A hereto (collectively,
the "SERVICES") in the manner prescribed by such Fund's currently effective
prospectus, statement of additional information or other governing document,
certified copies of which have been supplied to the Accounting Agent (a
"GOVERNING DOCUMENT").
Each Fund shall provide timely prior notice to the Accounting Agent of any
modification in the manner in which such duties/calculations are to be performed
as prescribed in any revision to such Fund's governing document and shall supply
the Accounting Agent with certified copies of all amendments and/or supplements
to the governing documents in a timely manner. For purposes of calculating the
net asset value of a Fund, the Accounting Agent shall value each Fund's
portfolio securities utilizing prices obtained from sources designated by such
Fund (collectively, the "AUTHORIZED PRICE SOURCES") on a Price Source
Authorization substantially in the form attached hereto as Exhibit A, as the
same may be amended from time to time, or otherwise designated by means of
Proper Instructions (as such term is defined in Section 3.3 below) (the "PRICE
SOURCE AUTHORIZATION"). The Accounting Agent shall not be responsible for any
revisions to calculation methods made by the Fund unless such revisions are
communicated in writing to the Accounting Agent.
SECTION 2.2 RECORDS.
The Accounting Agent shall create and maintain all records relating to its
activities and obligations under this Agreement in such a manner as will meet
the obligations of each Fund under the Investment Company Act of 1940, as
amended, specifically Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the applicable Fund and shall at all
times during the regular business hours of the Accounting Agent be open for
inspection by duly authorized officers, employees or agents of the applicable
Fund and employees and agents of the Securities and Exchange Commission. Subject
to Section 5 below, the Accounting Agent shall preserve for the period required
by law the records required to be maintained thereunder.
Each Fund acknowledges that, in keeping the books of account of such Fund
and/or making the calculations described herein with respect to Fund property
released and delivered pursuant to Section 2.2(14), or purchased pursuant to
Section 2.6(7) of such Fund's custodial services agreement with State Street
Bank and Trust Company or otherwise with regard to free deliveries or payments
of Fund assets or monies effected by a Fund's custodian, the Accounting Agent is
authorized and instructed to rely upon information provided to it by such Fund,
such Fund's counterparty(ies) (as identified by free delivery or free payment
instructions issued pursuant to the relevant custody agreement), or the
authorized agents of either of them.
SECTION 2.3 APPOINTMENT OF AGENTS AND OTHERS.
The Accounting Agent is authorized to and may employ or associate with
such person or persons, entity or entities as the Accounting Agent may deem
desirable to assist it in performing its duties under this Agreement
("DELEGATE(s)"); provided, however; (a) Accounting Agent may not
2
delegate more fifty percent of any service to such Delegate without the prior
written approval of the Fund which shall not be unreasonably withheld; (b)
Accounting Agent shall pay all compensation and expenses of such Delegates; (c)
Accounting Agent shall be fully responsible for the acts and omissions of such
Delegates as Accounting Agent is for its own acts and omissions; and (d)
Accounting Agent agrees that as used in this paragraph, the references to
Delegates apply only to the provision of services by temporary workers or
sub-contractors for the purpose of handling short-term increases in Fund
activity or short-term shortage of Accounting Agent personnel.
SECTION 3. DUTIES OF EACH FUND.
SECTION 3.1 DELIVERY OF INFORMATION.
Each Fund shall provide, or shall cause a third party to provide, timely
notice to the Accounting Agent of certain data as a condition to the Accounting
Agent's performance described in Sections 1 and 2 above. The data required to be
provided pursuant to this section is set forth on Schedule B hereto, which
schedule may be separately amended or supplemented by the parties from time to
time.
The Accounting Agent is authorized and instructed to rely upon the
information it receives from the Fund or any of its Authorized Price Sources,
Authorized Persons or Third Party Agents (as such terms are defined in Section
3.3 below and pursuant to instructions as defined in Section 3.3 below). Except
as otherwise required by the Price Source Authorization with respect to data
obtained from Authorized Price Sources, the Accounting Agent shall have no
responsibility to review, confirm or otherwise assume any duty with respect to
the accuracy or completeness of any data supplied to it by or on behalf of any
Fund.
SECTION 3.2 DELIVERY OF DOCUMENTS.
Each Fund will promptly deliver to the Accounting Agent copies of each of
the following documents and all future amendments and supplements, if any:
a. The Fund's Declaration and by-laws;
b. The Fund's currently effective registration statement under the
Securities Act of 1933, as amended (the "1933 ACT"), and the 1940 Act and the
Fund's Prospectus(es) and Statement(s) of Additional Information relating to all
Portfolios and all amendments and supplements thereto as in effect from time to
time;
c. Certified copies of the resolutions of the Board of Directors or
Board of Trustees of the Fund (the "BOARD") authorizing (1) the Fund to enter
into this Agreement and (2) certain individuals or entities on behalf of the
Fund to (a) give instructions to the Accounting Agent pursuant to this Agreement
and (b) sign checks and pay expenses;
3
d. A copy of the investment advisory agreement between the Fund and its
investment adviser; and
e. Such other certificates, documents or opinions which the Accounting
Agent reasonably believes to be necessary or appropriate in the proper
performance of its duties, subject to the consent of the Fund, which consent
shall not be unreasonably withheld.
SECTION 3.3 PROPER INSTRUCTIONS.
Each Fund and any person/entity duly authorized by such Fund for such
communication ("AUTHORIZED PERSON(S)") shall communicate to the Accounting Agent
by means of Proper Instructions. Proper Instructions shall mean (i) a writing
signed or initialed by one or more Authorized Persons as the Board of a Fund
shall have from time to time authorized or (ii) communication effected directly
between a Fund or its duly authorized third-party agents (each, a "THIRD PARTY
AGENT") and the Accounting Agent by electro-mechanical or electronic devices,
provided that such Fund and the Accounting Agent have approved such security
procedures. Upon the effectiveness of this Agreement, each Fund shall provide to
the Accounting Agent a list of all Authorized Persons (with signature specimens
and such other information as the Accounting Agent may reasonably require) in
form and substance satisfactory to the Accounting Agent. The Accounting Agent
may rely upon any Proper Instruction reasonably believed by it to be genuine and
to have been properly issued by an Authorized Person or on behalf of the
applicable Fund and the Accounting Agent shall not be held to have notice of any
change of authority of an Authorized Person (or any other person or entity)
until receipt of written notice from the applicable Fund. Oral instructions
shall be considered Proper Instructions if the Accounting Agent reasonably
believes them to have been given by an Authorized Person. The Fund shall cause
all oral instructions to be confirmed in accordance with clauses (i) or (ii)
above, as appropriate. The Fund shall give timely Proper Instructions to the
Accounting Agent in regard to matters affecting accounting practices and the
Accounting Agent's performance pursuant to this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
a. The Accounting Agent represents and warrants to, and covenants with, the
Funds that:
(i) It is a Massachusetts trust company, duly organized and existing
under the laws of The Commonwealth of Massachusetts;
(ii) It has the corporate power and authority to carry on its business in
The Commonwealth of Massachusetts;
(iii) All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement;
4
(iv) No legal or administrative proceedings have been instituted or
threatened which would impair the Accounting Agent's ability to
perform its duties and obligations under this Agreement;
(v) Its entrance into this Agreement shall not cause a material breach
or be in material conflict with any other agreement or obligation
of the Accounting Agent or any law or regulation applicable to it;
and
(vi) It will comply with all applicable securities, banking, tax,
commodities and other laws, rules and regulations applicable to it
in connection with and as applicable to its provision of services
hereunder.
b. Each Fund represents and warrants to, and covenants with, the Accounting
Agent that:
(i) It is a business trust, duly organized, existing and in good
standing under the laws of Massachusetts;
(ii) It has the corporate power and authority under applicable laws and
by its charter and by-laws to enter into and perform this
Agreement;
(iii) All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement;
(iv) It is an investment company duly registered under the 1940 Act;
(v) A registration statement under the 1933 Act and the 1940 Act has
been filed and will be effective and remain effective during the
term of this Agreement. The Fund also warrants to the Accounting
Agent that as of the effective date of this Agreement, all
necessary filings under the securities laws of the states in which
the Fund offers or sells its shares have been made;
(vi) No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its
duties and obligations under this Agreement;
(vii) Its entrance into this Agreement will not cause a material breach
or be in material conflict with any other agreement or obligation
of the Fund or any law or regulation applicable to it; and
(viii) It will comply with all securities, banking, tax, commodities and
other laws, rules and regulations applicable to it.
SECTION 5. STANDARD OF CARE; LIMITATION OF LIABILITY.
5
The Accounting Agent shall, at all times, act in good faith and exercise
reasonable care in performing the Services. The Accounting Agent shall be
responsible for the performance of only the Services and, except as otherwise
provided under Section 2.3 above, shall have no responsibility for the actions
or activities of any other party, including other service providers, except as
described in Section 2.3 above. The Accounting Agent shall be entitled to
obtain, rely on and act upon the advice of counsel for the Fund on all matters.
The Accounting Agent shall be without liability for any action reasonably taken
or omitted in good faith in accordance with the advice of counsel for the Fund.
For the avoidance of doubt, it is hereby specifically understood and agreed that
nothing in this Section shall be construed as imposing upon the Accounting Agent
any obligation to seek such advice of counsel for the Fund. Without in any way
limiting the generality of the foregoing, the Accounting Agent shall in no event
be liable for any loss or damage arising from causes beyond its control or, on
an industry standard basis, its anticipation.
Each Fund, any Third Party Agent or Authorized Price Sources from which
the Accounting Agent shall receive or obtain certain records, reports and other
data utilized or included in the services provided hereunder are responsible for
the contents of such information including, without limitation, the accuracy
thereof and each Fund agrees to make no claim against the Accounting Agent
arising out of the contents of such third-party data including, but not limited
to, the accuracy thereof. The Accounting Agent shall have no responsibility to
review, confirm or otherwise assume any duty with respect to the accuracy or
completeness of any such information and shall be without liability for any loss
or damage suffered as a result of the Accounting Agent's reasonable reliance on
and utilization of such information, except as otherwise required by the Price
Source Authorization with respect to the use of data obtained from Authorized
Price Sources. The Accounting Agent shall have no responsibility and shall be
without liability for any loss or damage caused by the failure of any Fund,
Authorized Person or Third Party Agent to provide it with the information
required by Section 3.1, Section 3.2 or Section 3.3 above. Further, and without
in any way limiting the generality of the foregoing, the Accounting Agent shall
have no liability in respect of any loss, damage or expense suffered by the Fund
or any third party, insofar as such loss, damage or expense arises from the
performance of the Accounting Agent's duties hereunder by reason of the
Accounting Agent's good faith reliance upon records that were maintained for any
Fund by any entity other than the Accounting Agent prior to such Fund's
appointment of the Accounting Agent pursuant to this Agreement.
The Accounting Agent shall have no liability for any error of judgment or
mistake of law or for any loss or damage resulting from the performance or
nonperformance of its duties hereunder except to the extent caused by or
resulting from the negligence, bad faith or willful misconduct of the Accounting
Agent, its directors, officers, employees or Delegates. No party hereto shall be
liable for any special, indirect, incidental, punitive or consequential damages,
including lost profits, of any kind whatsoever (including, without limitation,
attorneys' fees) under any provision of this Agreement or for any such damages
arising out of any act or failure to act hereunder, each of which is hereby
excluded by agreement of the parties regardless of whether such damages were
foreseeable or whether either party or any entity had been advised of the
possibility of such damages. For the avoidance of doubt, it is hereby
acknowledged that the damage limitations set forth in the immediately preceding
sentence are not intended to relieve the
6
Accounting Agent from any responsibility that it may otherwise have to a Fund
under this Agreement for foreseeable loss incurred by such Fund as a direct
result of the Accounting Agent's negligent calculation of such Fund's net asset
value.
In any event, for any liability or loss suffered by the Fund including,
but not limited to, any liability relating to qualification of the Fund as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, or any liability relating to the Fund's compliance with any federal or
state tax or securities statute, regulation or ruling, the Accounting Agent's
liability under this Agreement with respect to the Services "n" through "aa" as
set forth on Schedule A hereto only shall be limited to such amount as may be
agreed upon from time to time by the parties hereto. This limitation on
liability shall not be applicable to any other services listed on said Schedule
A.
Each Fund agrees to indemnify and hold the Accounting Agent and its
directors, officers, employees and Delegates free and harmless from any expense,
loss, cost, damage or claim, including reasonable attorney's fees and expenses
(collectively, "LOSSES"), suffered by the Accounting Agent and caused by or
resulting any claim, demand, action or suit (collectively, "CLAIMS") in
connection with any action or omission by the Accounting Agent in the
performance of its duties hereunder, or as a result of acting upon any
instructions reasonably believed by it to have been communicated by Authorized
Persons, or from the acts or omissions of such Fund or any authorized
third-party whose services the Accounting Agent must rely upon in performing
services hereunder, provided, however, that this indemnification shall not apply
to actions or omissions of the Accounting Agent, its directors, officers,
employees or Delegates in cases of its or their own negligence, bad faith or
willful misconduct.
The indemnifications contained herein shall survive the termination of
this Agreement.
Each Fund acknowledges and agrees that, with respect to investments it
maintains with an entity which may from time to time act as a transfer agent for
uncertificated shares of regulated investment companies (the "UNDERLYING
TRANSFER AGENT"), such Underlying Transfer Agent is the sole source of
information on the number of shares held by it on behalf of a Fund and that the
Accounting Agent has the right to rely on holdings information furnished by the
Underlying Transfer Agent to the Accounting Agent in performing its duties under
this Agreement.
SECTION 6. DISASTER RECOVERY AND BUSINESS CONTINUITY.
The Accounting Agent shall implement and maintain reasonable disaster
recovery and business continuity procedures that are reasonably designed to
recover data processing systems, data communications facilities, information,
data and other business related functions of the Accounting Agent in a manner
and time frame consistent with legal, regulatory and business requirements
applicable to the Accounting Agent in its provision of Services hereunder. In
the event of any disaster which causes a business interruption, the Accounting
Agent shall act in good faith and take reasonable steps to minimize service
interruptions.
7
SECTION 7. SERVICE LEVEL DOCUMENTS.
The Fund and the Accounting Agent may from time to time, in good faith,
agree on certain performance measures by which the Accounting Agent is expected
to provide the services contemplated by this Agreement ("SERVICE LEVEL
DOCUMENTS"). The Service Level Documents are designed to provide metrics and
other information which may be utilized by the parties to help measure
performance. The parties agree Service Level Documents reflect performance
measures as opposed to specific contractual obligations. Notwithstanding, the
parties agree that (a) the Accounting Agent's inability to achieve such
performance measures may give rise to grounds for termination pursuant to
Section 9 below; and (b) the Accounting Agent's performance and/or
non-performance of the services, separate and apart from the performance
measures in the Service Level Documents, may give rise to any remedies in tort
or contract that the Fund may assert against Accounting Agent under the terms of
this Agreement.
SECTION 8. COMPENSATION OF ACCOUNTING AGENT; EXPENSE REIMBURSEMENT.
The Accounting Agent shall be entitled to reasonable compensation for its
services and reasonable expenses as Accounting Agent, as agreed upon from time
to time between the Fund and the Accounting Agent. All expenses in excess of
$500 must be pre-approved by the Fund in writing and such approval shall not be
unreasonably withheld.
At no additional charge to the Fund, the Accounting Agent shall provide
the office facilities, equipment, supplies, the personnel and other items
determined by it to perform the services contemplated herein. Each Fund agrees
promptly to reimburse the Accounting Agent for any equipment and supplies
specially ordered in writing by or for such Fund through the Accounting Agent
and for any other reasonable expenses not contemplated by this Agreement that
the Accounting Agent may incur on a Fund's behalf at a Fund's request or with
the Fund's consent. All such equipment, supplies and expenses must be
pre-approved by the Fund in writing and such approval shall not be unreasonably
withheld.
Each Fund will bear all expenses that are incurred in its operation and
not assumed by the Accounting Agent. Expenses to be borne by the Funds, include,
but are not limited to: the Fund's organizational expenses; cost of services of
independent accountants and the Fund's outside legal and tax counsel (including
such counsel's review of the Fund's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Accounting Agent under this Agreement);
cost of any services contracted for by the Fund directly from parties other than
the Accounting Agent; cost of trading operations and brokerage fees, commissions
and transfer taxes in connection with the purchase and sale of securities for
the Fund; investment advisory fees; taxes, insurance premiums applicable to the
Fund's operation; costs incidental to any meetings of shareholders (excluding
costs specifically assumed by the Accounting Agent) including, but not limited
to, the Fund's legal and accounting fees, proxy filing fees and the costs of
printing and mailing of any proxy materials; costs incidental to Board meetings
(excluding costs specifically assumed by the Accounting Agent), including fees
and expenses of Board members; the salary and expenses of any officer,
director\trustee or
8
employee of the Fund; costs of printing and distribution of the Fund's
registration statements and any amendments thereto and shareholder reports; cost
of typesetting and printing of prospectuses; cost of filing of the Fund's tax
returns, Form N-1A or N-2, Form N-CSR, Form N-Q, Form N-PX and Form N-SAR, and
all notices, registrations and amendments associated with applicable federal and
state tax and securities laws; all applicable registration fees and filing fees
required under federal and state securities laws; the Fund's fidelity bond and
directors' and officers' liability insurance; and cost of independent pricing
services that have been approved by the Fund used in computing the Portfolios'
net asset values.
SECTION 9. TERM OF AGREEMENT; AMENDMENT.
a. This Agreement shall become effective on the date of its execution
and shall remain in full force and effect for a period of three (3) years from
the effective date (the "INITIAL TERM"), and thereafter shall automatically
continue in full force and effect unless either party terminates this Agreement
by written notice to the other party at least ninety (90) days prior to the date
of termination.
b. During the Initial Term and thereafter, the Accounting Agent may, at
its discretion, terminate the Agreement for cause with respect to (1) one or
more Portfolios; and/or (2) the Fund in its entirety by providing not less than
60 days prior written notice to the Fund upon occurrence of any of the following
termination events:
(A) Fund has been convicted, pled guilty or pled no contest to criminal
conduct in a criminal proceeding;
(B) Fund has been found to have violated federal or state law in an
administrative or regulatory proceeding; provided such violation (1)
involves unethical conduct; and (2) Accounting Agent reasonably believes
that such violation would have a material adverse impact on Accounting
Agent's ability to perform services under this Agreement:
(C) Fund has encountered financial difficulties 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 that said Title 11, of any jurisdiction relation
to the liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors;
(D) Fund has been terminated for cause by the Accounting Agent pursuant to the
terms of (1) any fund accounting or custody agreement between Accounting
Agent or Fund, or (2) any fund accounting, custody or administrative
agreement between Accounting Agent and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Investment
Management, Inc. ("CSIM") or any other investment company other than the
Fund advised by CSIM;
9
(E) CSIM has been terminated for cause by the Accounting Agent pursuant to the
terms of any agreement between Accounting Agent and CSIM;
(F) Fund attempts to assign this Agreement in violation of Section 11.3 of
this Agreement; and
(G) Fund has committed a material breach of this Agreement, and such breach
has not been remedied by the Fund within sixty days written notice of such
breach by Accounting Agent.
c. During the Initial Term and thereafter, Fund, at its discretion, may
terminate this agreement for cause with respect to (1) one or more Portfolios,
and/or (2) the Fund in its entirety by providing at least 60 days written notice
to Accounting Agent upon the occurrence of any of the following termination
events;
(A) Accounting Agent has been convicted, pled guilty or pled no contest to
criminal conduct in any criminal proceeding in connection with the
provision of fund administration, fund accounting and/or custody services
to any client;
(B) Accounting Agent has been found to have violated federal or state law in
any administrative or regulatory proceeding; provided such violation (1)
involves unethical behavior and (2) relates to the provision of
administrative services, fund accounting services and/or custody services
to any client;
(C) Accounting Agent has encountered financial difficulties 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, pr 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;
(D) Accounting Agent has been terminated by the Fund for cause pursuant to the
terms of (1) any administration or custody agreement between Accounting
Agent and Fund, or (2) any administration, custody or fund accounting
agreement between Accounting Agent and CSIM or any investment company
(other than Fund) advised by CSIM;
(E) Accounting Agent has been terminated by CSIM for cause pursuant to the
terms of any sub-administrative agreement between Accounting Agent and or
its affiliates and CSIM;
(F) Accounting Agent transfers fifty percent (50%) or more of any class of its
voting securities; (2) transfers all, or substantially all, of its assets
to a non-affiliate; or (3) attempts to assign this Agreement in violation
of Section 11.3 of this Agreement; and
(G) In Fund's reasonable opinion, Accounting Agent has not achieved one or
more of the performance measures set forth in any Service Level Document
established pursuant to
10
pursuant to Section 7 of this Agreement, and a plan or revised plan has
not been put into place in accordance with the following procedures: In
the event that Fund reasonably believes that the Accounting Agent has not
met one or more of the performance measures set forth in any Service Level
Document during any calendar quarter or other period of measurement as may
be set forth in any Service Level Document, the Fund may, in its
discretion, submit a written deficiency notice to Accounting Agent
outlining the performance deficiencies ("DEFICIENCY NOTICE"). Such
Deficiency Notice must be provided to Accounting Agent within 20 days of
the end of such quarter. After receipt of such notice, Accounting Agent
shall present the Fund with a written plan to address the deficiencies set
forth in the Deficiency Notice (the "PLAN"). Such Plan must be provided to
Fund within 30 days after receipt of the Deficiency Notice. If Accounting
Agent fails to submit a Plan within such 30 day period, Fund may terminate
the Agreement upon 60 days written notice to the Accounting Agent. The
Fund, in its discretion, may accept the Plan or reject the Plan
("REJECTION NOTICE"). Such Rejection Notice must be submitted to the
Accounting Agent within 15 days after submission of the Plan. If Fund
fails to provide a Rejection Notice within such 15 days period, it shall
be presumed that Fund accepted the Plan. In the event, Fund submits a
Rejection Notice, Accounting Agent shall submit a revised plan ("REVISED
PLAN") to the Fund. Such Revised Plan must be provided to Fund within 30
days after provision of the Rejection Notice. If Accounting Agent fails to
submit a Revised Plan within such 30 day period, Fund may terminate the
Agreement upon 60 days written notice to Accounting Agent. The Fund, in
its sole discretion, may accept the Revised Plan or reject the Revised
Plan ("DENIAL NOTICE"). Any Denial Notice must be submitted to Accounting
Agent within 15 days after provision of the Revised Plan. If Fund fails to
provide a Denial Notice within such 15 day period, it shall be presumed
that Fund accepted the Revised Plan. If Fund provides a Denial Notice to
Accounting Agent, Fund may, in its sole discretion, terminate this
Agreement upon 60 days written notice to Accounting Agent. Such
termination notice must be submitted to Accounting Agent within 60 days
after provision of the Denial Notice.
(H) Accounting Agent has committed a material breach of this Agreement and
such breach has not been remedied by the Accounting Agent within sixty
days written notice of such breach by Fund.
d. Termination of this Agreement with respect to any given Portfolio or
Fund shall in no way affect the continued validity of this Agreement with
respect to any other Portfolio or Fund.
e. Upon termination of this Agreement, the Fund shall pay to the
Accounting Agent such compensation and any reimbursable expenses as may be due
and undisputed under the terms hereof as of the date of such termination,
including reasonable out-of-pocket expenses associated with such termination.
All out-of-pocket expenses associated under the sub-paragraph for which the
Accounting Agent seeks reimbursement must be pre-approved by this Fund in
writing, such approval shall not be unreasonable withheld.
11
f. This Agreement may be modified or amended from time to time by
mutual written agreement of the parties hereto.
SECTION 10. SUCCESSOR ACCOUNTING AGENT.
If a successor accounting agent for any Fund shall be appointed by a Fund,
the Accounting Agent shall upon termination deliver to such successor agent at
the office of the Accounting Agent all properties of such Fund held by it
hereunder. If no such successor agent shall be appointed, the Accounting Agent
shall at its office upon receipt of Proper Instructions deliver such properties
in accordance with such instructions.
SECTION 11. GENERAL.
SECTION 11.1 MASSACHUSETTS LAW TO APPLY. This Agreement shall be governed
by, construed and the provisions thereof interpreted under and in accordance
with laws of The Commonwealth of Massachusetts excluding that body of law
applicable to conflicts of law.
SECTION 11.2 PRIOR AGREEMENTS. This Agreement supersedes and terminates,
as of the date hereof, all prior agreements between any Fund and the Accounting
Agent relating to fund accounting and recordkeeping services regarding such
Fund.
SECTION 11.3 ASSIGNMENT. No part or whole of this Agreement may be
assigned by any party hereto without the prior consent in writing of (a) the
Funds in the event of assignment by the Accounting Agent or (b) by the
Accounting Agent in the event of assignment by any Fund, except that any party
may, without such prior consent, assign to an entity controlling, controlled by
or under common control with such party or to a successor of all of or a
substantial portion of its business.
SECTION 11.4 INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with
the operation of this Agreement, the Accounting Agent and the Funds may from
time to time agree on such provisions interpretive of or in addition to the
provisions of this Agreement as may in their joint opinion be consistent with
the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by all parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of a
Fund's governing documents. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
SECTION 11.5 ADDITIONAL FUNDS. In the event that any management investment
company in addition to those listed on Appendix A hereto desires to have the
Accounting Agent render services as accounting agent under the terms hereof, it
shall so notify the Accounting Agent in writing, and if the Accounting Agent
agrees in writing to provide such services, such
12
management investment company shall become a Fund hereunder and be bound by all
terms and conditions and provisions hereof with respect to such Fund.
SECTION 11.6 ADDITIONAL PORTFOLIOS. In the event that any Fund establishes
one or more series of Shares in addition to those set forth on Appendix A hereto
with respect to which it desires to have the Accounting Agent render services as
accounting agent under the terms hereof, it shall so notify the Accounting Agent
in writing, and if the Accounting Agent agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.
SECTION 11.7 REMOTE ACCESS SERVICES ADDENDUM. Each Fund and the Accounting
Agent hereby agree to the terms of the Remote Access Services Addendum hereto.
SECTION 11.8 CONFIDENTIALITY.
a. Definition of term "Fund Confidential Information." The term "FUND
CONFIDENTIAL INFORMATION" means any information that Fund discloses, whether in
writing, electronically or orally, to Accounting Agent whether in tangible or
intangible form which is identified as confidential at the time of disclosure or
which by the circumstances of disclosure or nature of the information would be
considered to be confidential. By way of example and not limitation, Fund
Confidential Information includes: (i) any information concerning Fund's, its
agents or licensors' technology, such as systems, source code, databases,
hardware, software, programs, applications, engine protocols, routines, models,
displays and manuals, including, without limitation, the selection,
coordination, and arrangement of the contents thereof; and (ii) any information
concerning Fund's, its agents or licensors' financial or business plans or
operations, such as research activities and plans, marketing or sales plans,
pricing or pricing strategies, operational techniques, internal controls,
compliance policies, methods of operation, security procedures, strategic plans,
customer information, and unpublished financial information, including
information concerning revenues, profits and profit margins. Accounting Agent
agrees that Fund will have no obligation to specifically identify by any notice
or other action any information to which the protection of this Agreement
extends. Without limiting the foregoing, to the extent disclosed to the
Accounting Agent, portfolio holdings information of the Fund shall be deemed to
be Confidential Information of the Fund until such time as such portfolio
holdings information shall made in a public filing by the Fund. The Accounting
Agent shall not purchase or sell securities or other investments on the basis of
confidential portfolio holdings information of the Fund provided to the
Accounting Agent and shall take reasonable steps to prevent any employee or
agent of Accounting Agent from purchasing or selling securities or other
investments on the same basis.
b. Restrictions on Use. Without the prior written consent of Fund,
Accounting Agent will not use any portion of Fund Confidential Information for
any purpose other than for the services provided under this Agreement.
Accounting Agent further agrees that:
(i) it will hold Fund Confidential Information of Fund in the strictest
confidence;
13
(ii) it will exercise the same care with respect to Fund Confidential
Information as it exercises with respect to its own proprietary and
confidential information;
(iii) it will not, without Fund's prior written consent, copy or disclose
to any third party any portion thereof;
(iv) it will notify immediately Fund of any unauthorized disclosure or
use unless in and ownership of Fund Confidential Information
resulting from such unauthorized disclosure or use by or through
Accounting Agent; and
(v) it will restrict dissemination of Fund Confidential Information to
only those persons within or related to its organization who are
involved in the delivery services provided under this Agreement, to
Accounting Agent's regulatory authorities as required to comply with
such regulatory authorities' request or order, and to Accounting
Agent's examiners, auditors, directors and legal counsel to the
extent Accounting Agent believes the same is reasonably required
provided that Accounting Agent makes reasonable effort to notify
such parties as to the confidential nature of the Fund Confidential
Information.
c. Exceptions. The foregoing shall not prohibit or limit Accounting
Agent's use, disclosure, reproduction or dissemination of Fund Confidential
Information which:
(i) is or becomes public domain information or material through no fault
or breach on the part of Accounting Agent;
(ii) as demonstrated by the written records of Accounting Agent or
otherwise, was already lawfully known (without restriction on
disclosure) to Accounting Agent prior to the information being
disclosed to Accounting Agent by Fund or any representative of Fund;
(iii) has been or is hereafter rightfully furnished to Accounting Agent
without restriction on disclosure by the Fund or a third person
lawfully in possession thereof;
(iv) has been independently developed, by or for Accounting Agent,
without reference to Fund Confidential Information;
(v) is requested or required to be disclosed pursuant to any legal or
regulatory proceeding, investigation, audit, examination, subpoena,
civil investigative demand or other similar process, where required
by law, regulation, rule or self-regulatory organization rule,
provided that, unless prohibited from doing so in such circumstance,
the Accounting Agent notifies Fund as promptly as possible so that
Fund may to have a reasonable opportunity to obtain a protective
order or other form of protection against disclosure.
Notwithstanding any such disclosure by Accounting Agent, such
disclosure will not otherwise affect Accounting
14
Agent's obligations hereunder with respect to Fund Confidential
Information so disclosed which is retained by Accounting Agent; or
(vi) is disclosed by the Accounting Agent with the prior written consent
of the applicable Fund to disclose, which consent shall not be
unreasonably withheld.
Any Fund Confidential Information in the possession of Accounting Agent that has
been disclosed to it by Fund or any representative of Fund that is not within
any of the exceptions above shall be considered confidential unless the
Accounting Agent may demonstrate otherwise by records, documentation or other
reasonable means.
d. Equitable Relief. Accounting Agent agrees and acknowledges that any
breach of this Section 11.8 may cause Fund irreparable harm for which monetary
damages would be inadequate. Accordingly, Fund will be entitled to seek
injunctive or other equitable relief to remedy any threatened or actual breach
of this Section 11.8 by Accounting Agent, as well as monetary damages.
e. No Publicity. No party hereto will announce or disclose the
existence of this Agreement, or its contents to any third party without the
prior written consent of the other or except as may be required by law, in which
case the party required to make such a disclosure will give the other party the
maximum feasible prior notice of such disclosure.
SECTION 11.9 NOTICES. Any notice, instruction or other instrument required
to be given hereunder may be delivered in person to the offices of the parties
as set forth herein during normal business hours or delivered prepaid registered
mail or by telex, cable or telecopy to the parties at the following addresses or
such other addresses as may be notified by any party from time to time.
To any Fund: [Name of Fund]
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Treasurer and
Principal Financial Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
15
To the Accounting Agent: STATE STREET BANK AND TRUST COMPANY
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed to have been received at the next time after delivery when
normal business hours commence and in the case of cable, telex or telecopy on
the business day after the receipt thereof. Evidence that the notice was
properly addressed, stamped and put into the post shall be conclusive evidence
of posting.
SECTION 11.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts taken together shall constitute one and the same agreement.
SECTION 11.11 SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, unlawful or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired.
SECTION 11.12 REPRODUCTION OF DOCUMENTS. This Agreement and all schedules,
addenda, exhibits, appendices, attachments and amendments hereto may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties hereto all/each agree that
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 11.13 MASSACHUSETTS BUSINESS TRUST. With respect to any Fund which
is a party to this Agreement and which is organized as a Massachusetts business
trust (in each case a "TRUST"), the term "Fund" (as used throughout this
Agreement) means and refers to the trustees from time to time serving under the
applicable trust agreement of such Trust, as the same may be amended from time
to time (the "DECLARATION OF TRUST"). It is expressly agreed that the
obligations of any such Trust hereunder shall not be binding upon any of the
trustees, shareholders, nominees, officers, agents or employees of such Trust
personally, but bind only the trust property of the Trust as set forth in the
applicable Declaration of Trust. In the case of each Trust, the execution and
delivery of this Agreement on behalf of the Trust has been authorized by the
trustees, and signed by an authorized officer of the Trust, in each case acting
in such capacity and not individually, and neither such authorization by the
trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually, but shall only bind the trust property of
the Trust as provided in its Declaration of Trust.
16
SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the date first above-written.
SIGNATURE ATTESTED TO BY: EACH REGULATED MANAGEMENT INVESTMENT
COMPANY SET FORTH ON APPENDIX A HERETO
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- --------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Treasurer and Principal
Title: Assistant Treasurer Financial Officer
SIGNATURE ATTESTED TO BY: STATE STREET BANK AND TRUST COMPANY
/s/ ▇▇▇▇▇▇▇▇▇ ▇. Poster By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- --------------------------------
▇▇▇▇▇▇▇▇▇ ▇. Poster, Vice President ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice
President
17
APPENDIX A
TO
MASTER ACCOUNTING SERVICES AGREEMENT
MANAGEMENT INVESTMENT COMPANIES AND PORTFOLIOS THEREOF, IF ANY
SCHWAB CAPITAL TRUST
Schwab International Index Fund
Schwab Small-Cap Index Fund
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab MarketTrack All Equity Portfolio
Schwab S&P 500 Index Fund
Schwab Dividend Equity Fund
Schwab Small-Cap Equity Fund
Schwab Institutional Select S&P 500 Fund
Schwab Large Cap Growth Fund
Schwab Total Stock Market Index Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab Technology Fund
Schwab Target 2040 Fund
Schwab Target 2030 Fund
Schwab Target 2020 Fund
Schwab Target 2010 Fund
Schwab Retirement Income Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Hedged Equity Fund
Laudus International MarketMasters Fund
Laudus U.S. MarketMasters Fund
Laudus Balanced MarketMasters Fund
Laudus Small-Cap MarketMasters Fund
SCHWAB ANNUITY PORTFOLIOS
Schwab MarketTrack Growth Portfolio II
Schwab S&P500 Portfolio
Schwab Money Market Portfolio
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ FAMILY OF FUNDS
Schwab Money Market Fund
Schwab Value Advantage Money Fund
Schwab Retirement Advantage Money Fund
Schwab Retirement Money Fund
Schwab Government Money Fund
Schwab U.S. Treasury Money Fund
Schwab Municipal Money Fund
Schwab California Municipal Money Fund
Schwab New York Municipal Money Fund
Schwab Florida Municipal Money Fund
Schwab Massachusetts Municipal Money Fund
Schwab Pennsylvania Municipal Money Fund
Schwab New Jersey Municipal Money Fund
Schwab Cash Reserves Fund
Schwab Advisor Cash Reserves Fund
(i)
SCHWAB INVESTMENTS
Schwab 1000 Index Fund
Schwab Short-Term Bond Market Fund
Schwab Total Bond Market Fund
Schwab California Short/Intermediate Tax-Free Bond Fund
Schwab California Long-Term Tax-Free Bond Fund
Schwab Short/Intermediate Tax-Free Bond Fund
Schwab Long-Term Tax-Free Bond Fund
Schwab Yield Plus Fund
Schwab GNMA Fund
Schwab California Tax-Free YieldPlus Fund
Schwab Tax-Free YieldPlus Fund
(ii)
EXHIBIT A
TO
MASTER FUND ACCOUNTING SERVICES AGREEMENT
FORM OF PRICE SOURCE AUTHORIZATION
(i)
SCHEDULE A
TO
MASTER FUND ACCOUNTING AND SERVICES AGREEMENT
LIST OF SERVICES
a. Record general ledger entries;
b. Calculate daily expenses;
c. Calculate daily income;
d. Reconcile daily activity to the trial balance;
e. Calculate net asset value;
f. Prepare account balances;
g. Verify the underlying fund net asset values and reconcile the positions
with the Portfolio's recordkeeping agent for any Fund-of Funds;
h. Maintain historical tax lots for each asset;
i. Record investment purchases and sales;
j. Monitor the activities of the Custodian, including, but not limited to,
the daily reconciliation of cash and investment positions;
k. Record the capital share activities and reconcile such activities daily
with the Transfer Agent;
l. Assist in reporting the cash balances available for investment for each of
the next five business days;
m. Assist in monitoring daily collateral asset segregation for futures and
other financial instruments;
n. Assist in preparing for review and approval by officers of the Trust the
Investment Funds' financial information contained within the Trust's
semi-annual and annual shareholder reports, Form N-Q reports and other
quarterly reports (as mutually agreed upon), including tax footnote
disclosures where applicable;
o. Assist in the preparation of annual fund expense budgets, perform accrual
analyses and rollforward calculations and recommend changes to fund
expense accruals on a periodic basis, arrange for payment of the Trust's
expenses, review calculations of fees paid to the
(i)
Trust's investment adviser, custodian, fund accountant, distributor and
transfer agent, and obtain authorization of accrual changes and expense
payments;
p. Prepare SEC-yield, portfolio turnover rate and average weighted maturity
for money market funds, calculated in accordance with applicable U.S.
securities laws and regulations and as may be reasonably requested by fund
management;
q. Prepare and furnish total return performance information, including such
information on an after-tax basis, calculated in accordance with
applicable U.S. securities laws and regulations, as may be reasonably
requested by fund management;
r. In conjunction with the Trust's Principal Financial Officer, assist in
preparing for and coordinating the Trust's annual audit of its financial
statements;
s. Assist in the calculation of (pre-declaration) periodic income
distributions and annual minimum distributions;
t. Assist in preparing and disseminating vendor survey information;
u. Assist in maintaining certain books and records of the Trust as required
under Rule 31a-1(b) of the 1940 Act, as may be mutually agreed upon;
v. Assist in developing guidelines and procedures to improve overall
compliance by the Trust;
w. Consult with the Trust's officers, independent accountants, legal counsel,
custodian, fund accountant, distributor, and transfer agent in
establishing the accounting policies of the Trust;
x. Assist the Trust in the handling of routine regulatory examinations and
work with the Trust's legal counsel in response to any non-routine
regulatory matters;
y. Assist in computing tax basis provisions for both excise and income tax
purposes;
z. Coordinate Forms 1042/1042S with the Trust's transfer agent; and
aa. Provide periodic certifications and reasonable documentation to the Chief
Compliance Officer of the Trust in connection with Rule 38a-1 of the 1940
Act.
(ii)
SCHEDULE B
TO
MASTER FUND ACCOUNTING AND SERVICES AGREEMENT
INFORMATION REQUIRED TO BE SUPPLIED RESPONSIBLE PARTY
----------------------------------- -----------------
Portfolio Trade Authorizations Investment Adviser
Currency Transactions Investment Adviser
Cash Transaction Report Custodian
Portfolio Prices Third Party Vendors/Investment Adviser
Exchange Rates Third Party Vendors/Investment Adviser
Capital Stock Activity Report Transfer Agent
Dividend/Distribution Schedule Investment Adviser
Dividend/Distribution Declaration Investment Adviser
Dividend Reconciliation/Confirmation Transfer Agent
Corporate Actions Custodian
Service Provider Fee Schedules Investment Adviser
Expense Budget Investment Adviser/Administrator
Amortization Policy Investment Adviser
Accounting Policy/Complex Investments Investment Adviser
Audit Management Letter Auditor
Annual Shareholder Letter Investment Adviser
Annual/Semi-Annual Reports Investment Adviser/Administrator
(i)
[ATTACH: REMOTE ACCESS SERVICES ADDENDUM]
(i)