1
EXHIBIT (9)(c)
FUND ACCOUNTING AGREEMENT
This Agreement is made as of ____, 1998 between Governor Funds (the
"Trust"), a Delaware business trust having its principal place of business at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and BISYS Fund Services, Inc.
("BISYS"), a Delaware corporation having its principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Trust desires that BISYS perform certain fund accounting
services for each of the investment portfolios of the Trust identified on
Schedule A hereto, as such Schedule may be amended from time to time
(individually referred to herein as a "Fund" and collectively as the "Funds");
and
WHEREAS, BISYS is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
Section 1. Services as Fund Accountant.
(a) Maintenance of Books and Records. BISYS will keep and
maintain the following books and records of each Fund pursuant
to Rule 31a-1 under the Investment Company Act of 1940 (the
"Rule"):
(i) Journals containing an itemized daily record in
detail of all purchases and sales of securities, all receipts
and disbursements of cash and all other debits and credits, as
required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income and expense
accounts, including interest accrued and interest received, as
required by subsection (b)(2)(i) of the Rule;
(iii) Separate ledger accounts required by subsection
(b)(2)(ii) and (iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts
(except shareholder accounts) as required by subsection (b)(8)
of the Rule.
(b) Performance of Daily Accounting Services. In addition to
the maintenance of the books and records specified above,
BISYS shall perform the following accounting services daily
for each Fund:
(i) Calculate the net asset value per share utilizing
prices obtained from the sources described in subsection
1(b)(ii) below;
(ii) Obtain security prices from independent pricing
services, or if such quotes are unavailable, then obtain such
prices from each Fund's investment adviser or its designee, as
approved by the Trust's Board of Trustees;
(iii) Verify and reconcile with the Funds' custodian
all daily trade activity;
Page 1
2
(iv) Compute, as appropriate, each Fund's net income
and capital gains, dividend payables, dividend factors, 7-day
yields, 7-day effective yields, 30-day yields, and weighted
average portfolio maturity;
(v) Review daily the net asset value calculation and
dividend factor (if any) for each Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations, and
distribute net asset values and yields to NASDAQ;
(vi) Report to the Trust the daily market pricing of
securities in any money market Funds, with the comparison to
the amortized cost basis;
(vii) Determine unrealized appreciation and
depreciation on securities held in variable net asset value
Funds;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than face value, if
requested by the Trust;
(ix) Update fund accounting system to reflect rate
changes, as received from a Fund's investment adviser, on
variable interest rate instruments;
(x) Post Fund transactions to appropriate categories;
(xi) Accrue expenses of each Fund according to
instructions received from the Trust's Administrator;
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2) Fund share
transactions and (3) income and expense accounts;
(xiii) Provide accounting reports in connection with
the Trust's regular annual audit and other audits and
examinations by regulatory agencies; and
(xiv) Provide such periodic reports as the parties
shall agree upon, as set forth in a separate schedule.
(c) Special Reports and Services
(i) BISYS may provide additional special reports upon
the request of the Trust or a Fund's investment adviser, which
may result in an additional charge, the amount of which shall
be agreed upon between the parties.
(ii) BISYS may provide such other similar services
with respect to a Fund as may be reasonably requested by the
Trust, which may result in an additional charge, the amount of
which shall be agreed upon between the parties.
(d) Additional Accounting Services. BISYS shall also perform
the following additional accounting services for each Fund:
(i) Provide monthly a download (and hard copy
thereof) of the financial statements described below, upon
request of the Trust. The download will include the following
items:
Page 2
3
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the
following:
(A) federal and state income tax
returns and federal excise tax returns;
(B) the Trust's semi-annual reports
with the Securities and Exchange Commission ("SEC")
on Form N-SAR;
(C) the Trust's annual, semi-annual
and quarterly (if any) shareholder reports;
(D) registration statements on
Form-N1A and other filings relating to the
registration of shares;
(E) the Administrator's monitoring
of the Trust's status as a regulated investment
company under Subchapter M of the Internal Revenue
Code, as amended;
(F) annual audit by the Trust's
auditors; and
(G) examinations performed by the
SEC.
Section 2. Subcontracting.
BISYS may, at its expense, subcontract with any entity or person
acceptable to the Trust concerning the provision of the services contemplated
hereunder; provided, however, that BISYS shall not be relieved of any of its
obligations under this Agreement by the appointment of such subcontractor and
provided further, that BISYS shall be responsible, to the extent provided in
Section 7 hereof, for all acts of such subcontractor as if such acts were its
own.
Section 3. Compensation.
The Trust shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in,
Schedule A hereto, as such Schedule may be amended from time to time.
Notwithstanding anything to the contrary, amounts owed by the Trust to BISYS
shall only be paid out of the assets and property of the particular Fund
involved.
Section 4. Reimbursement of Expenses.
In addition to paying BISYS the fees described in Section 3 hereof, the
Trust agrees to reimburse BISYS for BISYS's out-of-pocket expenses in providing
services hereunder, including without limitation the following:
(1) All freight and other delivery and bonding charges incurred by
BISYS in delivering materials to and from the Trust;
Page 3
4
(2) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by BISYS in communication
with the Trust, the Trust's investment adviser or custodian, dealers or
others as required for BISYS to perform the services to be provided
hereunder;
(3) The cost of obtaining security market quotes pursuant to Section
1(b)(ii) above;
(4) The cost of microfilm or microfiche of records or other materials;
(5) Any expenses BISYS shall incur at the written direction of an
officer of the Trust thereunto duly authorized by the Trust's Board of
Trustees; and
(6) Any additional out-of-pocket expenses reasonably incurred by BISYS
in the performance of its duties and obligations under this Agreement.
Section 5. Effective Date. This Agreement shall become effective with
respect to a Fund as of the date first written above (or, if a particular Fund
is not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed) (the "Effective Date").
Section 6. Term. This Agreement shall continue in effect with respect
to a Fund, unless earlier terminated by either party hereto as provided
hereunder, until June 30, 2001, and thereafter shall be renewed automatically
for successive one-year terms unless written notice not to renew is given by the
non-renewing party to the other party at least 60 days prior to the expiration
of the then-current term; provided, however, that after such termination, for so
long as BISYS, with the written consent of the Trust, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due BISYS and unpaid by the Trust upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Trust, in addition to
the compensation described under Section 3 hereof, the amount of all of BISYS'
reasonable cash disbursements for services in connection with BISYS' activities
in effecting such termination, including without limitation, the delivery to the
Trust and/or its designees of the Trust's property, records, instruments and
documents, or any copies thereof. To the extent that BISYS may retain in its
possession copies of any Trust documents or records subsequent to such
termination, which copies had not been requested by or on behalf of the Trust in
connection with the termination process described above, for its reasonable
out-of-pocket expenses, BISYS will provide the Trust with reasonable access to
such copies. This Agreement is terminable with respect to a particular Fund only
upon mutual agreement of the parties hereto; upon 180 days' written notice by
the Trust after the initial term hereof but only in connection with the
reorganization of the Funds into another registered management investment
company; or for "cause" (as defined below) by the party alleging "cause," on not
less than 60 days' notice by the Trust's Board of Trustees or by BISYS.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, multiple negligent acts by BISYS which
in the aggregate are determined by the Trust's Board of Trustees to constitute a
serious failure to perform satisfactorily BISYS' obligations hereunder, or
reckless disregard on the part of either party with respect to its obligations
and duties set forth herein; (b) a final, unappealable judicial, regulatory or
administrative ruling or order in which either party has been found guilty of
criminal or unethical behavior in the conduct of its business; (c) the
dissolution or liquidation of either party or other cessation of business other
than a reorganization or recapitalization of such party as an ongoing business;
(d) financial difficulties on the part of either party which is evidenced by the
authorization or commencement of, or involvement by way of pleading, answer,
consent, or
Page 4
5
acquiescence in, a voluntary or involuntary case under Title 11 of the United
States Code, as from time to time is in effect, or any applicable law, other
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors; or (e) any circumstance which substantially impairs the performance
of either party's obligations and duties as contemplated herein.
Section 7. Standard of Care; Reliance on Records and Instructions;
Indemnification. BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Trust
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. A Fund agrees to indemnify and hold harmless BISYS, its employees,
agents, directors, officers and nominees from and against any and all claims,
demands, actions and suits, whether groundless or otherwise, and from and
against any and all judgments, liabilities, losses, damages, costs, charges,
counsel fees and other expenses of every nature and character arising out of or
in any way relating to BISYS' actions taken or nonactions with respect to the
performance of services under this Agreement with respect to such Fund or based,
if applicable, upon reasonable reliance on information, records, instructions or
requests with respect to such Fund given or made to BISYS by a duly authorized
representative of the Trust; provided that this indemnification shall not apply
to actions or omissions of BISYS in cases of its own bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties, and further provided that prior to confessing any claim against it which
may be the subject of this indemnification, BISYS shall give the Trust written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of BISYS.
Section 8. Record Retention and Confidentiality. BISYS shall keep and
maintain on behalf of the Trust all books and records which the Trust or BISYS
is, or may be, required to keep and maintain pursuant to any applicable
statutes, rules and regulations, including without limitation Rules 31a-1 and
31a-2 under the Investment Company Act of 1940, as amended (the "1940 Act"),
relating to the maintenance of books and records in connection with the services
to be provided hereunder. BISYS further agrees that all such books and records
shall be the property of the Trust and to make such books and records available
for inspection by the Trust or by the Securities and Exchange Commission at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Trust and its shareholders; except when
requested to divulge such information by duly-constituted authorities or court
process.
Section 9. Uncontrollable Events. BISYS assumes no responsibility
hereunder, and shall not be liable, for any damage, loss of data, delay or any
other loss whatsoever caused by events beyond its reasonable control.
Section 10. Reports. BISYS will furnish to the Trust and to its
properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Trust in writing, such reports and at such times as are prescribed pursuant
to the terms and the conditions of this Agreement to be provided or completed by
BISYS, or as subsequently agreed upon by the parties pursuant to an amendment
hereto. The Trust agrees to examine each such report or copy promptly and will
report or cause to be reported any errors or discrepancies therein no later than
three business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within ten days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and binding upon the Trust and any
other recipient, and except as provided in Section 7 hereof, BISYS shall have no
liability for errors or discrepancies therein and shall have no further
responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Trust.
Page 5
6
Section 11. Rights of Ownership. All computer programs and procedures
developed to perform services required to be provided by BISYS under this
Agreement are the property of BISYS. All records and other data except such
computer programs and procedures are the exclusive property of the Trust and all
such other records and data will be furnished to the Trust in appropriate form
as soon as practicable after termination of this Agreement for any reason.
Section 12. Return of Records. BISYS may at its option at any time, and
shall promptly upon the Trust's demand, turn over to the Trust and cease to
retain BISYS' files, records and documents created and maintained by BISYS
pursuant to this Agreement; provided, however, that to the extent needed by
BISYS in the performance of its services or for its legal protection, BISYS may
retain copies of such files, records and documents at BISYS' own expense. If not
so turned over to the Trust, such documents and records will be retained by
BISYS for six years from the year of creation. At the end of such six-year
period, such records and documents will be turned over to the Trust unless the
Trust authorizes in writing the destruction of such records and documents.
Section 13. Representations of the Trust. The Trust certifies to BISYS
that: (1) as of the close of business on the Effective Date, each Fund which is
in existence as of the Effective Date has authorized unlimited shares, and (2)
this Agreement has been duly authorized by the Trust and, when executed and
delivered by the Trust, will constitute a legal, valid and binding obligation of
the Trust, enforceable against the Trust in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
Section 14. Representations of BISYS. BISYS represents and warrants
that: (1) the various procedures and systems which BISYS has implemented with
regard to safeguarding from loss or damage attributable to fire, theft, or any
other cause of the blank checks, records, and other data of the Trust and BISYS'
records, data, equipment facilities and other property used in the performance
of its obligations hereunder are adequate and that it will make such changes
therein from time to time as are required for the secure performance of its
obligations hereunder, and (2) this Agreement has been duly authorized by BISYS
and, when executed and delivered by BISYS, will constitute a legal, valid and
binding obligation of BISYS, enforceable against BISYS in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
secured parties.
Section 15. Insurance. BISYS shall notify the Trust should any of its
insurance coverage be cancelled or reduced. Such notification shall include the
date of change and the reasons therefor. BISYS shall notify the Trust of any
material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify the
Trust from time to time as may be appropriate of the total outstanding claims
made by BISYS under its insurance coverage.
Section 16. Information to be Furnished by the Trust and Funds. The
Trust has furnished to BISYS the following:
(a) Copies of the Declaration of Trust of the Trust and of any
amendments thereto, certified by the proper official of the state in
which such Declaration has been filed.
(b) Copies of the following documents:
(i) The Trust's By-Laws and any amendments thereto; and
Page 6
7
(ii) Certified copies of resolutions of the Board of Trustees
covering the approval of this Agreement, authorization of a
specified officer of the Trust to execute and deliver this
Agreement and authorization for specified officers of the
Trust to instruct BISYS thereunder.
(c) A list of all the officers of the Trust, together with specimen
signatures of those officers who are authorized to instruct BISYS in
all matters.
(d) Two copies of the Prospectus and Statement of Additional
Information for each Fund.
Section 17. Information Furnished by BISYS.
(a) BISYS has furnished to the Trust the following:
(i) BISYS's Articles of Incorporation; and
(ii) BISYS's Bylaws and any amendments thereto.
(b) BISYS shall, upon request, furnish certified copies of actions of
BISYS covering the following matters:
(i) Approval of this Agreement, and authorization of a
specified officer of BISYS to execute and deliver this
Agreement; and
(ii) Authorization of BISYS to act as fund accountant for the
Trust and to provide accounting services for the Trust.
Section 18. Amendments to Documents. The Trust shall furnish BISYS
written copies of any amendments to, or changes in, any of the items referred to
in Section 16 hereof forthwith upon such amendments or changes becoming
effective.
Section 19. Compliance with Law. Except for the obligations of BISYS
set forth in Section 8 hereof, the Trust assumes full responsibility for the
preparation, contents and distribution of each prospectus of the Trust as to
compliance with all applicable requirements of the Securities Act of 1933, as
amended, the 1940 Act and any other laws, rules and regulations of governmental
authorities having jurisdiction. BISYS shall have no obligations hereunder to
take cognizance of any laws relating to the sale of the Trust's shares. The
Trust represents and warrants that no shares of the Trust will be offered to the
public until the Trust's registration statement under the Securities Act of 1933
and the 1940 Act has been declared or becomes effective.
Section 20. Notices. Any notice provided hereunder shall be
sufficiently given when sent by registered or certified mail to the party
required to be served with such notice, at the following address: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Drinker ▇▇▇▇▇▇ &
▇▇▇▇▇ LLP, Philadelphia National Bank Building, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ for notices to the Trust, or at such other address
as such party may from time to time specify in writing to the other party
pursuant to this Section.
Section 21. Headings. Paragraph headings in this Agreement are included
for convenience only and are not to be used to construe or interpret this
Agreement.
Page 7
8
Section 22. Assignment. This Agreement and the rights and duties
hereunder shall not be assignable with respect to a Fund by either of the
parties hereto except by the specific written consent of the other party.
Section 23. Governing Law. This Agreement shall be governed by and
provisions shall be construed in accordance with the laws of the State of
Delaware.
Section 24. Limitation of Liability of the Trustees and Shareholders.
The Governor Funds is a business trust organized under Delaware law and under a
Declaration of Trust, to which reference is hereby made and a copy of which is
on file at the office of the Secretary of State of Delaware as required by law,
and to any and all amendments thereto so filed or hereafter filed. The
obligations of "Governor Funds" entered into in the name or on behalf thereof by
any of the Trustees, officers, employees or agents are made not individually,
but in such capacities, and are not binding upon any of the Trustees, officers,
employees, agents or shareholders of the Trust personally, but bind only the
assets of the Trust and all persons dealing with any of the Funds of the Trust
must look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
Section 25. Year 2000 Compliant. BISYS represents and warrants that all
services rendered and all computer systems used in the performance of BISYS's
obligations under the Fund Accounting Agreement shall be Year 2000 Compliant.
"Year 2000 Compliant" means that the services and systems are designed to and
shall:
(a) operate in the year 2000 and later with four digit year date
capability;
(b) operate fault-free in the processing of date and date-dependant
data before, during and after January 1, 2000, including but not limited to
accepting date input, providing date output, and performing date calculations,
comparison and sequencing;
(c) function accurately and without interruption before, during, and
after January 1, 2000, without any adverse effect on operations and associated
with the advent of the new century;
(d) store and provide output of date information in ways that are
unambiguous as to century.
The representations and warranties contained herein may not be
disclaimed or limited by operations of law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
GOVERNOR FUNDS
By /
----------------------
BISYS FUND SERVICES, INC.
By /
----------------------
(name) (title)
Page 8
9
Dated: _____________, 1998
SCHEDULE A
TO THE
FUND ACCOUNTING AGREEMENT
BETWEEN
GOVERNOR FUNDS
AND
BISYS FUND SERVICES, INC.
______, 1998
Name of Fund Compensation* Date
------------ ------------- ----
Prime Money Market, The greater of (i) the annual rate of __________________, 1998
Pennsylvania Municipal .03% (.04% for international funds) of
Bond, the Funds' combined net assets up to $2
Established Growth, billion and .02% (.03% for
Intermediate Term Income, international funds) of the Funds'
Aggressive Growth, combined net assets of $2 billion or
U.S. Treasury Obligations more or (ii) the applicable annual
Money Market, Limited minimum fee of $30,000 per fund
Duration Government ($35,000 municipal or tax-exempt fund,
Securities, $40,000 international fund).
Emerging Growth,
International Equity,
Lifestyle Conservative
Growth, Lifestyle
Moderate Growth and
Lifestyle Growth Funds
BISYS FUND SERVICES, INC. GOVERNOR FUNDS
By _________________________ By _________________________
* All fees are computed daily and paid periodically.
Page 9