EXHIBIT 10.3
FUND ADMINISTRATION AND ACCOUNTING AGREEMENT
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AGREEMENT made as of ______________________, by and between each entity
listed on Exhibit A hereto (each, a "Fund"; collectively, the "Funds"), and The
Bank of New York, a New York banking organization ("BNY").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, each Fund desires to retain BNY to provide the services described
herein, and BNY is willing to provide such services, all as more fully set forth
below;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereby agree as follows:
1. Appointment.
Each Fund hereby appoints BNY as its agent for the term of this Agreement
to perform the services described herein. BNY hereby accepts such appointment
and agrees to perform the duties hereinafter set forth.
2. Representations and Warranties.
Each Fund hereby represents and warrants to BNY, which representations and
warranties shall be deemed to be continuing, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its business as
now conducted, to enter into this Agreement and to perform its obligations
hereunder;
(b) This Agreement has been duly authorized, executed and delivered by
the Fund in accordance with all requisite action and constitutes a valid and
legally binding obligation of the Fund, enforceable in accordance with its
terms;
(c) It is conducting its business in compliance with all applicable
laws and regulations, both state and federal, and has obtained all regulatory
licenses, approvals and consents necessary to carry on its business as now
conducted; there is no statute, regulation, rule,
order or judgment binding on it and no provision of its charter or by-laws, nor
of any mortgage, indenture, credit agreement or other contract binding on it or
affecting its property which would prohibit its execution or performance of this
Agreement; and
(d) To the extent the performance of any services described in
Schedule II attached hereto by BNY in accordance with the then effective
Prospectus (as hereinafter defined) for the Funds would violate any applicable
laws or regulations, the Funds shall immediately so notify BNY in writing and
thereafter shall either furnish BNY with the appropriate valuations, net asset
value or other computation, as the case may be, or, subject to the prior
approval of BNY, instruct BNY in writing to value assets and/or compute net
asset value or other computations in a manner the Fund specifies in writing, and
either the furnishing of such values or the giving of such instructions shall
constitute a representation by the Fund that the same is consistent with all
applicable laws and regulations and with its Prospectus.
3. Delivery of Documents.
(a) Each Fund will promptly deliver to BNY true and correct copies of
each of the following documents as currently in effect and will promptly deliver
to it all future amendments and supplements thereto, if any:
(i) The Fund's organizational document and all amendments thereto
(the "Charter");
(ii) The Fund's registration statement most recently filed with
the Securities and Exchange Commission (the "SEC") relating to the shares of the
Fund (the "Registration Statement") and the prospectus therein contained (the
"Prospectus");
(b) Each copy of the Fund's certificate of trust shall be certified by
the Secretary of State (or other appropriate official) of the State of Delaware,
and if the Fund's certificate of trust is required by law also to be filed with
a county or other officer or official body, a certificate of such filing shall
be filed with a certified copy submitted to BNY. Each copy of the Registration
Statement and Prospectus, and all amendments thereto, shall be certified by DB
Commodity Services LLC, in its capacity as managing owner of each of the Funds.
(c) It shall be the sole responsibility of each Fund to deliver to BNY
its
currently effective Prospectus and BNY shall not be deemed to have notice of any
information contained in such Prospectus until it is actually received by BNY.
4. Duties and Obligations of BNY.
(a) Subject to the direction and control of DB Commodity Services LLC,
in its capacity as managing owner of each of the Funds, and the provisions of
this Agreement, BNY shall provide to each Fund (i) the administrative services
set forth on Schedule I attached hereto and (ii) the valuation and computation
services listed on Schedule II attached hereto.
(b) In performing hereunder, BNY shall provide, at its expense, office
space, facilities, equipment and personnel.
(c) BNY shall not provide any services relating to the management,
investment advisory or sub-advisory functions of any Fund, distribution of
shares of any Fund, maintenance of any Fund's financial records or other
services normally performed by the Funds' respective counsel or independent
auditors.
(d) Upon receipt of a Fund's prior written consent (which shall not be
unreasonably withheld), BNY may delegate any of its duties and obligations
hereunder to any delegee or agent whenever and on such terms and conditions as
it deems necessary or appropriate. Notwithstanding the foregoing, no Fund
consent shall be required for any such delegation to any other subsidiary of The
Bank of New York Company, Inc. BNY shall not be liable to any Fund for any loss
or damage arising out of, or in connection with, the actions or omissions to act
of any delegee or agent utilized hereunder so long as BNY acts in good faith and
without negligence or wilful misconduct in the selection of such delegee or
agent.
(e) Each Fund shall cause its officers, advisors, sponsor,
distributor, legal counsel, independent accountants, current administrator (if
any) and transfer agent to cooperate with BNY and to provide BNY, upon request,
with such information, documents and advice relating to such Fund as is within
the possession or knowledge of such persons, in order to enable BNY to perform
its duties hereunder. In connection with its duties hereunder, BNY shall be
entitled to rely, and shall be held harmless by each Fund when acting in
reliance, upon the advice or any documents relating to such Fund provided to BNY
by any of the aforementioned persons or Proper Instructions (as hereinafter
defined). BNY shall not be liable for any loss, damage or
expense resulting from or arising out of the failure of the Fund to cause any
information, documents or advice to be provided to BNY as provided herein. All
fees or costs charged by such persons shall be borne by the appropriate Fund.
(f) Nothing in this Agreement shall limit or restrict BNY, any
affiliate of BNY or any officer or employee thereof from acting for or with any
third parties, and providing services similar or identical to same or all of the
services provided hereunder.
(g) Each Fund shall furnish BNY with any and all instructions,
explanations, information, specifications and documentation deemed necessary by
BNY in the performance of its duties hereunder, including, without limitation,
the amounts or written formula for calculating the amounts and times of accrual
of Fund liabilities and expenses. BNY shall not be required to include as Fund
liabilities and expenses, nor as a reduction of net asset value, any accrual for
any federal, state, or foreign income taxes unless the Fund shall have specified
to BNY the precise amount of the same to be included in liabilities and expenses
or used to reduce net asset value. Each Fund shall also furnish BNY by Proper
Instruction with bid, offer, or market values of assets if BNY notifies such
Fund that same are not available to BNY from a pricing or similar service
utilized, or subscribed to, by BNY which BNY in its judgment deems reliable at
the time such information is required for calculations hereunder. At any time
and from time to time, the Fund also may furnish BNY by Proper Instruction with
bid, offer, or market values of assets and instruct BNY to use such information
in its calculations hereunder. BNY shall at no time be required or obligated to
commence or maintain any utilization of, or subscriptions to, any pricing or
similar service. In no event shall BNY be required to determine, or have any
obligations with respect to, whether a market price represents any fair or true
value, nor to adjust any price to reflect any events or announcements,
including, without limitation, those with respect to the issuer thereof, it
being agreed that all such determinations and considerations shall be solely for
the Fund.
(h) BNY may apply to an officer of any Fund for Proper Instructions
with respect to any matter arising in connection with BNY's performance
hereunder for such Fund, and BNY shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with such Proper
Instructions. Such application for Proper Instructions may, at the
option of BNY, set forth in writing any action proposed to be taken or omitted
to be taken by BNY with respect to its duties or obligations under this
Agreement and the date on and/or after which such action shall be taken, and BNY
shall not be liable for any action taken or omitted to be taken in accordance
with a proposal included in any such application on or after the date specified
therein unless, prior to taking or omitting to take any such action, BNY has
received Proper Instructions in response to such application specifying the
action to be taken or omitted.
(i) BNY may consult with counsel to the appropriate Fund, at such
Fund's expense, and shall be fully protected with respect to anything done or
omitted by it in good faith in accordance with the advice or opinion of such
counsel.
(j) Notwithstanding any other provision contained in this Agreement or
Schedule I or II attached hereto, BNY shall have no duty or obligation to with
respect to, including, without limitation, any duty or obligation to determine,
or advise or notify any Fund of: (i) the taxable nature of any distribution or
amount received or deemed received by, or payable to, a Fund, (ii) the taxable
nature or effect on a Fund or its shareholders of any corporate actions, class
actions, tax reclaims, tax refunds or similar events, (iii) the taxable nature
or taxable amount of any distribution or dividend paid, payable or deemed paid,
by a Fund to its shareholders; or (iv) the effect under any federal, state, or
foreign income tax laws of a Fund making or not making any distribution or
dividend payment, or any election with respect thereto.
(k) BNY shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in this Agreement
and Schedules I and II attached hereto, and no covenant or obligation shall be
implied against BNY in connection with this Agreement.
(l) BNY, in performing the services required of it under the terms of
this Agreement, shall be entitled to rely fully on the accuracy and validity of
any and all Proper Instructions furnished to it by a Fund and shall have no duty
or obligation to review the accuracy, validity or propriety of such Proper
Instructions including, without limitation, evaluations; the amounts or formula
for calculating the amounts and times of accrual of liabilities and expenses;
the amounts receivable and the amounts payable on the sale or purchase of
assets; and amounts receivable or amounts payable for the sale or redemption of
Fund shares effected by or on behalf
of a Fund. In the event BNY's computations hereunder rely, in whole or in part,
upon information, including, without limitation, bid, offer or market values of
assets, or accruals of interest or earnings thereon, from a pricing or similar
service utilized, or subscribed to, by BNY which BNY in its judgment deems
reliable, BNY shall not be responsible for, under any duty to inquire into, or
deemed to make any assurances with respect to, the accuracy or completeness of
such information. Without limiting the generality of the foregoing, BNY shall
not be required to inquire into any valuation of other assets by a Fund or any
third party described in this (l) even though BNY in performing services similar
to the services provided pursuant to this Agreement for others may receive
different valuations of the same or different securities of the same issuers.
(m) BNY, in performing the services required of it under the terms of
this Agreement, shall not be responsible for determining whether any interest
accruable to a Fund is or will be actually paid, but will accrue such interest
until otherwise instructed by such Fund.
(n) BNY shall not be responsible for delays or errors which occur by
reason of circumstances beyond its control in the performance of its duties
under this Agreement, including, without limitation, labor difficulties within
or without BNY, mechanical breakdowns, flood or catastrophe, acts of God,
failures of transportation, interruptions, loss, or malfunctions of utilities,
communications or computer (hardware or software) services. Nor shall BNY be
responsible for delays or failures to supply the information or services
specified in this Agreement where such delays or failures are caused by the
failure of any person(s) other than BNY to supply any instructions,
explanations, information, specifications or documentation deemed necessary by
BNY in the performance of its duties under this Agreement.
5. Allocation of Expenses.
Except as otherwise provided herein, all costs and expenses arising or
incurred in connection with the performance of this Agreement shall be paid by
the appropriate Fund, including but not limited to, organizational costs and
costs of maintaining corporate existence, taxes, interest, brokerage fees and
commissions, insurance premiums, compensation and expenses of such Fund's
officers or employees, legal, accounting and audit expenses, management,
advisory, sub-advisory, administration and shareholder servicing fees, charges
of custodians, transfer and dividend disbursing agents, expenses (including
clerical expenses)
incident to the issuance, redemption or repurchase of Fund shares, fees and
expenses incident to the registration or qualification under federal or state
securities laws of the Fund or its shares, costs (including printing and mailing
costs) of preparing and distributing Prospectuses, reports, notices and proxy
material to such Fund's shareholders, all expenses incidental to holding
meetings of such Fund's shareholders, and extraordinary expenses as may arise,
including litigation affecting such Fund and legal obligations relating thereto
for which the Fund may have to indemnify third parties.
6. Standard of Care; Indemnification.
(a) Except as otherwise provided herein, BNY shall not be liable for
any costs, expenses, damages, liabilities or claims (including attorneys' and
accountants' fees) incurred by a Fund, except those costs, expenses, damages,
liabilities or claims arising out of BNY's own bad faith, negligence or wilful
misconduct. In no event shall BNY be liable to any Fund or any third party for
special, indirect or consequential damages, or lost profits or loss of business,
arising under or in connection with this Agreement, even if previously informed
of the possibility of such damages and regardless of the form of action. BNY
shall not be liable for any loss, damage or expense, including counsel fees and
other costs and expenses of a defense against any claim or liability, resulting
from, arising out of, or in connection with its performance hereunder, including
its actions or omissions, the incompleteness or inaccuracy of any Proper
Instructions, or for delays caused by circumstances beyond BNY's control, unless
such loss, damage or expense arises out of the bad faith, negligence or willful
misconduct of BNY.
(b) Each Fund shall indemnify and hold harmless BNY from and against
any and all costs, expenses, damages, liabilities and claims (including claims
asserted by a Fund), and reasonable attorneys' and accountants' fees relating
thereto, which are sustained or incurred or which may be asserted against BNY,
by reason of or as a result of any action taken or omitted to be taken by BNY in
good faith hereunder or in reliance upon (i) any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed, (ii) such Fund's Registration Statement
or Prospectus, (iii) any Proper Instructions, or (iv) any opinion of legal
counsel for such Fund, or arising out of transactions or other activities of
such Fund which occurred prior to the commencement of this Agreement;
provided, that no Fund shall indemnify BNY for costs, expenses, damages,
liabilities or claims for which BNY is liable under preceding 6(a). This
indemnity shall be a continuing obligation of each Fund, its successors and
assigns, notwithstanding the termination of this Agreement. Without limiting the
generality of the foregoing, each Fund shall indemnify BNY against and save BNY
harmless from any loss, damage or expense, including counsel fees and other
costs and expenses of a defense against any claim or liability, arising from any
one or more of the following:
(i) Errors in records or instructions, explanations, information,
specifications or documentation of any kind, as the case may be, supplied to BNY
by any third party described above or by or on behalf of a Fund;
(ii) Action or inaction taken or omitted to be taken by BNY
pursuant to Proper Instructions of the Fund or otherwise without bad faith,
negligence or willful misconduct;
(iii) Any action taken or omitted to be taken by BNY in good
faith in accordance with the advice or opinion of counsel for a Fund;
(iv) Any improper use by a Fund or its agents, distributor or
investment advisor of any valuations or computations supplied by BNY pursuant to
this Agreement;
(v) The method of valuation and the method of computing net asset
value; or
(vi) Any valuations or net asset value provided by a Fund.
(c) Actions taken or omitted in reliance on Proper Instructions, or
upon any information, order, indenture, stock certificate, power of attorney,
assignment, affidavit or other instrument believed by BNY to be genuine or
bearing the signature of a person or persons believed to be authorized to sign,
countersign or execute the same, or upon the opinion of legal counsel for a
Fund, shall be conclusively presumed to have been taken or omitted in good
faith.
(d) Notwithstanding any other provision contained in this Agreement,
BNY shall have no duty or obligation with respect to, including, without
limitation, any duty or obligation to determine, or advise or notify the Fund
of: (a) the taxable nature of any distribution or amount received or deemed
received by, or payable to, a Fund; (b) the taxable nature or effect
on a Fund or its shareholders of any corporate actions, class actions, tax
reclaims, tax refunds, or similar events; (c) the taxable nature or taxable
amount of any distribution or dividend paid, payable or deemed paid, by a Fund
to its shareholders; or (d) the effect under any federal, state, or foreign
income tax laws of the Fund making or not making any distribution or dividend
payment, or any election with respect thereto.
7. Compensation.
For the services provided hereunder, each Fund agrees to pay BNY such
compensation as is mutually agreed from time to time and such out-of-pocket
expenses (e.g., telecommunication charges, postage and delivery charges, record
retention costs, reproduction charges and transportation and lodging costs) as
are incurred by BNY in performing its duties hereunder. Except as hereinafter
set forth, compensation shall be calculated and accrued daily and paid monthly.
Each Fund authorizes BNY to debit such Fund's custody account for all amounts
due and payable hereunder. BNY shall deliver to each Fund invoices for services
rendered after debiting such Fund's custody account with an indication that
payment has been made. Upon termination of this Agreement before the end of any
month, the compensation for such part of a month shall be prorated according to
the proportion which such period bears to the full monthly period and shall be
payable upon the effective date of termination of this Agreement. For the
purpose of determining compensation payable to BNY, each Fund's net asset value
shall be computed at the times and in the manner specified in the Fund's
Prospectus.
8. Term of Agreement.
(a) This Agreement shall continue until terminated by either BNY
giving to a Fund, or a Fund giving to BNY, a notice in writing specifying the
date of such termination, which date shall be not less than 90 days after the
date of the giving of such notice. Upon termination hereof, the affected Fund(s)
shall pay to BNY such compensation as may be due as of the date of such
termination, and shall reimburse BNY for any disbursements and expenses made or
incurred by BNY and payable or reimbursable hereunder.
(b) Notwithstanding the foregoing, BNY may terminate this Agreement
upon 30 days prior written notice to a Fund if such Fund shall terminate its
custody agreement with The Bank of New York, or fail to perform its obligations
hereunder in a material respect.
9. Authorized Persons.
Attached hereto as Exhibit B is a list of persons duly authorized to
execute this Agreement and give any written or oral instructions, or written or
oral specifications, by or on behalf of such Fund. From time to time each Fund
may deliver a new Exhibit B to add or delete any person and BNY shall be
entitled to rely on the last Exhibit B actually received by BNY. Any
instructions or specifications from any such persons are referred to as "Proper
Instructions."
10. Amendment.
This Agreement may not be amended or modified in any manner except by a
written agreement executed by BNY and the Fund to be bound thereby.
11. Assignment.
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 any Fund without the written consent
of BNY, or by BNY without the written consent of the affected Fund.
12. Governing Law; Consent to Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of New York, without regard to conflict of laws principles thereof. Each Fund
hereby consents to the jurisdiction of a state or federal court situated in New
York City, New York in connection with any dispute arising hereunder, and waives
to the fullest extent permitted by law its right to a trial by jury. To the
extent that in any jurisdiction any Fund may now or hereafter be entitled to
claim, for itself or its assets, immunity from suit, execution, attachment
(before or after judgment) or other legal process, such Fund irrevocably agrees
not to claim, and it hereby waives, such immunity.
13. Severability.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby, and if any provision is inapplicable to any
person or circumstances, it shall nevertheless remain applicable
to all other persons and circumstances.
14. No Waiver.
Each and every right granted to BNY hereunder or under any other document
delivered hereunder or in connection herewith, or allowed it by law or equity,
shall be cumulative and may be exercised from time to time. No failure on the
part of BNY to exercise, and no delay in exercising, any right will operate as a
waiver thereof, nor will any single or partial exercise by BNY of any right
preclude any other or future exercise thereof or the exercise of any other
right.
15. Notices.
All notices, requests, consents and other communications pursuant to this
Agreement in writing shall be sent as follows:
if to a Fund, at
c/o DB Commodity Services LLC
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
if to BNY, at
The Bank of Xxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Title:
or at such other place as may from time to time be designated in writing.
Notices hereunder shall be effective upon receipt.
16. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original; but such counterparts together shall
constitute only one instrument.
17. Several Obligations.
The parties acknowledge that the obligations of the Funds hereunder are
several and not joint, that no Fund shall be liable for any amount owing by
another Fund and that the Funds have executed one instrument for convenience
only.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers as of the day and year first
above written.
DB COMMODITY SERVICES LLC, as
managing owner of each of the Funds
By: __________________________
Name:
Title:
THE BANK OF NEW YORK
By: __________________________
Title:
EXHIBIT A
Name of Fund
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DB Commodity Index Tracking Fund
DB Commodity Index Tracking Master Fund
EXHIBIT B
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I, Xxxxx Xxxx, of DB Commodity Services LLC, a Delaware limited liability
company and the sole managing owner of each of DB Commodity Index Tracking Fund
and DB Commodity Index Tracking Master Fund (the "Funds"), in my capacity as an
officer of DB Commodity Services LLC and not in my individual capacity, do
hereby certify that:
The following individuals are authorized to give written or oral
instructions or written or oral specifications by or on behalf of each of the
Funds to The Bank of New York and the signatures set forth opposite their
respective names are their true and correct signatures.
Name Signature
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IN WITNESS WHEREOF, I have hereunto set my hand as of the date set forth below:
By: _____________________
Xxxxx Xxxx
Dated: _________________, 2005
SCHEDULE I
ADMINISTRATIVE SERVICES
1. Maintain each Fund's minute book and its general corporate records
(other than accounting books and records).
2. Monitor and document compliance by each Fund with its policies and
restrictions as delineated in its Prospectus.
3. Participate in the periodic updating of each Fund's Registration
Statement and Prospectus and, subject to approval by such Fund's
managing owner and legal counsel, coordinate the preparation,
filing, printing and dissemination of periodic reports and other
information to the SEC and the Fund's shareholders, including,
without limitation, Form 10-K and Form 10-Q and proxy materials, if
any.
4. Prepare federal, state and local income tax returns for each Fund
and file such returns upon the approval of the Funds' respective
independent accountants.
5. Assist such Fund in obtaining fidelity bond and E&O/D&O insurance
coverage.
6. Prepare statistical reports for outside information services.
7. Attend shareholder meetings as requested from time to time.
8. Establish appropriate expense accruals, maintain expense files and
coordinate the payment of invoices.
SCHEDULE II
VALUATION AND COMPUTATION SERVICES
I. BNY shall maintain the following records on a daily basis for each
Fund.
1. Report of priced portfolio assets
2. Statement of net asset value per share
II. BNY shall maintain the following records on a monthly basis for each
Fund:
1. General Ledger
2. General Journal
3. Cash Receipts Journal
4. Cash Disbursements Journal
5. Subscriptions Journal
6. Redemptions Journal
7. Accounts Receivable Reports
8. Accounts Payable Reports
9. Open Subscriptions/Redemption Reports
10. Transaction Journal
11. Broker Net Trades Reports
III. BNY shall prepare a Holdings Ledger on a quarterly basis, and a
Buy-Sell Ledger (Broker's Ledger) on a semiannual basis for each Fund. Schedule
D shall be produced on an annual basis for each Fund.
The above reports may be printed according to any other required frequency
to meet the requirements of the Internal Revenue Service, The Securities and
Exchange Commission and the Fund's Auditors.
IV. For internal control purposes, BNY uses the Account Journals produced
by The Bank of New York Custody System to record daily settlements of the
following for each Fund:
1. Assets bought
2. Assets sold
3. Interest received
4. Capital stock sold
5. Capital stock redeemed
6. Other income and expenses
All portfolio purchases for the Fund are recorded to reflect expected
maturity value and total cost including any prepaid interest.
