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Exhibit 8(i)
ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of November 4, 1991 by and between SCHWAB
INVESTMENTS, (the "Fund"), a Massachusetts business trust, and PROVIDENT
FINANCIAL PROCESSING CORPORATION ("PFPC"), a Delaware corporation which is an
indirect wholly-owned subsidiary of PNC Financial Corp.
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940 (the "1940" Act), as amended.
The Fund wishes to retain PFPC to provide accounting services to each of
the Fund's investment portfolios listed on Schedule A, hereto ("Portfolio(s)"),
and PFPC wishes to furnish such services. For the Schwab 1000 Fund, a portfolio
of the Fund, this agreement amends and restates, in its entirety, the Accounting
Services Agreement dated March 31, 1991 by and between the Schwab 1000 Fund and
PFPC.
In consideration of the promises and mutual covenants herein contained,
the parties agree as follows:
1. Definitions.
(a) "Authorized Person". The term "Authorized Person" shall
mean any officer of the Fund and any other person, who is duly authorized by
the Fund's Governing Board, to give Oral and Written Instructions on behalf
of the Fund. Such persons are listed in the Certificate attached hereto as
the Authorized Persons Appendix to each Services Attachment to this
Agreement. If
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Provident provides more than one service hereunder, the Fund's designation of
Authorized Persons may vary by service.
(b) "Book-Entry System". The term "Book-Entry System" means Federal
Reserve Treasury book-entry system for United States and federal agency
securities, its successor or successors, and its nominee or nominees and any
book-entry system maintained by an exchange registered with the SEC under the
1934 Act.
(c) "CFTC". The term "CFTC" shall mean the Commodities Futures
Trading Commission.
(d) "Governing Board". The Term "Governing Board" shall mean the
Fund's Board of Directors if the Fund is a corporation or the Fund's Board of
Trustees if the Fund is a trust, or, where duly authorized, a competent
committee thereof.
(e) "Oral Instructions". The term "Oral Instructions" shall
mean oral instructions received by PFPC from an Authorized Person or from a
person reasonably believed by PFPC to be an Authorized Person.
(f) "Provident". The term "Provident" shall mean Provident National
Bank or a subsidiary or affiliate of Provident National Bank.
(g) "SEC". The term "SEC" shall mean the Securities and
Exchange Commission.
(h) "Securities and Commodities Laws". The terms the "1933 Act"
shall mean the Securities Act of 1933, as amended, the "1934 Act" shall mean the
Securities Exchange Act of 1934, as
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amended, the "1940 Act" shall mean the Investment Company Xxx 0000, as amended,
and the "CEA" shall mean the Commodities Exchange Act, as amended.
(i) "Services". The term "Services" shall mean the service
provided to the Portfolios by PFPC.
(j) "Shares". The terms "Shares" shall mean the shares of stock of
any series or class of the Fund, or, where appropriate, units of beneficial
interest in a trust where the Fund is organized as a Trust.
(k) "Property". The term "Property" shall mean:
(i) any and all securities and other investment items which
the Fund may from time to time deposit, or cause to be
deposited, with Provident or which Provident may from
time to time hold for the Fund;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such
securities or investment items; and
(iv) all proceeds of the sale of securities issued by the
Fund, which are received by Provident from time to time,
from or on behalf of the Fund.
(l) "Written Instructions". The term "Written Instructions" shall
mean written instructions signed by two Authorized Persons and received by PFPC.
The instructions may be
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delivered by hand, mail, tested telegram, cable, telex
or facsimile sending device.
2. Appointment. The Fund hereby appoints PFPC to provide accounting
services to each of the Portfolios listed on Schedule A, hereto, in
accordance with the terms set forth in this Agreement. PFPC accepts such
appointment and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where applicable,
will provide PFPC with the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Governing Board, approving the appointment of Provident or its
affiliates to provide services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements;
(d) a copy of the Fund's distribution agreement or agreements;
(e) copies of any shareholder servicing agreements made in
respect of the Fund; and
(f) certified or authenticated copies of any and all
amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations. PFPC undertakes to
comply with all applicable requirements of the 1933 Act, the 1934 Act, the 1940
Act, and the CEA, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to all duties to be performed by
PFPC
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hereunder. Except as specifically set forth herein, PFPC assumes no
responsibility for such compliance by the Fund.
5. Instructions. Unless otherwise provided in this Agreement, PFPC
shall act only upon Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written Instructions it
receives from an Authorized Person (or from a person reasonably believed by PFPC
to be an Authorized Person) pursuant to this Agreement. In the exercise of
reasonable judgement, PFPC may assume that any Oral or Written Instruction
received hereunder is not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote, resolution or
proceeding of the Fund's Governing Board or of the Fund's shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming Oral
Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC shall in no way
invalidate the transactions or enforceability of the transactions authorized by
the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund solely by reason of acting upon Oral or Written
Instructions provided such instructions reasonably appear to have been received
from an Authorized Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or
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advice, including Oral or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any questions of
law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be counsel
for the Fund, the Fund's advisor or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between directions,
advice or Oral or Written Instructions Provident receives from the Fund, and the
advice it receives from counsel, PFPC shall be entitled in good faith to rely
upon and follow the advice of counsel.
(d) Protection of PFPC. PFPC shall be protected in any action it takes or
does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which PFPC believes,
in good faith, to be consistent with those directions, advice and Oral or
Written Instructions.
Nothing in this paragraph shall be construed so as to impose an obligation
upon PFPC (i) to seek such directions, advice or Oral or Written Instructions,
or (ii) to act in accordance with such directions, advice or Oral or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PFPC's properly taking or not taking such action.
7. Records. The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. Such books and records
shall be prepared and maintained as
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required by the 1940 Act and other applicable securities laws, rules and
regulations. The Fund, or the Fund's Authorized Persons, shall have access to
such books and records at all times during PFPC's normal business hours. Upon
the reasonable request of the Fund, copies of any such books and records shall
be provided by PFPC to the Fund or to an Authorized Person of the Fund, at the
Fund's expense.
PFPC shall keep the following records:
(a) all books and records with respect to the Fund's books of
account;
(b) records of the Fund's securities transaction;
(c) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act and as specifically set forth in
Appendix A hereto.
8. Confidentiality. PFPC agrees to keep confidential all records of the
Fund and information relative to the Fund and its shareholders (past, present
and potential), unless the release of such records or information is otherwise
consented to, in writing, by the Fund. The Fund agrees that such consent shall
not be unreasonably withheld. The Fund further agrees that, should PFPC be
required to provide such information or records to duly constituted authorities
(who may institute civil or criminal contempt proceedings for failure to
comply), PFPC shall not be required to seek the Fund's prior written consent
before disclosing such information, but shall instead notify an officer of the
Fund and obtain the officer's oral consent, which consent shall be
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timely and shall not be unreasonably withheld.
9. Liaison with Accountants. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide account analyses, fiscal year
summaries, and other audit-related schedules. PFPC shall take all reasonable
action in the performance of its obligations under this Agreement to assure that
the necessary information is made available to such accountants for the
expression of their opinion, as such may be required by the Fund from time to
time.
10. Disaster Recovery. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable provision of
emergency use of electronic data processing equipment to the extent appropriate
equipment is available. In the event of equipment failures, PFPC shall, at no
additional expense to the Fund, take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
11. Compensation. The fees for services rendered by PFPC during the
term of this Agreement shall be paid by the Fund to PFPC as may be agreed to
in writing by the Fund and PFPC from time to time.
12. Indemnification. The Fund agrees to indemnify and hold harmless PFPC
and its nominees from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the 1933
Act, the 1934 Act, the 1940 Act, the CEA, and any state and foreign securities
and blue sky laws,
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and amendments thereto, and expenses, including (without limitation) reasonable
attorneys' fees and disbursements, arising directly or indirectly from any
action which PFPC takes or does not take (i) at the request or on the direction
of or in reliance on the advice of the Fund or (ii) upon Oral or Written
Instructions. Neither PFPC, nor any of its nominees, shall be indemnified
against any liability to the Fund or to its shareholders (or any expenses
incident to such liability) arising out of PFPC's own willful misfeasance, gross
negligence or reckless disregard of its duties and obligations under this
Agreement.
13. Responsibility of PFPC. PFPC shall be under no duty to take any action
on behalf of the Fund except as specifically set forth herein or as may be
specifically agreed to by PFPC, in writing. PFPC shall be obligated to exercise
care and diligence in the performance of its duties hereunder, to act in good
faith and to use its best efforts, within reasonable limits, in performing
services provided for under this Agreement. PFPC shall be responsible for
damages arising out of its failure to perform its duties under this Agreement
arising out of PFPC's gross negligence. Notwithstanding the foregoing, PFPC
shall not be responsible for losses beyond its reasonable control, provided that
PFPC has acted in accordance with the standard of care set forth above; and
provided further that PFPC shall only be responsible for that portion of losses
or damages suffered by the fund that are attributable to the gross negligence of
PFPC.
Without limiting the generality of the foregoing or of any
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other provision of this Agreement, PFPC, in connection with its duties under
this Agreement, shall not be liable for (a) the validity or invalidity or
authority or lack thereof of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this Agreement, and
which PFPC reasonably believes to be genuine; or (b) delays or errors or loss of
data occurring by reason of circumstances beyond PFPC's reasonable control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots
or failure of the mails, transportation, communication or power supply.
14. Description of Accounting Services.
(a) Services on a Continuing Basis. PFPC will perform the
following accounting functions if required:
(i) Journalize each Portfolio's investment,
capital share and income and expense activities;
(ii) Verify investment buy/sell trade tickets when received
from the Fund's investment advisor and transmit trades
to the Fund's custodian for proper settlement;
(iii) Maintain individual ledgers for investment
securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the
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Fund with the custodian, and provide the Fund's
investment advisor with the beginning cash balance
available for investment purposes;
(vi) Update the cash availability throughout the day as
required by the Fund's advisor;
(vii) Post to and prepare the Fund's Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (e.g., advisory
and custody fees);
(ix) Monitor the expense accruals and notify Fund management
of any proposed adjustments;
(x) Control all disbursements from the Fund and authorize
such disbursements upon Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine each Portfolio's net income;
(xiii) Obtain security market quotes from independent pricing
services approved by the Advisor, or if such quotes are
unavailable, then obtain such prices from the Advisor,
and in either case calculate the market value of each
Portfolio's investments;
(xiv) Transmit or mail a copy of the daily portfolio valuation
to the Advisor;
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(xv) Compute the net asset value of the Portfolio;
(xvi) As appropriate, compute the Portfolio's yields, total
return, expense ratios, Portfolio turnover rate, and, if
required, Portfolio average dollar-weighted maturity;
and
(xvii) Prepare a monthly financial statement, which will
include the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
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(b) PFPC will provide the Funds' Administrator with the
following services:
(i) Assist with preparation of:
Federal and State Tax Returns
Excise Tax Returns
Annual and Semi-Annual Shareholder Reports
Rules 24(e)-2 and 24(f)-2 Notices;
(ii) Assist in the Blue Sky and Federal registration and
compliance process;
(iii) Assist in the review of registration statements; and
(iv) Assist in monitoring compliance with Sub-Chapter M of
the Internal Revenue Code.
15. Duration and Termination. This Agreement shall continue, unless sooner
terminated by the Portfolio or by PFPC for "cause" (as defined below) on sixty
(60) days prior written notice to the other party, for a period of 5 years. For
purposes of this Agreement "cause" shall mean any circumstances which materially
impair the ability of either party to this Agreement to perform all of its
duties and obligations hereunder.
16. Notices. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. If notice is sent by confirming telegram, cable, telex
or facsimile sending device, it shall be deemed to have been given immediately.
If notice is sent by first-class mail, it shall be deemed to have
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been given three days after it has been mailed. If notice is sent by messenger,
it shall be deemed to have been given on the day it is delivered. Notices shall
be addressed (a) if to PFPC at PFPC's address, 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000; (b) if to the Fund, at the address of the Fund; or (c) if to
neither of the foregoing, at such other address as shall have been notified to
the sender of any such Notice or other communication.
17. Amendments. This Agreement, or any term thereof, may be changed or
waived only by written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. Delegation. PFPC may, with the prior written consent of the Fund,
which such consent may not be unreasonably withheld, assign its rights and
delegate its duties hereunder to any wholly-owned direct or indirect subsidiary
of Provident National Bank or PNC Financial Corp, provided that (i) PFPC gives
the Fund a minimum of thirty (30) days in which to decide and consent by written
notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of this Agreement and the 1940 Act; and (iii) PFPC and such delegate
promptly provide such information as the Fund may request, and respond to such
questions as the Fund may ask, relative to the delegation, including (without
limitation) the capabilities of the delegate.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Further Actions. Each party agrees to perform such
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further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
21. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to delegated and/or Oral Instructions.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
This Agreement shall be deemed to be a contract made in California and
governed by California law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
PROVIDENT FINANCIAL
PROCESSING CORPORATION
By:/s/ Xxxxxx Gramlech
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SCHWAB INVESTMENTS
By: /s/ Xxx X. Xxxx
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Appendix A
[List of Books and Records to be
Maintained by PFPC]
Subject to Section 7, PFPC will keep and maintain the following books and
records of each Portfolio pursuant to Rule 31a-1 under the Investment Company
Act of 1940 (the "Rule"):
a. 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;
b. 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;
c. Separate ledger accounts required by subsection (b) (2) (ii) and
(iii) of the Rule; and
d. A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b) (8) of the Rule.
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