1
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 30th day of August, 2000, between CTB SECURITIES
TRUST FUND (the "Fund"), a Massachusetts business trust having its principal
place of business at 00000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, and
CHINATRUST BANK (U.S.A.) ("Fund Accountant"), a state-chartered banking
corporation, having its principal place of business at 00000 Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx, 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;
2
(ii) Obtain security prices from independent pricing
services, or if such quotes are unavailable, then
obtain such prices from the Fund's investment
adviser or its designee, as approved by the Fund's
Board of Trustees;
(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.
2
3
(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
3
4
not be relieved of any of its obligations under this Agreement by the
appointment of such 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 two years
from the date of execution of this agreement, 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
4
5
or more of the services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including without limitation
the provisions dealing with indemnification, shall continue in full force and
effect. Compensation due 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, trustees, 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.
5
6
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.
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 shares,
6
7
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 Declaration of Trust 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
(ii) Certified copies of resolutions of the Board of
Trustees 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.
7
8
(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: 00000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx,
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.
8
9
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.
CTB SECURITIES TRUST FUND
By: /s/ Xxxxx Xxxx
-----------------------------------
President
CHINATRUST BANK (U.S.A)
By: /s/ Yu-Xxxxx Xxx
-----------------------------------
Executive Vice President
and Chief Financial Officer
CHINATRUST BANK (U.S.A)
By: /s/ Xxxxx Xxx
-----------------------------------
First Vice President
and Corporate Secretary
9
10
Dated: August 29, 2000
FORM OF SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
CTB SECURITIES TRUST FUND
AND
CHINATRUST BANK (U.S.A.)
FEES
Chinatrust Bank (U.S.A.) shall be entitled to receive a fee from the Fund
at the annual rate of $600,000 plus Chinatrust Bank (U.S.A.)'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.
CTB SECURITIES TRUST FUND
By: /s/ XXXXX XXXX
----------------------------
Xxxxx Xxxx, President
CHINATRUST BANK (U.S.A.)
By: /S/ YU-XXXXX XXX
----------------------------
Yu-Xxxxx Xxx, EVP & CFO
CHINATRUST BANK (U.S.A.)
By: /s/ XXXXX XXX
----------------------------
Xxxxx Xxx, EVP & Corporate Secretary
10
