ACCOUNTING SERVICES AGREEMENT
-----------------------------
AGREEMENT dated as of ____________, 1998 between Clearbrook Investment
Trust, a Delaware business trust (the "Trust"), and Countrywide Fund Services,
Inc. ("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to provide
the Trust with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Countrywide as agent to perform
those services described in this Agreement for the Trust. Countrywide shall act
under such appointment and perform the obligations thereof upon the terms and
conditions hereinafter set forth.
2. ACCOUNTING SERVICES
-------------------
Countrywide shall provide the following accounting services to the
Fund:
Determine Fund Valuation
------------------------
- Calculate each day the net asset value of each series of the Trust,
per share net asset value, per share net earnings, and other per share
amounts as needed, in accordance with the Trust's current prospectus
and statement of additional information and as of the time selected by
the Trust's Board of Trustees;
- Prepare and maintain a daily valuation of all securities and other
assets of the Trust in accordance with instructions from a designated
officer of the Trust or its investment adviser and in the manner set
forth in the Trust's current prospectus and statement of additional
information. When valuing the assets in the Trust, obtain prices form
a pricing source approved by the Trust's Board of Trustees and apply
those prices to the portfolio positions. For those securities where
market quotations are not readily available, the Board shall approve,
in good faith, the method for determining the fair value for such
securities in the manner specified in the Trust's current registration
statement. Countrywide may contract with and rely upon market
quotations provided by outside services when valuing securities of the
Trust;
- Account for each day's share purchases, sales, exchanges, transfers,
dividend reinvestments, and other share activity as reported by the
transfer agent by the next business day; and
- Communicate, at an agreed upon time, the daily per share price to the
investment adviser and other parties as agreed upon from time to time.
Maintain Books and Records
--------------------------
- Maintain and keep current a general ledger, in a form agreed upon by
the Trust and Countrywide, for each series of the Trust, recording all
income and expenses, capital share activity, and security
transactions;
- Identify and record on a daily basis the interest and dividend accrual
balances and calculate gross earnings on investments for the
accounting period;
- Determine and record gain/loss on security sales and record their
short, mid, or long-term status, account for periodic distributions of
gains or losses to shareholders and maintain daily undistributed gain
or loss balances;
- Balance assets of the Trust with the Trust's custodian;
- Maintain such further books and records as are necessary to enable
Countrywide to perform its duties under this Agreement;
- Calculate daily cash figure for investment purposes;
- Prepare and provide periodic but not less than monthly reports to the
Trust and its authorized agents which include share purchases and
redemptions and which document accounting detail to a level that
supports month-end ledger balances;
- 2 -
- Prepare and maintain complete, accurate, and current all records with
respect to the Trust required to be maintained by the Trust under the
Internal Revenue Code of 1986, as amended (the "Code"), and under the
rules and regulations of the 1940 Act, and will preserve said records
in the manner and for the periods prescribed in the Code and the 1940
Act;
- Prepare the necessary supporting computations on a book and tax basis
for the declaration and payment of dividends, including the updating
of carryforward schedules and the calculation of dividend payments to
ensure that each series of the Trust complies with the requirements of
Section 851 of the Code (Subchapter M) and to ensure that the Trust
avoids imposition of the excise tax under Section 4982 of the Code;
- Monitor all tax compliance calculations to ensure that each series of
the Trust continues to qualify as a regulated investment company
pursuant to Subchapter M of the Code;
- Maintain tax lot detail for each series of the Trust and calculate
taxable gain/loss on security sales using the tax lot relief method
designated by the Trust;
- Maintain portfolio records on a trade date +1 basis using security
trade information communicated from the investment adviser;
- Maintain records required to fulfill the requirements of Form N-SAR
and assist the Trust in completing Form N-SAR documentation;
- Prepare the financial statements and supporting statements, footnotes,
and per share information for the inclusion in the semiannual and
annual reports;
- Supervise and coordinate the typesetting, printing and distribution of
financial statements, including semiannual and annual reports; and
- Prepare and issue the fiscal year-end tax letters (60-day letters) to
shareholders which reflect the per share characterization of the
dividend distributions during the year.
- 3 -
Provide Payment Services
------------------------
- Record authorized payment requests received from the Trust or its
agents;
- Prepare and send checks in the appropriate amounts and signed by an
authorized officer of Countrywide, upon receipt of written
instructions signed by an officer or authorized agent of the Trust;
- Account for Trust expenditures and maintain expense accrual balances
at the level of accounting detail agreed upon by the Trust and
Countrywide;
- Calculate the expense accrual amounts as directed by the Trust;
- Review expense account activity and monitor expense limitation
compliance; and
- Provide a minimum of monthly expense accrual and payment reporting.
Support Compliance Reporting
----------------------------
- Assist the Trust's independent accountants with the annual audit by
preparing a substantial amount of the annual audit workpapers;
- Provide accounting records, data files, information and support to the
Trust, the Securities and Exchange Commission, and the outside
auditors retained by the Trust for their compliance efforts; and
- Maintain accounting records according to the 1940 Act and regulations
thereunder.
3. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
4. FEES.
-----
For the performance of the services under this Agreement, each series
of the Trust shall pay Countrywide a monthly fee in accordance with the schedule
attached hereto as Schedule A. The fees with respect to any month shall be paid
to Countrywide on the last business day of such month. The Trust shall also
promptly reimburse Countrywide for the cost of external pricing services
utilized by Countrywide.
- 4 -
5. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the Trust
which services could cause Countrywide to be deemed an "investment adviser" of
the Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede
or contravene the Trust's prospectus or statement of additional information or
any provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Countrywide, the Trust assumes full responsibility for complying with
all applicable requirements of the 1940 Act, the Securities Act of 1933, as
amended, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
6. CONFIDENTIALITY
---------------
Countrywide agrees on behalf of itself and its employees and agents to
treat confidentially all information relating to the Trust's business which is
received by Countrywide during the course of rendering any service hereunder.
Countrywide agrees on behalf of itself and its employees and agents to treat
confidentially all records and other information relative to the Trust and its
shareholders and shall not disclose to any other party, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld and may not be withheld where Countrywide may be
exposed to civil or criminal contempt proceedings for failure to comply after
being requested to divulge such information by duly constituted authorities.
7. REFERENCES TO COUNTRYWIDE.
--------------------------
The Trust shall not circulate any printed matter which contains any
reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
8. EQUIPMENT FAILURES.
-------------------
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
- 5 -
9. PERFORMANCE OF SERVICE: LIMITED LIABILITY AND INDEMNIFICATION.
--------------------------------------------------------------
A. Countrywide shall exercise reasonable care and act in good faith in
the performance of its duties under this Agreement. Countrywide may rely on
information, regarding the Trust, reasonably believed by it to be accurate and
reliable. Except as may otherwise be required by the 1940 Act and the rules
thereunder, neither Countrywide nor its shareholders, officers, directors,
employees, agents, control persons or the affiliates of any thereof shall be
subject to any liability for, or any damages, expenses or losses incurred by the
Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except for any refusal or failure to comply with the terms of
this Agreement or by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates 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 Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of any action taken or omitted to be taken by Countrywide in good
faith in reliance upon any certificate, instrument, order or share certificate
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 Trust or upon the opinion of legal
counsel for the Trust. However, indemnification under this subparagraph shall
not apply to actions or omissions of
- 6 -
Countrywide or its directors, officers, employees, shareholders or agents in
cases of its or their own gross negligence, willful misconduct, bad faith, or
reckless disregard of its or their own duties hereunder. In the event of a
mechanical breakdown or failure of communication or power supplies beyond its
control, Countrywide shall take all reasonable steps to minimize service
interruptions for any period that such interruption continues beyond
Countrywide's control. Countrywide will make every reasonable effort to restore
any lost or damaged data and correct any errors resulting from such a breakdown
at the expense of Countrywide. Countrywide agrees that it shall, at all times,
have reasonable contingency plans with appropriate parties, making reasonable
provision for emergency use of electrical data processing equipment to the
extent appropriate equipment is available. Representatives of the Trust shall be
entitled to inspect Countrywide's premises and operating capabilities at any
time during regular business hours of Countrywide, upon reasonable notice to
Countrywide.
D. In order that the indemnification provisions contained in this
section shall apply, it is understood that in any case in which the Trust may be
asked to indemnify or hold Countrywide harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that Countrywide will use all reasonable care to
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust.
E. Countrywide shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which the Trust may sustain or incur or which may be
asserted against the Trust by any person arising out of or attributed to any
action taken or omitted to be taken by Countrywide as a result of Countrywide's
refusal or failure to comply with the terms of this Agreement, or from its bad
faith, gross negligence, or willful misconduct of Countrywide or any of its
employees and agents.
10. TERMINATION.
------------
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved a) by the Trust (1) by vote, cast in person at a meeting
called for the purpose, of a majority of the
- 7 -
Trust's trustees who are not parties to this Agreement or interested persons (as
defined in the 0000 Xxx) of any such party, and (2) by vote of a majority of the
Trust's Board of Trustees or a majority of the Trust's outstanding voting
securities, and b) by Countrywide.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefor. Upon termination of this Agreement, the
Trust shall pay to Countrywide such compensation as may be due, prorated, as of
the date of such termination, and shall likewise reimburse Countrywide for any
out-of-pocket expenses and disbursements reasonably incurred by Countrywide to
such date, and otherwise subject to reimbursement hereunder. Termination of this
Agreement pursuant to this Section 10 shall be without the payment of any
penalty.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Countrywide's knowledgeable personnel in the
establishment of books, records and other data by such successor.
11. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 0000 Xxx) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Trust under this Agreement.
12. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
- 8 -
13. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
14. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Delaware.
Any question of interpretation of any term or provision of this Agreement having
a counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the 1940 Act, reflected in any
provision of this Agreement, is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
15. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Clearbrook Investment Trust
0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
To Countrywide: Countrywide Fund Services, Inc.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
or to such other address as any party may designate by notice complying with the
terms of this Section 15. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d)
- 9 -
on the date upon which the return receipt is signed or delivery is refused or
the notice is designated by the postal authorities as not deliverable, as the
case may be, if mailed.
16. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
17. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
18. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
19. FORCE MAJEURE.
--------------
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance. Countrywide shall take all reasonable steps to
minimize service interruptions and have reasonable contingency plans with
appropriate parties to address any periods that such interruptions continue
beyond Countrywide's control.
20. MISCELLANEOUS.
--------------
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
- 10 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
CLEARBROOK INVESTMENT TRUST
By:
-------------------------------
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:
-------------------------------
Its: President
- 11 -
Schedule A
----------
COMPENSATION
------------
Each series of the Trust will pay Countrywide a monthly fee, according to
the average monthly net assets of such series during such month, as follows:
Monthly Fee Average Net Assets During Month
----------- -------------------------------
$2,000 $0 - $ 50,000,000
$2,500 $50,000,000 - $100,000,000
$3,000 $100,000,000 - $200,000,000
$4,000 $200,000,000 - $300,000,000
$5,000 + .001% of Over $300,000,000
average net assets
over $300,000,000
- 12 -
