1
Exhibit (h)(3)
ACCOUNTING SERVICES AGREEMENT
This Agreement, dated as of the 5th day of February, 1994 made by and between
Meridian Value Fund (the "Fund"), a separate series of shares of Meridian Fund,
Inc., a corporation organized under the laws of the state of Maryland operating
as an open end management investment company registered under the Investment
Company Act of 1940, as amended and Fund/Plan Services, Inc. ("Fund/Plan"), a
corporation duly organized and existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint Fund/Plan as Accounting Services
Agent to maintain and keep current the books, accounts, records, journals or
other records of original entry relating to the business of the Fund (the
"Accounts and Records") and to perform certain other functions in connection
with such Accounts and Records; and
WHEREAS, Fund/Plan is willing to serve in such capacity and perform such
functions upon the terms and conditions set forth below; and
WHEREAS, the Fund will provide certain information concerning the Fund
to Fund/Plan as set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Parties hereto, intending to be legally bound, do hereby
agree as follows:
Section 1. For purposes of this Agreement:
Oral Instructions shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to Fund/Plan in
person or by telephone, telegram, telecopy, or other mechanical or documentary
means lacking a signature, by a person or persons reasonably identified to
Fund/Plan to be a person or persons authorized by a resolution of the Board of
Directors of the Fund, to give such oral instructions on behalf of the Fund.
Written Instructions shall mean an authorization, instruction, approval,
item or set of data or information of any kind transmitted to Fund/Plan in
original writing containing original signatures or a copy of such document
transmitted by telecopy including transmission of such signature reasonably
identified to Fund/Plan to be the signature of a person authorized by a
resolution of the Board of Directors of the Fund to give written instructions on
behalf of the Fund.
1
2
The Fund shall file with Fund/Plan a certified copy of each resolution of its
Board of Directors authorizing execution of Written Instructions or the
transmittal of Oral Instructions as provided above.
Section 2. To the extent Fund/Plan receives the necessary information
from the Fund or its agents by Written or Oral Instructions, Fund/Plan shall
maintain and keep current the following Accounts and Records relating to the
business of the Fund in such form as may be mutually agreed upon between the
Fund and Fund/Plan:
(a) Cash Receipts Journal
(b) Cash Disbursements Journal
(c) Dividends Paid and Payable Schedule
(d) Purchase and Sales Journals - Portfolio Securities
(e) Subscription and Redemption Journals
(f) Security Ledgers - Transaction Report and Tax Lot Holdings
Report
(g) Broker Ledger - Commission Report
(h) Daily Expense Accruals
(i) Daily Interest Accruals
(j) Daily Trial Balance
(k) Portfolio Interest Receivable and Income Journal
(l) Portfolio Dividend Receivable and Income Register
(m) Listing of Portfolio Holdings - showing cost, market value
and percentage of portfolio comprised of each security.
(n) Average Daily Net assets provided on monthly basis.
The necessary information to perform the above functions and the
calculation of Fund's net asset value as provided below, is to be furnished by
Written or Oral Instructions to Fund/Plan daily (in accordance with the time
frame identified in Section 7) prior to the close of regular trading on the New
York Stock Exchange.
Section 3. Fund/Plan shall perform the ministerial calculations
necessary to compute the Fund's net asset value each day the New York Stock
Exchange is open, in accordance with (i) the Fund's then current Prospectus and
Statement of Additional Information and (ii) procedures with respect thereto
approved by the Board of Directors of the Fund and supplied in writing to
Fund/Plan's Accounting Services Unit. Portfolio items for which market
quotations are available by Fund/Plan's use of an automated financial
information service (the "Service") shall be based on the closing prices of such
Service except where the Fund has given or caused to be given specific Written
or Oral Instructions to use a different value. All of the portfolio securities
shall be given such values as the Fund provides by Written or Oral Instructions
including all restricted securities and other securities requiring valuation not
readily ascertainable solely by such Service. Fund/Plan shall not have any
responsibility or liability for the accuracy of
2
3
prices quoted by such Service; for the accuracy of the information supplied by
the Fund; or for any loss, liability, damage, or cost arising out of any
inaccuracy of such data. Fund/Plan shall have no responsibility or duty to
include information or valuations to be provided by the Fund in any computation
unless and until it is timely supplied to Fund/Plan in usable form. Fund/Plan
shall record corporate action information as received from the Custodian, the
Service, or the Fund. Fund/Plan shall not have any duty to gather or record
corporate action information not supplied by these sources.
Fund/Plan will not assume any liability for price changes caused by: the
investment adviser(s), custodian, suppliers of security prices, corporate action
and dividend information, or any party other than Fund/Plan itself.
In the event an error is made by Fund/Plan which creates a price change,
consideration must be given to the effect of the price change and Fund/Plan
shall accept liability as provided below:
Notwithstanding the provisions of Section 11, the following provisions
govern Fund/Plan's liability for errors in calculating the net asset value
("NAV") of the Fund:
If the NAV should have been higher for a date or dates in the
past, the error would have the effect of having given more shares to
subscribers and less money to redeemers to which they were entitled.
Conversely, if the NAV should have been lower, the error would have the
effect of having given less shares to subscribers and overpaying
redeemers.
If the error affects the prior business day's NAV only, and the prior
day's work can be rerun before shareholder statements and checks are
mailed, the Fund hereby accepts this manner of correcting the error.
If the error spans five (5) business days or less, Fund/Plan
shall reprocess shareholder purchases and redemptions where redeeming
shareholders have been underpaid. Fund/Plan shall assume liability to
the Fund for overpayments to shareholders who have redeemed.
If the error spans more than five (5) business days, Fund/Plan
would bear the liability to the Fund for, 1) buying in for excess shares
given to shareholders if the NAV should have been higher, or, 2) funding
overpayments to shareholders who have redeemed if the NAV should have
been lower. The cost of any reprocessing required for shareholders who
have been credited with fewer shares than
3
4
appropriate, or for redeeming shareholders who are due additional
amounts of money will also be borne by Fund/Plan.
Section 4. For all purposes under this Agreement, Fund/Plan is
authorized to act upon receipt of the first of any Written or Oral Instruction
it receives from the Fund or its agents on behalf of the Fund. In cases where
the first instruction is an Oral Instruction that is not in the form of a
document or written record, a confirmatory Written Instruction or Oral
Instruction in the form of a document or written record shall be delivered, and
in cases where Fund/Plan receives an Instruction, whether Written or Oral, to
enter a portfolio transaction on the records, the Fund shall cause the
broker/dealer to send a written confirmation to Fund/Plan. Fund/Plan shall be
entitled to rely on the first Instruction received, and for any act or omission
undertaken in compliance therewith shall be free of liability and fully
indemnified and held harmless by the Fund, provided however, that in the event a
Written or Oral Instruction received by Fund/Plan is countermanded by a timely
later Written or Oral Instruction received by Fund/Plan prior to acting upon
such countermanded Instruction, Fund/Plan shall act upon such later Written or
Oral Instruction. Fund/Plan shall only be liable for losses which occur due to
Fund/Plan's negligence. The sole obligation of Fund/Plan with respect to any
follow-up or confirmatory Written Instruction, Oral Instruction in documentary
or written form, or broker/dealer written confirmation shall be to make
reasonable efforts to detect any such discrepancy between the original
Instruction and such confirmation and to report such discrepancy to the Fund.
The Fund shall be responsible, at the Fund's expense, for taking any action,
including any reprocessing, necessary to correct any discrepancy or error, and
to the extent such action requires Fund/Plan to act, the Fund shall give
Fund/Plan specific Written Instruction as to the action required.
Section 5. The Fund shall cause its Custodian (the "Custodian") to
forward to Fund/Plan a daily statement of cash and portfolio transactions and,
at the end of each month, the Fund shall cause the Custodian to forward to
Fund/Plan a monthly statement of portfolio transactions, which Fund/Plan will
reconcile with its Accounts and Records maintained on behalf of the Fund.
Fund/Plan will report any discrepancies to the Custodian, and report any
unreconciled items to the Fund.
Section 6. Fund/Plan shall promptly supply daily and periodic reports to
the Fund as requested by the Fund and agreed upon by Fund/Plan.
4
5
Section 7. The Fund shall provide and shall require each of its agents
(including the Custodian) to provide Fund/Plan as of the close of each business
day, or on such other schedule as the Fund determines is necessary, with Written
or Oral Instructions (to be delivered to Fund/Plan by 11:00 a.m., Eastern time,
the next following business day) containing all data and information necessary
for Fund/Plan to maintain the Fund's Accounts and Records and Fund/Plan may
conclusively assume that the information it receives by Written or Oral
Instructions is complete and accurate. Fund/Plan, as Transfer Agent, accepts
responsibility for providing reports of share purchases, redemptions, and total
shares outstanding, on the next business day after each net asset valuation.
Section 8. The Accounts and Records, in the agreed-upon format,
maintained by Fund/Plan shall be the property of the Fund and shall be made
available to the Fund promptly upon request and shall be maintained for the
periods prescribed in Rules 3la-1 and 3la-2 under the Investment Company Act of
1940, as amended. Fund/Plan shall assist the Fund's independent auditors, or
upon approval of the Fund, or upon demand, any regulatory body, in any requested
review of the Fund's Accounts and Records but shall be reimbursed for all
expenses and employee time invested in any such review outside of routine and
normal periodic review and audits. Upon receipt from the Fund of the necessary
information, Fund/Plan shall supply the necessary data for the Fund or an
independent auditor's completion of any necessary tax returns, questionnaires,
periodic reports to Shareholders and such other reports and information requests
as the Fund and Fund/Plan shall agree upon from time to time.
Section 9. In case of any request or demand for the inspection of the
Share records of the Fund, Fund/Plan, as Accounting Services Agent, shall
endeavor to notify the Fund and to secure instructions as to permitting or
refusing such inspection. Fund/Plan may however, exhibit such records to any
person in any case where it is advised by its counsel that it may be held liable
for failure to do so after notice to the Fund.
Section 10. Fund/Plan and the Fund may from time to time adopt such
procedures as agreed upon in writing, and Fund/Plan may conclusively assume that
any procedure approved by the Fund or directed by the Fund, does not conflict
with or violate any requirements of the Fund's registration statement, articles
of incorporation, by-laws, or any rule or regulation of any regulatory body or
governmental agency. The Fund shall be responsible for notifying Fund/Plan of
any changes in regulations or rules which might
5
6
necessitate changes in Fund/Plan's procedures, and for working out with
Fund/Plan such changes.
Section 11.
(a) Fund/Plan, its directors, officers, employees, shareholders, and
agents shall only be liable for an error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the performance of this
Agreement that result from willful misfeasance, bad faith, negligence or
reckless disregard on the part of Fund/Plan in the performance of its
obligations and duties under this Agreement.
(b) Notwithstanding any other provision of this Agreement, the Fund
shall indemnify and hold harmless Fund/Plan, its directors, officers, employees,
shareholders and agents from and against any and all claims, demands, expenses
and liabilities (whether with or without basis in fact or law) of any and every
nature which Fund/Plan may sustain or incur or which may be asserted against
Fund/Plan by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by Fund/Plan except
matters resulting from willful misfeasance, bad faith, negligence or reckless
disregard on the part of Fund/Plan in the performance of its obligations and
duties under this Agreement; or
(ii) in reliance upon any certificate, instrument, order or
stock certificate or other document reasonably believed by it to be genuine and
to be signed, countersigned or executed by any duly authorized person, upon the
Oral Instructions or Written Instructions of an authorized person of the Fund or
upon the written opinion of legal counsel for the Fund or Fund/Plan; or
(iii) any action taken or omitted to be taken in good faith by
Fund/Plan in connection with its appointment, in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended, or repealed. Indemnification under this
subparagraph shall not apply, however, to actions or omissions of Fund/Plan or
its directors, officers, employees, shareholders, or agents in cases of its or
their own negligence, misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
(c) Likewise, as it pertains to this agreement, Fund/Plan shall
indemnify and hold harmless the Fund, its directors, officers, employees,
shareholders and agents from and against any and all claims, demands, expenses
and liabilities (whether with or without basis in fact or law) of any and every
nature which the Fund may sustain or incur or which may
6
7
be asserted against the Fund by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by the Fund except
matters resulting from willful misfeasance, bad faith, negligence or reckless
disregard on the part of the Fund in the performance of its obligations and
duties under this Agreement.
(d) Fund/Plan shall give written notice to the Fund within ten (10)
business days of receipt by Fund/Plan of a written assertion or claim of any
threatened or pending legal proceeding which may be subject to this
indemnification. The failure to so notify the Fund of such written assertion or
claim shall not, however, operate in any manner whatsoever to relieve the Fund
of any liability arising from this Section or otherwise, except to the extent
failure to give notice prejudices the Fund.
(e) For any legal proceeding giving rise to this indemnification, the
Fund shall be entitled to defend or prosecute any claim in the name of Fund/Plan
at its own expense and through counsel of its own, choosing if it gives written
notice to Fund/Plan within ten (10) business days of receiving notice of such
claim. Notwithstanding the foregoing, Fund/Plan may participate in the
litigation at its own expense through counsel of its own choosing. If the Fund
chooses to defend or prosecute such claim, then the Parties shall cooperate in
the defense or prosecution thereof and shall furnish such records and other
information as are reasonably necessary.
Section 12. All financial data provided to, processed by, and reported
by Fund/Plan under this Agreement shall be stated in United States dollars.
Fund/Plan shall have no obligation to convert to, equate, or deal in foreign
currencies or values, and expressly assumes no liability for any currency
conversion or non-U.S. dollar denominated computations relating to the affairs
of the Fund.
Section 13. The Fund agrees to pay Fund/Plan compensation for its
services, and to reimburse it for expenses, at the rates and amounts as set
forth in Schedule "B" attached hereto, and as shall be set forth in any
amendments to such Schedule "B" agreed upon in writing by the Fund and
Fund/Plan. The Fund agrees and understands that Fund/Plan's compensation be
comprised of two components and payable on a monthly basis as follows:
(i) A fixed fee for each Fund, together with a combined asset
based fee which the Fund hereby authorizes Fund/Plan to collect by debiting the
Fund's custody account for invoices which are rendered for the services
performed for the applicable function. The invoices for the services performed
will be sent to the Fund after such debiting with the
7
8
indication that payment has been made; and
(ii) reimbursement of any out-of-pocket expenses paid by
Fund/Plan on behalf of the Fund, which out-of-pocket expenses will be billed to
the Fund within the first ten calendar days of the month following the month in
which such out-of-pocket expenses were incurred. The Fund agrees to reimburse
Fund/Plan for such expenses within ten calendar days of receipt of such xxxx.
For the purpose of determining fees payable to Fund/Plan, the value of
the Fund's net assets shall be computed at the times and in the manner specified
in the Fund's then current Prospectuses and Statement of Additional Information.
During the term of this Agreement, should the Fund seek services or
functions in addition to those outlined above or in Schedule "A" attached, a
written amendment to this Agreement specifying the additional services and
corresponding compensation shall be executed by both Fund/Plan and the Fund.
Section 14. Nothing contained in this Agreement is intended to or shall
require Fund/Plan, in any capacity hereunder, to perform any functions or duties
on any holiday, day of special observance or any other day on which the New York
Stock Exchange is closed. Functions or duties normally scheduled to be performed
on such days shall be performed on, and as of, the next succeeding business day
on which the New York Stock Exchange is open. Notwithstanding the foregoing,
Fund/Plan shall compute the net asset value of the Fund on each day required
pursuant to (i) Rule 22c-I promulgated under the Investment Company Act of 1940,
as amended, and (ii) the Fund's then current Prospectus and Statement of
Additional Information.
Section 15.
(a) The term of this Agreement shall be for a period of two (2) years,
commencing on the execution date ("effective date") of this Agreement.
(b) The fee schedule set forth in Schedule "B" attached shall be fixed
for two (2) years after the effective date of this Agreement.
(c) After the initial two year term of this Agreement, the Fund or
Fund/Plan may give written notice to the other of the termination of this
Agreement, such termination to take effect at the time specified in the notice,
which date shall not be less than one hundred twenty (120) days after the date
of giving notice. Upon the effective termination date, the Fund shall pay to
Fund/Plan such compensation as may be due as of the date of
8
9
termination and shall likewise reimburse Fund/Plan for any out-of-pocket
expenses and disbursements reasonably incurred by Fund/Plan to such date.
(d) If a successor to any of Fund/Plan's duties or responsibilities
under this Agreement is designated by the Fund by written notice to Fund/Plan in
connection with the termination of this Agreement, Fund/Plan shall promptly upon
such termination and at the expense of the Fund, transfer all Required Records
and shall cooperate in the transfer of such duties and responsibilities.
Section 16. Except as otherwise provided in this Agreement, any notice
or other communication required by or permitted to be given in connection with
this Agreement shall be in writing, and shall be delivered in person or sent by
first class mail, postage prepaid to the respective parties as follows:
If to the Fund: If to Fund/Plan:
Meridian Value Fund, a separate series
shares of Meridian Fund, Inc. Fund/Plan Services, Inc.
Xxxx Xxxxxx, Xxxxx 000 0 Xxxx Xxx Xxxxxx
00 Xxxx Xxx Xxxxxxx Xxxxx Xxxx. Xxxxxxxxxxxx, XX 00000
Xxxxxxxx, XX 00000 Attention: Xxxxxxx X. Xxxxx,
Attention: Xxxxxxx X. Xxxxx, Xx., President
Chairman & President
Section 17. This Agreement may be amended from time to time by
supplemental agreement executed by the Fund and Fund/Plan and the compensation
stated in Schedule "B" attached hereto may be adjusted accordingly as mutually
agreed upon.
Section 18. The Fund represents and warrants to Fund/Plan that the
execution and delivery of this Agreement by the undersigned officers of the Fund
has been duly and validly authorized by resolution of the Board of Directors of
the Fund.
Section 19. 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.
Section 20. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of Fund/Plan or by Fund/Plan without the written consent of the Fund,
authorized or approved by a resolution of its respective Boards of Directors.
9
10
Section 21. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania and the venue of any action arising under this
Agreement shall be Xxxxxxxxxx County, Commonwealth of Pennsylvania.
Section 22. No provision of this Agreement may be amended or modified,
in any manner except by a written agreement properly authorized and executed by
Fund/Plan and the Fund.
Section 23. If any part, term or provision of this Agreement is held by
any court to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or provision held to
be illegal or invalid provided that the basic Agreement is not thereby
substantially impaired.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
consisting of ten type written pages, together with Schedules "A" and "B," to be
signed by their duly authorized officers as of the day and year first above
written.
Meridian Fund, Inc. Fund/Plan Services, Inc.
By: Xxxxxxx X. Xxxxx, Xx. By: Xxxxxxx X. Xxxxx
Chairman and President President
10
11
Schedule "A"
Daily Accounting Services
1) Calculate Net Asset Value Per Share:
- Update the daily market value of securities held by the Fund using
Fund/Plan Services' standard agents for pricing domestic equity, bond
and foreign securities. The standard domestic equity pricing service is
Quotron Systems, Inc., Interactive Data and Xxxxxx Data Corporation/
Extel Financial are used for bond and foreign prices/exchange rates.
- If necessary, enter manual prices supplied by Meridian and/or broker.
- Prepare NAV proof sheet. Review components of change in NAV for
reasonableness.
- Review variance reporting on-line and in hard copy for price changes
in individual securities using variance levels established by client.
Verify US dollar security prices exceeding variance levels by notifying
client and pricing sources of noted variances.
- Complete daily variance analysis on foreign exchange rates and local
foreign prices. Notify Meridian of changes exceeding established levels
for the Meridian's verification. (Meridian should establish tolerance
levels for each country/currency so that local price changes and foreign
exchange rate changes exceeding this tolerance are identified and NAV
problems minimized.)
- Review for ex-dividend items indicated by pricing sources; trace to
general ledger for agreement.
- Communicate required pricing information (NAV) to Meridian, Transfer
Agent and, electronically, to NASDAQ.
2) Determine and Report Cash Availability to Fund by 10:00 AM Eastern Time:
- Receive daily cash and transaction statements from the Custodian by
8:30 AM Eastern time.
- Receive daily shareholder activity reports from the Fund's Transfer
Agent by 8:30 AM Eastern time.
- Fax hard copy Cash Availability calculations with all details to
Meridian.
- Supply client with 5-day cash projection report.
- Prepare and complete daily bank cash reconciliations including
documentation of any reconciling items and notify the custodian/
Meridian.
- The Fund's Transfer Agent will also support Meridian in receipt of
timely cash information.
3) Reconcile and Record All Daily Expense Accruals:
- Accrue expenses based on Meridian supplied budget either as
percentage of Fund's net assets or specific dollar amounts.
- If applicable, monitor expense limitations established by Meridian.
- If applicable, accrue daily amortization of Organizational Expense.
- If applicable, complete daily accrual of 12b-I expenses.
12
4) Verify and Record All Daily Income Accruals for Debt Issues:
- Review and verify all system generated Interest and Amortization
reports.
- Establish unique security codes for bond issues to permit segregated
Trial Balance income reporting.
5) Monitor Domestic Securities Held for Cash Dividends, corporate actions
and capital changes such as splits, mergers, spinoffs, etc. and process
appropriately.
- Monitor electronically received information from Xxxxxx Data
Corporation for all domestic securities.
- Review current daily security trades for dividend activity.
- Interface with custodian to monitor timely collection and postings of
corporate actions, dividends and interest.
- Process international dividend and capital change information received
from the Custodian and Advisor. If selected by Meridian, back-up
information on foreign dividends and corporate actions may also be
obtained from Xxxxxx Data Corporation or Interactive Data Corporation
(as pricing vendor for the Fund).
- Provide xxxx-to-market analysis for currency exchange rate
fluctuations on unsettled dividends and interest.
6) Enter All Security Trades on Investment Accounting System (IAS) based on
written instructions from Meridian.
- Review system verification of trade and interest calculations.
- Verify settlement through the Custodian statements.
- Maintain security ledger transaction reporting.
- Maintain tax lot holdings.
- Determine realized gains or losses on security trades.
- Provide complete broker commission reporting.
- Provide foreign currency exchange rate realized and unrealized
gains/losses detail.
7) Enter All Fund Share Transactions on IAS:
- Process activity identified on the Transfer Agent reports.
- Verify settlement through the Custodian statements.
- Reconcile to the Fund/Plan Services' Transfer Agent report
balances.
8) Prepare and Reconcile/Prove Accuracy of the Daily Trial Balance (listing
all asset, liability, equity, income and expense accounts)
- Post manual entries to the general ledger.
- Post custodian bank activity.
- Post shareholder and security transactions.
- Post and verify system generated activity, i.e., income and expense
accruals.
- Segregate foreign tax expense.
- Prepare general ledger net cash proof used in NAV calculation.
- Prepare daily xxxx-to-market analysis for all unrealized foreign
currency exchange rate gains/losses by asset/liability category.
13
9) Review and Reconcile With Custodian Statements:
- Verify all posted interest, dividends, expenses, and shareholder and
security payments/receipts, etc. (Discrepancies will be reported to
and resolved by the Custodian.)
- Post all cash settlement activity to the Trial Balance.
- Reconcile to ending cash balance accounts.
- Clear IAS subsidiary reports with settled amounts.
- Track status of past due items and failed trades handled by the
Custodian.
10) Submission of Daily Accounting Reports to Meridian: (Additional reports
readily available.)
- Trial Balance
- Portfolio Valuation (listing inclusive of holdings, costs, market
values, unrealized appreciation/depreciation and percentage of
portfolio comprised of each security).
- NAV Calculation Report
- Cash Availability and 5-day Cash Projection Reports
Monthly Accounting Services
1) Full Financial Statement Preparation (automated Statements of Assets
and Liabilities, of Operations and of Changes in Net Assets) and
submission to client by 10th business day.
2) Submission of Monthly Automated IAS Reports to Fund/Meridian:
- Security Purchase/Sales Journal
- Interest and Maturity Report
- Brokers Ledger (Commission Report)
- Security Ledger Transaction Report with Realized Gains/Losses
- Security Ledger Tax Lot Holdings Report
- Additional reports available upon request
3) Reconcile Accounting Asset Listing to Custodian Asset Listing:
- Report any security balance discrepancies to the custodian/Meridian.
4) Provide Monthly Analysis and Reconciliation of Additional Trial Balance
Accounts, such as:
- Security cost and realized gains/losses
- Interest/dividend receivable and income
- Payable/receivable for securities purchased and sold
- Payable/receivable for fund shares; issued and redeemed
- Expense payments and accruals analysis
- Unrealized and realized currency gains/losses.
14
5) If Appropriate, Prepare and Submit to Meridian:
- Income by state reporting
- Standard Industry Code Valuation Report
- Alternative Minimum Tax Income segregation schedule
Annual (and Semi-Annual) Accounting Services
1) Assist and supply auditors with schedules supporting securities and
shareholder transactions, income and expense accruals, etc. during the
year in accordance with standard audit assistance requirements.
2) Provide NSAR Reporting (Accounting Questions):
If applicable, answer the following items:
2, 12B, 20, 21, 22, 23, 28, 30A, 31, 32, 35, 36, 37, 43, 53, 55, 62, 63,
00X, 00, 00, 00, 00, 00, 00
00
ACCOUNTING SERVICES UNIT BASIC ASSUMPTIONS FOR MERIDIAN VALUE FUND,
A SEPARATE SERIES OF SHARES OF MERIDIAN FUND, INC.
Basic Assumptions:
1) The Fund's Administrator will complete all necessary compliance
reports (Sub-Chapter "M"), as well as monitoring of the various prospectus
limitations and restrictions.
2) It is assumed that the portfolio asset composition will be primarily
common stocks, corporate/government bonds and "junk bonds". While the Fund may
choose to invest in foreign securities, we understand that initial international
investments would be in the form of US dollar denominated ADR's. Should this
change the foreign investment fee schedule described in Section 2 will apply.
Should you desire to invest in foreign securities, the following
assumptions will reference services to be used and steps to be taken.
3) Trading activity is expected to be comparable to the Meridian Fund
which averages 77 trades per month on 48 securities.
4) The Fund has a tax year-end which coincides with its fiscal year-end.
No additional accounting requirements are necessary to identify or maintain
book-tax differences.
To the extent tax accounting for certain securities differs from the
book accounting, it will be done by the Fund's Administrator or the Fund's
Independent Accountant. We would recommend book/tax differences be minimized.
The Accounting Services Unit will supply segregated Trial Balance
account details to assist the administrator in proper identification by category
of all appropriate realized gains/losses.
5) The Fund would foresee no difficulty in using Fund/Plan's standard
current pricing agents for domestic equity, bond, ADR and foreign securities. We
currently use Quotron Systems, Inc. for domestic equities and listed ADR's, and
Xxxxxx Data Corporation/Extel Financial for bonds and foreign issues.
It is expected that Xxxxxx Data Corporation would be the Fund's primary
foreign security pricing vendor and supply ASU with daily (spot) foreign
exchange rates to be used in market value calculations of non-US dollar
denominated securities and currency xxxx-to-market requirements. To the extent
Xxxxxx Data is unable to supply certain foreign security prices, they will be
provided by the Fund's investment advisor or a Meridian recommended pricing
source. (The Accounting Unit will be able to supply Meridian with information on
Xxxxxx'x sources of exchange rates and ADR/foreign security prices.)
If appropriate, Telerate Systems, Inc. is available for daily
forward currency contract prices.
16
It is assumed that the Accounting Unit will work closely with Meridian
to ensure the accuracy of the Fund's NAV and to obtain the most satisfactory
pricing sources and specific methodologies prior to the actual start-up date. We
would propose the Fund establish clear cut security variance procedures by
country/currency to minimize NAV miscalculations.
6) To the extent the Fund requires daily security prices (limited in
number) from specific brokers for domestic or foreign securities, these manual
prices will be obtained by the Fund's Investment Advisors (or brokers) and faxed
to ASU by approximately 4:00 PM Eastern time for inclusion in the NAV
calculations. Meridian will supply ASU with the appropriate pricing contacts for
these manual quotes.
Based on our current clients' experience, we believe the Fund's
Investment Advisor will have better success in obtaining accurate and timely
broker quotes on a more consistent basis than Fund/Plan Services.
7) To the extent the Fund should ever purchase/hold open-end registered
investment companies (RIC's), procedural discussions should take place between
ASU and Fund management clarifying the appropriate pricing and dividend rate
sources. Depending on the methodologies selected by the Fund, additional fees
may apply.
8) ASU will supply daily Portfolio Valuation Reports (via fax) to the
Fund's Investment Advisor or manager identifying current security positions,
original/amortized cost, security market values and changes in unrealized
appreciation/depreciation.
It will be the responsibility of the Fund's Investment Advisor to review
these reports and to promptly notify ASU of any possible problems, trade
discrepancies, incorrect security prices, corporate action/capital change
information or exchange rate discrepancies that could result in a misstated Fund
NAV.
9) The Fund does not currently expect to invest in Futures, Swaps,
Foreign Currency Options and Futures, Interest Rate Futures, Xxxxxx, Forward
Currency Contracts, Security Lending, Leveraging, Short Sales, Foreign Trading,
or precious metals. To the extent these investment strategies should change,
additional fees, as noted above, will apply after the appropriate procedural
discussions have taken place between ASU and Fund management. (Advance notice is
requested should the Fund commence trading in the above investments.)
10) To the extent applicable, all foreign currency will be held within
the custodian and sub-custodian network. Time deposits and interest bearing
currency accounts will all be reflected on the Fund's custodian asset listings.
The Fund or custodian will supply ASU with appropriate (timely) information for
any trades/changes in the currency accounts, as well as interest rates to ensure
income accrual accuracy for the debt issues, time deposits, and currency
accounts. Income accrual adjustments (expected to be immaterial) will be
completed when the interest is actually collected and posted on the custodian's
statements.
11) It is assumed for all debt issues that the Advisor will supply the
Accounting Unit with critical income information such as accrual
17
methods, interest payment frequency details, coupon payment dates, floating rate
reset dates, and complete security descriptions with issue types and sedol/cusip
numbers. If applicable, for proper income accrual accounting, ASU will look to
the Fund's Advisor to supply PSA and related cash flow models for the
mortgage/asset-backed securities or IO/PO positions held in the Fund.
12) The custodian will provide the Accounting Unit with daily custodian
statements (or on-line access to the custody system) reflecting all prior day
cash activity on behalf of each portfolio by 8:30 AM Eastern time. Complete and
clear descriptions of any postings, inclusive of Sedol/cusip numbers,
interest/dividend payment dates, capital stock details, expense authorizations,
beginning/ending balances, etc. will be provided by the custodian's reports or
system.
13) It will be the responsibility of the Fund's custodian to supply the
foreign dividend, capital change information, and interest rate changes to
Accounting in a timely manner. The advisor will supplement and support as
appropriate. If selected by Meridian and appropriate, ASU can receive
supplemental capital change and dividend information on foreign positions from
Xxxxxx Data Corporation as the pricing vendor for the Fund's foreign securities.
14) It is assumed that the custodian will handle and report on all
settlement problems, failed trades and resolve unsettled
dividends/interest/paydowns and capital changes. Additionally, the custodian
will process all applicable capital change and foreign reclaim paperwork based
upon advice from Meridian. ASU will supply segregated Trial Balance reporting
and supplemental reports to assist in this process.
15) With respect to Mortgage/Asset-Backed securities such as GNMA's,
FHLMC's, FNMA's, CMO's, ARM's, etc., the Custodian (or a Meridian supplied
source) will provide ASU with current principal repayment factors on a timely
basis in accordance with the appropriate securities' schedule. Income accrual
adjustments (to the extent necessary) based upon initial estimates will be
completed by ASU when actual principal/income payments are collected by the
Custodian.
16) To the extent applicable, Accounting will maintain US dollar
denominated qualified covered call options and index options reporting on the
daily Trial Balance and value the respective options and underlying positions
daily. To the extent tax classifications are required, they will be done by the
Fund's Administrator or Independent Accountant.
The Fund does not currently expect to invest in domestic options or
designated xxxxxx. (Advance notice is requested should the Fund commence trading
in the above investments to clarify operational procedures between ASU and the
advisor.)
17) To the extent the Fund should establish a Line of Credit in
segregated accounts with the custodian for temporary administrative purposes,
and/or leveraging/hedging the portfolio, the investment advisor will complete
the appropriate paperwork/monitoring for segregation of assets and adequacy of
collateral. Accounting will reflect appropriate Trial Balance account entries
18
and interest expense accrual charges on the daily Trial Balance adjusting as
necessary at month-end.
18) Fund management or the Administrator will supply ASU with portfolio
specific expense accrual procedures and monitor the expense accrual balances for
adequacy based on outstanding liabilities monthly. The Fund's Administrator will
promptly communicate to the Accounting Unit any adjustments needed.
19) Specific deadlines and complete Fund supplied information will be
identified for all security trades in order to minimize any settlement problems,
NAV miscalculations or income accrual/distribution rate adjustments.
Trade Authorization Forms, with the appropriate officer's signature,
should be faxed on all security trades placed by the Fund no later than
settlement/value date by 11:30 AM Eastern time for money market and currency
issues (It is assumed trade date equals settlement date for money market/
currency issues.), and by 11:30 AM Eastern time on trade date plus one for
non-money market securities. Receipt of trade information within these
identified deadlines may be via telex, fax, or on-line system access. Should the
investment advisor communicate trade information directly to the Fund's Custody
Administrator, F/PS Custody will forward copies to ASU in accordance with the
above time frames.
Foreign exchange contracts will be completed by the Fund's custodian or
advisor and communicated to the Accounting Unit in a timely manner, i.e., the
earlier of trade date plus one or value date. For security trade information
called in after the above stated deadlines, there is no assurance it can be
included in that day's work.
CUSIP numbers and/or ticker symbols for all US dollar denominated trades
and Sedol numbers for all foreign trades will be supplied by the Investment
Advisor via the Trade Authorization, telex or on-line support. We would find it
difficult to be responsible for NAV changes that resulted from incomplete
information about a trade.
20) To the extent that Meridian utilizes Purchases In-Kind as a method
for shareholder subscriptions, ASU will provide Meridian with recommended
procedures to properly handle and process security in-kinds. Should Meridian
prefer procedures other than those provided by Fund/Plan Services, additional
fees may apply. (Discussions must take place in advance between Fund/Plan
Services and Meridian to clarify the appropriate In-Kind operational procedures
to be followed.)
21) It is assumed that the Fund's Investment Advisor or Administrator
will complete the applicable performance and rate of return calculations as
required by the SEC for the Fund.
22) With respect to amortization and accretion requirements for the debt
issues in the Fund, the ASU Investment Accounting System (IAS) offers a very
comprehensive and fully automated level of support. We are capable of reflecting
market discounts and acquisition premiums either utilizing the straight-line or
yield-to-maturity (scientific) method. It is extremely important that the Fund's
requirements and proper amortization procedures
19
be clarified prior to start-up.
It is assumed that the Fund will not hold any issues with Original Issue
Discounts (OID). It is our position that OID is a tax requirement and, as such,
not necessarily reflected on the books of the Fund. ASU's current clients have
not required any OID support. To the extent the Fund should, in the future, own
securities with OID, it is expected that the Fund's auditors will complete the
necessary OID adjustments for financial statements and/or tax reporting.
23) The Fund is not currently expected to issue separate classes of
shares. To the extent they do so, additional fees will be negotiated.
20
SCHEDULE "B"
FEE SCHEDULE FOR
MERIDIAN VALUE FUND
a separate series of shares of Meridian Fund, Inc.
--------------------------------------------------
(All fees are quoted for a term of one (1) year from effective date.)
FUND ACCOUNTING AND PORTFOLIO VALUATION FEES
NOTE: THE FUND WILL INITIALLY INVEST IN DOMESTIC OR ADR SECURITIES FOR
WHICH THE DOMESTIC SCHEDULE WILL APPLY. SHOULD THE FUND INVEST IN FOREIGN
(NON-US DOLLAR DENOMINATED) SECURITIES, THE FOREIGN SCHEDULE WOULD BECOME
EFFECTIVE. FOREIGN CUSTODY SCHEDULE IS BASED UPON CHASE MANHATTAN'S CURRENT
SCHEDULE TO FUND/PLAN SERVICES, AND IS SUBJECT TO CHANGE.
I. Domestic and ADR Securities Annual Fee Schedule for Portfolio
(1/12th payable monthly)
$24,000 Minimum to $ 10 Million of Average Net Assets
.0004 On Next $ 40 Million of Average Net Assets
.0003 On Next $ 50 Million of Average Net Assets
.0001 Over $100 Million of Average Net Assets
II. Annual Fees for Funds with Foreign Securities (1/12th payable monthly)
$40,000 Minimum to $ 10 Million of Average Net Assets
.0004 On Next $ 40 Million of Average Net Assets
.0003 On Next $ 50 Million of Average Net Assets
.0001 Over $100 Million of Average Net Assets
III. Pricing Service Quotation Fee: (Based upon individual cusip or security
identification numbers.)
Specific costs will be identified based upon options selected by the
client and will be billed monthly.
A) Xxxxxx Data Corporation * (if applicable)
* Based on current vendor costs, subject to change.
GNMA Quotes $.25 per Quote per Bond
Government/Corporate Short &
Long Term Quotes $.50 per Quote per Bond
Tax-Exempt Short & Long Term Quotes $.55 per Quote per Bond
Tax-Exempt Variable Rate Change
Information $.55 per Rate Change per Issue
21
Foreign Security Quotes $ .50 per Quote per Security
Foreign Security Supplemental Corporate
Actions, Dividends & Capital Changes $1.00 per Issue per Month
Minimum Weekly File Transmission is Assumed
There are currently no charges for the domestic dividend and capital
change information transmitted daily to Fund/Plan Services from Xxxxxx
Data Corporation.
B) Telerate Systems, Inc. * (if applicable)
* Based on current vendor costs, subject to change.
C) Quotron Systems, Inc.
There is currently no charge for the domestic security prices supplied
by Quotron Systems, Inc.
D) Interactive Data Corp. * (if applicable)
* Based on current vendor costs, subject to change.
Domestic Equities and Options $.15 per Quote per Issue
Corporate/Government/Agency Bonds
including Mortgage-Backed Securities
(evaluated, seasoned, and/or closing) $.50 per Quote per Issue
US Municipal Bonds and Collateralized
Mortgage Obligations $.80 per Quote per Issue
International Equities and Bonds $.50 per Quote per Issue
Domestic Dividends and
Capitalization Changes $3.50 per Month per Holding
International Dividends and
Capitalization Changes $4.00 per Month per Holding
Interactive Data also charges monthly transmission costs and disk
storage charges.
OUT-OF-POCKET-EXPENSES
The Fund will reimburse Fund/Plan Services monthly for all out-of-pocket
expenses, including telephone, postage, telecommunications, special reports,
record retention, special transportation costs as incurred. The cost of copying
and sending materials to auditors for off-site audits will be an additional
expense.
ADDITIONAL SERVICES
To the extent the Funds commence using investment techniques such as Security
Lending, Short Sales, Futures, Leveraging, Precious Metals and/or foreign
trading, additional fees will apply.
22
Activities of a non-recurring nature such as fund consolidations, mergers, or
reorganizations will be subject to negotiation. To the extent the Funds should
decide to issue multiple/separate classes of shares, additional fees will apply.
Any enhanced services or reports will be quoted upon request.
23
AMENDMENT TO
ACCOUNTING SERVICES AGREEMENT
This Amendment dated as of February 28, 1999, is entered into by
MERIDIAN FUND, INC. (the "Company") and FIRST DATA INVESTOR SERVICES GROUP,
INC. ("Investor Services Group"), the successor in interest to FPS SERVICES,
INC. ("FPS").
WHEREAS, the Company and FPS entered into an Accounting Services
Agreement dated as of February 5, 1994, which agreement was assigned to Investor
Services Group effective February 23, 1998 (as amended and supplemented, the
"Agreement");
WHEREAS, the Company and Investor Services Group wish to amend the
Agreement to extend the term of the Agreement and revise certain schedules to
the Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, hereby agree as follows:
I. The Agreement shall continue in effect for an initial period ending
February 28, 2000 (the "Initial Term"). Upon the expiration of the Initial Term,
the Agreement shall automatically renew for successive terms of one year
("Renewal Terms") each, unless the Company or Investor Services Group provides
written notice to the other of its intent not to renew. Such notice must be
received not less than ninety (90) days nor more than one-hundred eighty (180)
days prior to the expiration of the Initial Term or the then-current Renewal
Term.
II. Any references to out-of-pocket expenses in Schedule "B" to the
Agreement shall be deleted and replaced with the attached Supplement to Schedule
"B".
III. Except to the extent amended hereby, the Agreement shall remain
unchanged and in full force and effect and is hereby ratified and confirmed in
all respects as amended hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
and year first written above.
MERIDIAN FUND, INC.
By:
Xxxx X. Xxxxxxxx
Treasurer
FIRST DATA INVESTOR SERVICES
GROUP, INC.
By:
Xxxxxxx X. Xxxxx
Senior Vice President
24
Supplement to
Schedule "B"
Out-of-Pocket Expenses
The Company shall reimburse Investor Services Group monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Postage - direct pass through to the Fund
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Shipping, Certified and Overnight mail and insurance
- Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Overtime, as approved by the Company
- Temporary staff, as approved by the Company
- Travel and entertainment, as approved by the Company
- Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
- Third party audit reviews
- Insurance
- Pricing services (or other services used to determine Fund NAV)
- Vendor pricing comparison
- XXXXX filing fees
- Such other expenses as are agreed to by Investor Services Group and
the Company
The Company agrees that postage and mailing expenses will be paid on the day of
or prior to mailing as agreed with Investor Services Group. In addition, the
Company will promptly reimburse Investor Services Group for any other
unscheduled expenses incurred by Investor Services Group whenever the Company
and Investor Services Group mutually agree that such expenses are not otherwise
properly borne by Investor Services Group as part of its duties and obligations
under the Agreement.
Miscellaneous Charges
The Company shall be charged for the following products and services as
applicable:
- Ad hoc reports
- Ad hoc SQL time
- Manual Pricing
- Materials for Rule 15c-3 Presentations
- COLD Storage
- Digital Recording
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Pre-Printed Stock, including business forms, certificates, envelopes,
checks and stationary
Fee Adjustments
After the one year anniversary of the effective date of this Amendment, Investor
Services Group may adjust the fees described in the above sections once per
calendar year, upon thirty (30) days prior written notice in an amount not to
exceed the cumulative percentage increase in the Consumer Price Index for All
Urban Consumers (CPI-U) U.S. City Average, All items (unadjusted) -
(1982-84=100), published by the U.S. Department of Labor since the last such
adjustment in the Client's monthly fees (or the Effective Date of the Amendment
absent a prior such adjustment).
