Exhibit (h)(3)
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 26th day of September, 2003, by and
between THE WATCHDOG FUND TRUST (the "Trust"), a Delaware business trust having
its principal place of business at 00 Xxxx 00xx Xxxxxx, Xxxxx 0, Xxx Xxxx, Xxx
Xxxx 00000, and ULTIMUS FUND SOLUTIONS, LLC ("Ultimus"), a limited liability
company organized under the laws of the State of Ohio and having its principal
place of business at 000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxx 00000.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust desires that Ultimus perform certain fund accounting
services for each series of the Trust, listed on Schedule A attached hereto and
made part of this Agreement, as such Schedule A may be amended from time to time
(individually referred to herein as the "Portfolio" and collectively as the
"Portfolios"); and
WHEREAS, Ultimus 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:
1. RETENTION OF ULTIMUS.
The Trust hereby retains Ultimus to act as the fund accountant of the
Trust and to furnish the Trust with the services as set forth below. Ultimus
hereby accepts such employment to perform such duties.
(a) MAINTENANCE OF BOOKS AND RECORDS.
Ultimus shall maintain and keep current the accounts, books, records
and other documents relating to the Trust's financial and portfolio
transactions as may be required by the rules and regulations of the
Securities and Exchange Commission (the "SEC") adopted under Section
31(a) of the 1940 Act. Ultimus shall cause the subject records of the
Trust to be maintained and preserved pursuant to the requirements of
the 1940 Act.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES.
In addition to the maintenance of the books and records specified
above, Ultimus shall perform the following accounting services
daily for each Portfolio:
(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 Portfolio's investment
adviser or its designee, as approved by the Trust's
Board of Trustees (hereafter referred to as
"Trustees");
(iii) Verify and reconcile with the Portfolios' custodian
all daily trade activity;
(iv) Compute, as appropriate, each Portfolio's net income
and capital gains, dividend payables, dividend
factors, yields, and weighted average portfolio
maturity;
(v) Review daily the net asset value calculation and
dividend factor (if any) for each Portfolio 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) Determine unrealized appreciation and depreciation
on securities held by the Portfolios;
(vii) Amortize premiums and accrete discounts on
securities purchased at a price other than face
value, if requested by the Trust;
(viii) Update fund accounting system to reflect rate
changes, as received from a Portfolio's investment
adviser, on variable interest rate instruments;
(ix) Post Portfolio transactions to appropriate
categories;
(x) Accrue expenses of each Portfolio;
(xi) Determine the outstanding receivables and payables
for all (1) security trades, (2) Portfolio share
transactions and (3) income and expense accounts;
(xii) Provide accounting reports in connection with the
Trust's regular annual audit and other audits and
examinations by regulatory agencies; and (xiii)
Provide such periodic reports as the parties shall
agree upon.
(c) SPECIAL REPORTS AND SERVICES.
(i) Ultimus may provide additional special reports upon
the request of the Trust or a Portfolio's investment
adviser, which may result in an additional charge,
the amount of which shall be agreed upon between the
parties.
(ii) Ultimus may provide such other similar services with
respect to a Portfolio 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.
Ultimus shall also perform the following additional accounting
services for each Portfolio:
(i) Provide monthly (or as frequently as may reasonably
be requested by the Trust or a Portfolio's
investment adviser) a set of financial statements
for each Portfolio as described below, upon request
of the Trust:
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Security Purchases and Sales Journals
Portfolio Holdings Reports
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(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 SEC
on Form N-SAR;
(C) the Trust's annual, semi-annual and
quarterly (if any) shareholder reports;
(D) registration statements on Form N-1A and
other filings relating to the registration
of shares;
(E) Ultimus' 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.
2. SUBCONTRACTING.
Ultimus may, at its expense and, upon written notice to the Trust,
subcontract with any entity or person concerning the provision of the services
contemplated hereunder; provided, however, that Ultimus shall not be relieved of
any of its obligations under this Agreement by the appointment of such
subcontractor and provided further, that Ultimus shall be responsible, to the
extent provided in Section 7 hereof, for all acts of such subcontractor as if
such acts were its own.
3. COMPENSATION.
The Trust shall pay for the services to be provided by Ultimus under
this Agreement in accordance with, and in the manner set forth in, Schedule B
attached hereto, as such Schedule may be amended from time to time.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, Ultimus' compensation for
that part of the month in which the Agreement is in effect shall be prorated in
a manner consistent with the calculation of the fees as set forth above. Payment
of Ultimus' compensation for the preceding month shall be made promptly.
4. REIMBURSEMENT OF EXPENSES.
In addition to paying Ultimus the fees described in Schedule B attached
hereto, the Trust agrees to reimburse Ultimus for its reasonable out-of-pocket
expenses in providing services hereunder, including without limitation the
following:
(a) All freight and other delivery and bonding charges incurred by
Ultimus in delivering materials to and from the Trust;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by Ultimus in
communication with the Trust, the Trust's investment adviser
or custodian, dealers or others as required for Ultimus to
perform the services to be provided hereunder;
(c) The cost of obtaining security market quotes;
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(d) All expenses incurred in connection with any custom
programming or systems modifications required to provide any
special reports or services requested by the Trust;
(e) Any expenses Ultimus shall incur at the written direction of
an officer of the Trust thereunto duly authorized other than
an employee or other affiliated person of Ultimus who may
otherwise be named as an authorized representative of the
Trust for certain purposes; and
(f) Any additional expenses reasonably incurred by Ultimus and
approved in advance by the Trust in the performance of its
duties and obligations under this Agreement.
5. EFFECTIVE DATE.
This Agreement shall become effective with respect to the Trust, and
any Portfolio, on the date the Trust and any such Portfolio commences investment
operations (the "Effective Date").
6. TERM OF THIS AGREEMENT.
The term of this Agreement shall continue in effect, unless earlier
terminated by either party hereto as provided hereunder, for a period of
one year. Thereafter, unless otherwise terminated as provided herein, this
Agreement shall be renewed automatically for successive one-year periods.
This Agreement may be terminated without penalty: (i) by provision of
sixty (60) days' written notice; (ii) by mutual agreement of the parties; or
(iii) for "cause" (as defined herein) upon the provision of thirty (30) days'
advance written notice by the party alleging cause.
For purposes of this Agreement, "cause" shall mean: (i) a material
breach of this Agreement that has not been remedied within thirty (30) days
following written notice of such breach from the non-breaching party, (ii) a
series of negligent acts or omissions or breaches of this Agreement which, in
the aggregate, constitute in the reasonable judgment of the Trust, a serious
failure to perform satisfactorily Ultimus' obligations hereunder; (iii) a final,
unappealable judicial, regulatory or administrative ruling or order in which the
party to be terminated has been found guilty of criminal or unethical behavior
in the conduct of its business; or (iv) financial difficulties on the part of
the party to be terminated 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
than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or the modification or alteration of the rights of
creditors.
Notwithstanding the foregoing, after such termination for so long as
Ultimus, 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 Ultimus and unpaid by the Trust upon such termination
shall be immediately due and payable upon and notwithstanding such termination.
Ultimus shall be entitled to collect from the Trust, in addition to the
compensation described in Schedule B, the amount of all of Ultimus' cash
disbursements for services in connection with Ultimus' 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.
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7. STANDARD OF CARE.
The duties of Ultimus shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against Ultimus
hereunder. Ultimus shall be obligated to exercise care and diligence in the
performance of its duties hereunder and to act in good faith in performing the
services provided for under this Agreement. Ultimus shall be liable for any
damages arising directly or indirectly out of Ultimus' failure to perform its
duties under this Agreement to the extent such damages arise directly or
indirectly out of Ultimus' willful misfeasance, bad faith, negligence in the
performance of its duties, or reckless disregard of it obligations and duties
hereunder. (As used in this Article 7, the term "Ultimus" shall include
directors, officers, employees and other agents of Ultimus as well as Ultimus
itself.)
Without limiting the generality of the foregoing or any other provision
of this Agreement, (i) Ultimus shall not be liable for losses beyond its
reasonable control, provided that Ultimus has acted in accordance with the
standard of care set forth above; and (ii) Ultimus shall not be liable for the
validity or invalidity or authority or lack thereof of any instruction, notice
or other instrument that Ultimus reasonably believes to be genuine and to have
been signed or presented by a duly authorized representative of the Trust (other
than an employee or other affiliated persons of Ultimus who may otherwise be
named as an authorized representative of the Trust for certain purposes).
Ultimus may apply to the Trust at any time for instructions and may
consult with counsel for the Trust or its own counsel and with accountants and
other experts with respect to any matter arising in connection with Ultimus'
duties hereunder, and Ultimus shall not be liable or accountable for any action
taken or omitted by it in good faith in accordance with such instruction or with
the reasonable opinion of such counsel, accountants or other experts qualified
to render such opinion.
8. INDEMNIFICATION.
The Trust agrees to indemnify and hold harmless Ultimus from and
against any and all actions, suits, claims, losses, damages, costs, charges,
reasonable counsel fees and disbursements, payments, expenses and liabilities
(including reasonable investigation expenses) (collectively, "Losses") arising
directly or indirectly out of any action or omission to act which Ultimus takes
(i) at any request or on the direction of or in reliance on the reasonable
advice of the Trust, (ii) upon any instruction, notice or other instrument that
Ultimus reasonably believes to be genuine and to have been signed or presented
by a duly authorized representative of the Trust (other than an employee or
other affiliated person of Ultimus who may otherwise be named as an authorized
representative of the Trust for certain purposes) or (iii) on its own
initiative, in good faith and in accordance with the standard of care set forth
herein, in connection with the performance of its duties or obligations
hereunder; provided, however that the Trust shall have no obligation to
indemnify or reimburse Ultimus under this Article 8 to the extent that Ultimus
is entitled to reimbursement or indemnification for such Losses under any
liability insurance policy described in this Agreement or otherwise.
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Ultimus shall not be indemnified against or held harmless from any
Losses arising directly or indirectly out of Ultimus' own willful misfeasance,
bad faith, negligence in the performance of its duties, or reckless disregard of
its obligations and duties hereunder. (As used in this Article 8, the term
"Ultimus" shall include directors, officers, employees and other agents of
Ultimus as well as Ultimus itself.)
9. RECORD RETENTION AND CONFIDENTIALITY.
Ultimus shall keep and maintain on behalf of the Trust all books and
records which the Trust and Ultimus 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 1940 Act, relating to the maintenance
of books and records in connection with the services to be provided hereunder.
Ultimus 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 SEC 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.
10. FORCE MAJEURE.
Ultimus 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, including acts of civil or military
authority, national emergencies, fire, flood, catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
11. RIGHTS OF OWNERSHIP; RETURN OF RECORDS.
All records and other data except computer programs and procedures
developed to perform services required to be provided by Ultimus are the
exclusive property of the Trust and all such records and data will be furnished
to the Trust in appropriate form as soon as practicable after termination of
this Agreement for any reason. Ultimus may at its option at any time, and shall
promptly upon the Trust's demand, turn over to the Trust and cease to retain
Ultimus' files, records and documents created and maintained by Ultimus pursuant
to this Agreement which are no longer needed by Ultimus in the performance of
its services or for its legal protection. If not so turned over to the Trust,
such documents and records will be (1) copied and made available to the Trust by
Ultimus as soon as reasonably practical, and (2) retained by Ultimus 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.
12. REPRESENTATIONS OF THE TRUST.
The Trust certifies to Ultimus that: (1) as of the close of business
on the Effective Date, each Portfolio that 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.
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13. REPRESENTATIONS OF ULTIMUS.
Ultimus represents and warrants that: (1) the various procedures and
systems which Ultimus has implemented with regard to safeguarding from loss or
damage attributable to fire, theft, or any other cause the records, and other
data of the Trust and Ultimus's 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, (2) this Agreement has been
duly authorized by Ultimus and, when executed and delivered by Ultimus, will
constitute a legal, valid and binding obligation of Ultimus, enforceable against
Ultimus 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, (3) it is duly registered
with the appropriate regulatory agency as a transfer agent and such registration
will remain in full force and effect for the duration of this Agreement, and (4)
it has and will continue to have access to the necessary facilities, equipment
and personnel to perform its duties and obligations under this Agreement.
14. INSURANCE.
Ultimus shall furnish the Trust with pertinent information concerning
the professional liability insurance coverage that it maintains. Such
information shall include the identity of the insurance carrier(s), coverage
levels and deductible amounts. Ultimus shall notify the Trust should any of its
insurance coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. Ultimus 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 Ultimus under its insurance coverage.
15. INFORMATION TO BE FURNISHED BY THE TRUST.
The Trust has furnished to Ultimus the following:
(a) Copies of the Declaration of Trust and of any amendments
thereto, certified by the proper official of the state in
which such document has been filed.
(b) Copies of the following documents:
(1) The Trust's Bylaws and any amendments thereto; and
(2) Certified copies of resolutions of the 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 Ultimus thereunder.
(c) A list of all the officers of the Trust, together with
specimen signatures of those officers who are authorized to
instruct Ultimus in all matters.
(d) Copies of the Prospectus and Statement of Additional
Information for each Portfolio.
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16. AMENDMENTS TO AGREEMENT.
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.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and
Ultimus may conclusively assume that any special procedure which has been
approved by the Trust does not conflict with or violate any requirements of its
Declaration of Trust or then current prospectuses, or any rule, regulation or
requirement of any regulatory body.
17. COMPLIANCE WITH LAW.
Except for the obligations of Ultimus otherwise set forth herein, 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 "Securities Act"),
the 1940 Act and any other laws, rules and regulations of governmental
authorities having jurisdiction. 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 and the 1940 Act has been declared or becomes
effective.
18. 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: if to the Trust, at 00 Xxxx 00xx Xxxxxx, Xxxxx
0, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxx Xxxxxxxx; and if to Ultimus, at 000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxx 00000, Attn: Xxxxxx X. Xxxxxx; or
at such other address as such party may from time to time specify in writing to
the other party pursuant to this Section.
19. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
20. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of Ohio and the applicable provisions of the 1940 Act. To the extent that
the applicable laws of the State of Ohio, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
21. LIMITATION OF LIABILITY.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the State of Delaware, and notice is hereby given that this
instrument is executed on behalf of the Board of Trustees of the Trust and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees, officers or shareholders individually but are binding only
upon the assets and property of the Trust (or if the matter relates only to a
particular Portfolio, that Portfolio), and Ultimus shall look only to the assets
of the Trust, or the particular Portfolio, for the satisfaction of such
obligations.
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22. MULTIPLE ORIGINALS.
This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
THE WATCHDOG FUND TRUST
By:
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Title: President
ULTIMUS FUND SOLUTIONS, LLC
By:
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Title: President
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SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT BETWEEN
THE WATCHDOG FUND TRUST
AND
ULTIMUS FUND SOLUTIONS, LLC
FUND PORTFOLIOS
The Watchdog Fund
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SCHEDULE B
TO THE FUND ACCOUNTING AGREEMENT BETWEEN
THE WATCHDOG FUND TRUST
AND
ULTIMUS FUND SOLUTIONS, LLC
FEES AND EXPENSES
FEES:
Ultimus shall be entitled to receive a fee from the Trust on the first
business day following the end of each month, or at such time(s) as Ultimus
shall request and the parties hereto shall agree, a fee computed with respect to
each Portfolio as follows:
Base fee per year = $30,000 ($2,500 per month), plus
Asset based fee of:
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Average Daily Net Assets Asset Based Fee
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First $500 million .010%
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In excess of $500 million .005%
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The above base fee assumes one class of shares. For a Portfolio that
offers more than one class of shares, the base fee is $36,000 (two classes) or
$42,000 (three classes).
The foregoing fees will be discounted with respect to The Watchdog Fund by
25% during the first year of this Agreement, provided that all such
discounts will cease at the earlier of (i) the expiration of one year from
the date of this Agreement or (ii) such Fund's net assets reach $50
million.
The foregoing fees include 100 portfolio trades per month (exclusive of
daily cash investments). For Portfolios with more than 100 trades in a
month, Ultimus will charge $5.00 for each trade in excess of 100.
For Performance Reporting (including After-Tax Performance
Reporting), Ultimus charges each Portfolio a fee of $250 per month.
OUT-OF-POCKET EXPENSES:
The fees set forth above shall be in addition to the payment of
out-of-pocket expenses, as provided for in Section 4 of this Agreement.
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