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FUND ACCOUNTING AGREEMENT
AGREEMENT made this 28th day of April, 2000, between IMPERIAL SPECIAL
INVESTMENTS, INC. (the "Fund"), a California corporation having its principal
place of business at 0000 X. Xx Xxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx
00000, and IMPERIAL BANK ("Fund Accountant"), a California banking corporation
having its principal place of business at 0000 X. Xx Xxxxxxx Xxxx., Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxxx 00000.
WHEREAS, the Fund desires that Fund Accountant perform certain fund
accounting services for the Fund, all as now or hereafter may be established
from time to time; and
WHEREAS, Fund Accountant is willing to perform such services on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein set forth, the parties agree as follows:
1. Services as Fund Accountant.
(a) Maintenance of Books and Records. Fund Accountant will keep
and maintain the following books and records of the Fund
pursuant to Rule 31a-1 under the Investment Company Act of
1940 (the "Rule"):
(i) Journals containing an itemized daily record in detail
of all purchases and sales of securities, all receipts
and disbursements of cash and all other debits and
credits, as required by subsection (b)(1) of the Rule;
(ii) General and auxiliary ledgers reflecting all asset,
liability, reserve, capital, income and expense
accounts, including interest accrued and interest
received, as required by subsection (b)(2)(i) of the
Rule;
(iii) Separate ledger accounts required by subsection
(b)(2)(ii) and (iii) of the Rule; and
(iv) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8)
of the Rule.
(b) Performance of Accounting Services. In addition to the
maintenance of the books and records specified above, Fund
Accountant shall perform the following accounting services for
the Fund:
(i) Calculate the net asset value per share utilizing prices
obtained from the sources described in subsection
1(b)(ii) below;
(ii) Obtain security prices from independent pricing
services, or if such quotes are unavailable, then obtain
such prices from the Fund's
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investment adviser or its designee, as approved by the
Fund's Board of Directors;
(iii) Verify and reconcile with the Fund's custodian all daily
trade activity;
(iv) Compute, as appropriate, the Fund's net income and
capital gains, dividend payables, dividend factors,
7-day yields, 7-day effective yields, 30-day yields, and
weighted average portfolio maturity;
(v) Review the net asset value calculation and dividend
factor (if any) for the Fund prior to release to
shareholders, check and confirm the net asset values and
dividend factors for reasonableness and deviations;
(vi) Determine unrealized appreciation and depreciation on
securities held by the Fund;
(vii) Amortize premiums and accrete discounts on securities
purchased at a price other than face value, if requested
by the Fund;
(viii)Update fund accounting system to reflect rate changes,
as received from the Fund's investment adviser, on
variable interest rate instruments;
(ix) Post Fund transactions to appropriate categories;
(x) Accrue expenses of the Fund according to instructions
received from the Fund's Investment Adviser;
(xi) Determine the outstanding receivables and payables for
all (1) security trades, (2) Fund share transactions,
and (3) income and expense accounts;
(xii) Provide accounting reports in connection with the Fund's
regular annual audit and other audits and examinations
by regulatory agencies; and
(xiii)Provide such periodic reports as the parties shall
agree upon, as set forth in a separate schedule.
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(c) Special Reports and Services.
(i) Fund Accountant may provide additional special reports
upon the request of the Fund's Investment Adviser, which
may result in an additional charge, the amount of which
shall be agreed upon between the parties.
(ii) Fund Accountant may provide such other similar services
with respect to the Fund as may be reasonably requested
by the Fund, which may result in an additional charge,
the amount of which shall be agreed upon between the
parties.
(d) Additional Accounting Services. Fund Accountant shall also
perform the following additional accounting services for the
Fund:
(i) Provide monthly a download (and hard copy thereof) of
the financial statements described below, upon request
of the Fund. The download will include the following
items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
(ii) Provide accounting information for the following:
(A) federal and state income tax returns and federal
excise tax returns;
(B) the Fund's semi-annual reports with the Securities
and Exchange Commission ("SEC") on Form N-SAR;
(C) the Fund's annual, semi-annual and quarterly (if
any) shareholder reports;
(D) registration statements on Form N-2 and other
filings relating to the registration of shares;
(E) the Investment Adviser's monitoring of the Fund's
status as a regulated investment company under
Subchapter M of the Internal Revenue Code, as
amended;
(F) annual audit by the Fund's auditors; and
(G) examinations performed by the SEC.
2. Subcontracting.
Fund Accountant may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder; provided,
however, that Fund Accountant shall not be relieved of any of its obligations
under this Agreement by the appointment of such
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subcontractor and provided further, that Fund Accountant 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 Fund shall pay Fund Accountant for the services to be provided by Fund
Accountant under this Agreement in accordance with, and in the manner set forth
in, Schedule A hereto, as such Schedule may be amended from time to time.
4. Reimbursement of Expenses.
In addition to paying Fund Accountant the fees described in Section 3
hereof, the Fund agrees to reimburse Fund Accountant for its out-of-pocket
expenses in providing services hereunder, including without limitation the
following:
(a) All freight and other delivery and bonding charges incurred by Fund
Accountant in delivering materials to and from the Fund;
(b) All direct telephone, telephone transmission and telecopy or other
electronic transmission expenses incurred by Fund Accountant in
communication with the Fund, the Fund's Investment Adviser or
custodian, dealers or others as required for Fund Accountant to
perform the services to be provided hereunder;
(c) The cost of obtaining security market quotes pursuant to Section
l(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other materials;
and
(e) Any expenses Fund Accountant shall incur at the written direction of
an officer of the Fund thereunto duly authorized.
5. Effective Date.
This Agreement shall become effective with respect to the Fund as of the
date first written above (or, if the Fund is not in existence on that date, on
the date the Fund commences operation) (the "Effective Date").
6. Term.
This Agreement shall continue in effect with respect to the Fund, unless
earlier terminated by either party hereto as provided hereunder, until April 28,
2002 and thereafter shall be renewed automatically for successive two-year terms
unless written notice not to renew is given by the non-renewing party to the
other party at least 60 days prior to the expiration of the then-current term;
provided, however, that after such termination for so long as Fund Accountant,
with the written consent of the Fund, 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
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without limitation the provisions dealing with indemnification, shall continue
in full force and effect. Compensation due Fund Accountant and unpaid by the
Fund upon such termination shall be immediately due and payable upon and
notwithstanding such termination. Fund Accountant shall be entitled to collect
from the Fund, in addition to the compensation described under Section 3 hereof,
the amount of all of Fund Accountant's cash disbursements for services in
connection with Fund Accountant's activities in effecting such termination,
including without limitation, the delivery to the Fund and/or its designees of
the Fund's property, records, instruments and documents, or any copies thereof.
Subsequent to such termination, for a reasonable fee, Fund Accountant will
provide the Fund with reasonable access to any Fund documents or records
remaining in its possession.
7. Standard of Care; Reliance on Records and Instructions;
Indemnification.
Fund Accountant shall use its best efforts to insure the accuracy of all
services performed under this Agreement, but shall not be liable to the Fund for
any action taken or omitted by Fund Accountant in the absence of bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties. The Fund agrees to indemnify and hold harmless Fund
Accountant, its employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Fund Accountant's actions
taken or nonactions with respect to the performance of services under this
Agreement with respect to the Fund or based, if applicable, upon reasonable
reliance on information, records, instructions or requests with respect to the
Fund given or made to Fund Accountant by a duly authorized representative of the
Fund; provided that this indemnification shall not apply to actions or omissions
of Fund Accountant in cases of its own bad faith, willful misfeasance,
negligence or from reckless disregard by it of its obligations and duties, and
further provided that prior to confessing any claim against it which may be the
subject of this indemnification, Fund Accountant shall give the Fund written
notice of and reasonable opportunity to defend against said claim in its own
name or in the name of Fund Accountant.
8. Record Retention and Confidentiality.
Fund Accountant shall keep and maintain on behalf of the Fund all books
and records which the Fund and Fund Accountant is, or may be, required to keep
and maintain pursuant to any applicable statutes, rules and regulations,
including without limitation Rules 31a-1 and 31a-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"), relating to the maintenance of books
and records in connection with the services to be provided hereunder. Fund
Accountant further agrees that all such books and records shall be the property
of the Fund and to make such books and records available for inspection by the
Fund or by the Securities and Exchange Commission at reasonable times and
otherwise to keep confidential all books and records and other information
relative to the Fund and its shareholders; except when requested to divulge such
information by duly-constituted authorities or court process.
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9. Uncontrollable Events.
Fund Accountant 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.
10. Reports.
Fund Accountant will furnish to the Fund and to its properly authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Fund in writing, such
reports and at such times as are prescribed pursuant to the terms and the
conditions of this Agreement to be provided or completed by Fund Accountant, or
as subsequently agreed upon by the parties pursuant to an amendment hereto. The
Fund agrees to examine each such report or copy promptly and will report or
cause to be reported any errors or discrepancies therein no later than three
business days from the receipt thereof. In the event that errors or
discrepancies, except such errors and discrepancies as may not reasonably be
expected to be discovered by the recipient within ten days after conducting a
diligent examination, are not so reported within the aforesaid period of time, a
report will for all purposes be accepted by and binding upon the Fund and any
other recipient, and, except as provided in Section 7 hereof, Fund Accountant
shall have no liability for errors or discrepancies therein and shall have no
further responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Fund.
11. Rights of Ownership.
All computer programs and procedures developed to perform services
required to be provided by Fund Accountant under this Agreement are the property
of Fund Accountant. All records and other data except such computer programs and
procedures are the exclusive property of the Fund and all such other records and
data will be furnished to the Fund in appropriate form as soon as practicable
after termination of this Agreement for any reason.
12. Return of Records.
Fund Accountant may at its option at any time, and shall promptly upon the
Fund's demand, turn over to the Fund and cease to retain Fund Accountant's
files, records and documents created and maintained by Fund Accountant pursuant
to this Agreement which are no longer needed by Fund Accountant in the
performance of its services or for its legal protection. If not so turned over
to the Fund, such documents and records will be retained by Fund Accountant 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 Fund unless the Fund authorizes
in writing the destruction of such records and documents.
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13. Representations of the Fund.
The Fund certifies to Fund Accountant that: (1) as of the close of
business on the Effective Date, each Fund that is in existence as of the
Effective Date has authorized 10,000,000,000 shares, and (2) this Agreement has
been duly authorized by the Fund and, when executed and delivered by the Fund,
will constitute a legal, valid and binding obligation of the Fund, enforceable
against the Fund 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.
14. Representations of Fund Accountant.
Fund Accountant represents and warrants that: (1) the various procedures
and systems which Fund Accountant 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 Fund and Fund Accountant'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,
and (2) this Agreement has been duly authorized by Fund Accountant and, when
executed and delivered by Fund Accountant, will constitute a legal, valid and
binding obligation of Fund Accountant, enforceable against Fund Accountant 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.
15. Insurance.
Fund Accountant shall notify the Fund should any of its insurance coverage
be canceled or reduced. Such notification shall include the date of change and
the reasons therefor. Fund Accountant shall notify the Fund 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 Fund from
time to time as may be appropriate of the total outstanding claims made by Fund
Accountant under its insurance coverage.
16. Information to be Furnished by the Fund.
The Fund has furnished to Fund Accountant the following:
(a) Copies of the Articles of Incorporation of the Fund 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:
(i) The Fund's Bylaws and any amendments thereto; and
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(ii) Certified copies of resolutions of the Board of
Directors covering the approval of this Agreement,
authorization of a specified officer of the Fund to
execute and deliver this Agreement and authorization for
specified officers of the Fund to instruct Fund
Accountant thereunder.
(c) A list of all the officers of the Fund, together with specimen
signatures of those officers who are authorized to instruct
Fund Accountant in all matters.
(d) Two copies of the Private Offering Memorandum ("Memorandum")
for the Fund.
17. Information Furnished by Fund Accountant.
(a) Fund Accountant has furnished to the Fund the following:
(i) Fund Accountant's Charter; and
(ii) Fund Accountant's Bylaws and any amendments thereto.
18. Amendments to Documents.
The Fund shall furnish Fund Accountant written copies of any amendments
to, or changes in, any of the items referred to in Section 17 hereof forthwith
upon such amendments or changes becoming effective. In addition, the Fund agrees
that no amendments will be made to the Memorandum of the Fund which might have
the effect of changing the procedures employed by Fund Accountant in providing
the services agreed to hereunder or which amendment might affect the duties of
Fund Accountant hereunder unless the Fund first obtains Fund Accountant's
approval of such amendments or changes.
19. Compliance with Law.
Except for the obligations of Fund Accountant set forth in Section 8
hereof, the Fund assumes full responsibility for the preparation, contents and
distribution of the Memorandum of the Fund 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. Fund Accountant shall have no obligation to
take cognizance of any laws relating to the sale of the Fund's shares. The Fund
represents and warrants that no shares of the Fund will be offered until the
Fund's registration statement under the 1940 Act has become effective.
20. Notices.
Any notice provided hereunder shall be sufficiently given when sent by
registered or certified mail to the party required to be served with such
notice, at the following address: 9920 S.
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Xx Xxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000, or at such other
address as such party may from time to time specify in writing to the other
party pursuant to this Section.
21. Headings.
Paragraph headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
22. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable
with respect to the Fund by either of the parties hereto except by the specific
written consent of the other party.
23. Governing Law.
This Agreement shall be governed by and provisions shall be construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
IMPERIAL SPECIAL INVESTMENTS, INC.
By: /s/ Xxxxxx Xxxxx
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IMPERIAL BANK
By: /s/ Xxxxxxx X. Xxxxx
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Dated: , 2000
FORM OF SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
IMPERIAL SPECIAL INVESTMENTS, INC.
AND
IMPERIAL BANK
FEES
Imperial Bank shall be entitled to receive a fee from the Fund at the
annual rate of $800,000 plus Imperial Bank's reasonable out-of-pocket expenses
incurred in the performance of its services as provided in Section 4 of the Fund
Accounting Agreement to which this Schedule A is attached.
IMPERIAL SPECIAL INVESTMENTS, INC. IMPERIAL BANK
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxx
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