ACCOUNTING SERVICES AGREEMENT
This ACCOUNTING SERVICES AGREEMENT is
made as of this 7th day
of February, 2008 (the “Agreement”) between Z-Seven Fund, Inc. (the “Company”),
a corporation duly organized and existing under the laws of the State of
Maryland, and Commonwealth Fund Accounting, Inc. (“CFA”), a corporation duly
organized as a corporation in accordance with the laws of the Commonwealth of
Virginia.
WITNESSETH
THAT:
WHEREAS, the Company is a
non-diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the “1940 Act”), consisting of one
series portfolio (the “Fund”), which consists of one class of shares of common
stock;
WHEREAS, the Company desires to appoint
CFA as its Accounting Services Agent to maintain and keep current the books,
accounts, records, journals or other records of original entry relating to the
business of the Company as set forth in Schedule B of this Agreement (the
“Accounts and Records”) and to perform certain other functions in connection
with such Accounts and Records; and
WHEREAS, CFA is willing to perform such
functions upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the
premises and of the mutual covenants herein contained, the parties hereto,
intending to be legally bound, agree as follows:
Section 1. Appointment. The
Company hereby appoints CFA as its Accounting Services Agent on behalf of the
Company, and CFA hereby accepts such appointment, to furnish the Fund listed on
Schedule A, as such schedule may be amended from time to time, with accounting
services as set forth in this Agreement.
Section 2. Duties. CFA
shall perform or supervise the performance of others of the services set forth
in Schedule B hereto. CFA shall provide the Company with all
necessary office space, equipment, personnel, facilities and compensation for
providing such services. CFA may sub-contract with third parties to
perform certain of the services to be performed by CFA hereunder; PROVIDED,
however, that CFA shall remain principally responsible to the Company for the
acts and omissions of such other entities.
Except with respect to CFA’s duties as
set forth in this Agreement, and except as otherwise specifically provided
herein, the Company assumes all responsibility for ensuring that the Fund
complies with all applicable requirements of the Securities Act of 1933, the
1940 Act and any other laws, rules and regulations, or interpretations thereof,
of governmental authorities with jurisdiction over the Fund.
Section 3. Compensation and
Expenses. The Company agrees to
pay CFA compensation for its services as set forth in Schedule A attached
hereto, or as shall be set forth in amendments to such schedule approved by the
Board of Directors of the Company (the “Board”) and CFA. Fees will
begin to accrue for the Fund on the latter of the date of this Agreement or the
date of commencement of operations of the Fund. If fees begin to accrue in the
middle of a month or if this Agreement terminates before the end of any month,
all fees for the period from that date to the end of that month or from the
beginning of that month to the date of termination, as the case may be, shall be
prorated according to the proportion that the period bears to the full month in
which the effectiveness or termination occurs. Upon the termination
of this Agreement with respect to the Fund, the Fund shall pay to CFA such
compensation as shall be payable prior to the effective date of
termination.
In addition, the Company shall
reimburse CFA from the assets of the Fund certain reasonable expenses incurred
by CFA on behalf of the Fund individually in connection with the performance of
this Agreement. Such out-of-pocket expenses shall include, but not be
limited to: documented fees and costs of obtaining advice of Fund counsel or
accountants in connection with its services to the Fund; postage; long distance
telephone; special forms required by the Fund; any economy class travel which
may be required in the performance of its duties to the Fund; and any other
extraordinary expenses it may incur in connection with its services to the
Fund.
All fees and reimbursements are payable
in arrears on a monthly basis and the Company, on behalf of the Fund, agrees to
pay all fees and reimbursable expenses within five (5) business days following
receipt of the respective billing notice.
Section 4. Company Reports to
CFA. The Company shall furnish or otherwise make available to
CFA such copies of the Fund’s prospectus, statement of additional information,
financial statements, proxy statements, shareholder reports, the Fund’s net
asset value per share, declaration, record and payment dates, amounts of any
dividends or income, special actions relating to the Fund’s securities and other
information relating to the Company’s business and affairs as CFA may, at any
time or from time to time, reasonably require in order to discharge its
obligations under this Agreement. CFA shall maintain such information
as required by regulation and as agreed upon between the Company and
CFA. The Company will complete all necessary prospectus and
compliance reports, as well as monitoring the various limitations and
restrictions.
Section 5. Maintenance of
Records. CFA shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as they may
be amended from time to time, pertaining to the various functions CFA performs
under this Agreement and which are not otherwise created or maintained by
another party pursuant to contract with the Company. All such records
shall be the property of the Company and will be preserved, maintained and made
available in accordance with Section 31 of the 1940 Act and the rules
thereunder, and will be surrendered promptly to the Fund on and in accordance
with the Company’s request. The Company and the Company’s authorized
representatives shall have access to CFA’s records relating to the services to
be performed under this Agreement at all times during CFA’s normal business
hours. Upon the reasonable request of the Company, copies of any such records
shall be provided promptly by CFA to the Company or the Company’s authorized
representatives.
Section 6. Reliance on Company
Instructions and Experts. CFA may rely upon the written advice
of the Company and upon statements of the Company’s legal counsel, accountants
and other persons believed by it in good faith to be expert in matters upon
which they are consulted, and CFA shall not be liable for any actions taken in
good faith upon such statements.
Section 7. Standard of
Care. CFA shall be under no duty to take any action on behalf
of the Fund except as necessary to fulfill its duties and obligations as
specifically set forth herein or as may be specifically agreed to by CFA in
writing. CFA shall at all times act in good faith and agrees to use
its best effect within reasonable limits to ensure the accuracy of all services
performed under this Agreement, but assumes no responsibility for any loss
arising out of any act or omission in carrying out its duties hereunder, except
a loss resulting from CFA’s, its employees’ or its agents’ willful misfeasance,
bad faith or gross negligence in the performance of CFA’s duties under this
Agreement, or by reason of reckless disregard of CFA’s, its employees’ or its
agents’ obligations and duties hereunder. Notwithstanding the
foregoing, the limitation on CFA’s liability shall not apply to the extent any
loss or damage results from any fraud committed by CFA or any intentionally bad
or malicious acts (that is, acts or breaches undertaken purposefully under
circumstances in which the person acting knows or has reason to believe that
such act or breach violates such person’s obligations under this Agreement or
can cause danger or harm) of CFA.
Without limiting the generality of the
foregoing or of any other provision of this Agreement, (i) CFA shall not be
liable for losses beyond its control, provided that CFA has acted in accordance
with the standard of care set forth above; and (ii) CFA shall not be liable for
(A) the validity or invalidity or authority or lack thereof of any oral or
written instructions provided by the Fund, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which CFA
reasonably believes to be genuine; or (B) subject to Section 25, delays or
errors or loss of data occurring by reason of circumstances beyond CFA’s
control, including fire, flood, catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power
supply.
Section 8. Limitation of Liability
Regarding CFA. CFA shall not be liable for any actions taken
in good faith reliance upon any authorized written instructions or any other
document reasonably believed by CFA to be genuine and to have been executed or
signed by the proper person or persons. CFA shall not be held to have
notice of any change of authority of any officer, employee or agent of the
Company until receipt of notification thereof by the Company.
CFA shall not be liable for the errors
of other service providers of the Company, including the errors of pricing
services (other than to pursue all reasonable claims against the pricing service
based on the pricing services’ standard contracts entered into by CFA) and
errors in information provided by an investment adviser (including prices and
pricing formulas and the untimely transmission of trade information), custodian
or transfer agent to the Company.
With respect to a Fund that does not
value its assets in accordance with Rule 2a-7 under the 1940 Act (a money market
fund), notwithstanding anything to the contrary in this Agreement, CFA shall not
be liable to the Company or any shareholder of the Company for (i) any loss to
the Company if a NAV Difference for which CFA would otherwise be liable under
this Agreement is less than $0.01 per Fund share or (ii) any loss to a
shareholder of the Company if the NAV Difference for which CFA would otherwise
be liable under this Agreement is less than or equal to 0.005 (1/2 of 1%) or if
the loss in the shareholder’s account with the Company is less than or equal to
$10. Any loss for which CFA is determined to be liable hereunder shall be
reduced by the amount of gain which inures to shareholders, whether to be
collected by the Company or not.
For purposes of this Agreement: (i) the
NAV Difference shall mean the difference between the NAV at which a shareholder
purchase or redemption should have been effected (“Recalculated NAV”) and the
NAV at which the purchase or redemption is effected; (ii) NAV Differences and
any CFA or other responsible party liability therefrom are to be calculated each
time the Fund’s NAV is calculated; (iii) in calculating any NAV Difference for
which CFA would otherwise be liable under this Agreement for a particular NAV
error, Fund losses and gains shall be netted; and (iv) in calculating any NAV
Difference for which CFA would otherwise be liable under this Agreement for a
particular NAV error that continues for a period covering more than one NAV
determination, Fund losses and gains for the fund’s fiscal year shall be
netted.
Section 9. Limited
Recourse. CFA hereby acknowledges that the Fund’s obligations
hereunder with respect to the Shares are binding only on the assets and property
belonging to the Fund. The obligations of the parties hereunder shall
not be binding upon any of the Directors, shareholders, nominees, officers,
agents or employees of the Fund personally, but shall bind only the property of
the Fund. The execution and delivery of this agreement by such
officers shall not 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 Fund’s
property.
Notwithstanding any other provision of
this Agreement, the parties agree that the assets and liabilities of the Fund
are separate and distinct from the assets and liabilities of any subsequent fund
of the Company and that no fund shall be liable or shall be charged for any
debt, obligation or liability of any other fund, whether arising under this
Agreement or otherwise.
Section 10. Indemnification by the
Fund. The Fund shall indemnify CFA and hold it harmless from and against
any and all losses, damages and expenses, including reasonable attorneys’ fees
and expenses, incurred by CFA that result from: (i) any claim, action, suit or
proceeding in connection with CFA’s entry into or performance of this Agreement
with respect to such Fund; or (ii) any action taken or omission to act committed
by CFA in the performance of its obligations hereunder with respect to such
Fund; or (iii) any action of CFA upon instructions believed in good faith by it
to have been executed by a duly authorized officer or representative of the
Company with respect to such Fund; or (iv) any error, omission, inaccuracy or
other deficiency of any information provided to CFA by the Company, or the
failure of the Company to provide or make available any information requested by
CFA knowledgeably to perform its functions hereunder; PROVIDED, that CFA shall
not be entitled to such indemnification in respect of actions or omissions
constituting gross negligence, bad faith or willful misfeasance in the
performance of its duties, or by reckless disregard of such duties, on the part
of CFA or its employees, agents or contractors.
Section 11. Indemnification by
CFA. CFA shall indemnify the Fund and hold it harmless from
and against any and all losses, damages and expenses, including reasonable
attorneys’ fees and expenses, incurred by the Fund which result from: (i) CFA’s
failure to comply with the terms of this Agreement; or (ii) CFA’s lack of good
faith in performing its obligations hereunder; or (iii) CFA’s gross negligence
or misconduct or that of its employees, agents or contractors in
connection herewith.
In order that the indemnification
provisions contained in Sections 10 and 11 shall apply, upon the assertion of an
indemnification claim, the party seeking the indemnification shall promptly
notify the other party of such assertion, and shall keep the other party advised
with respect to all developments concerning such claim. The Company shall have
the option to participate with CFA in the defense of such claim or to defend
against said claim in its own name or that of CFA. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
indemnifying party’s written consent, which consent shall not be unreasonably
withheld.
Section 12. Confidentiality. CFA
agrees on behalf of itself and its employees to treat confidentially all records
and other information relative to the Company and its Shareholders received by
CFA in connection with this Agreement, including any non-public personal
information as defined in Regulation S-P, and that it shall not use or disclose
any such information except for the purpose of carrying out the terms of this
Agreement; PROVIDED, however, that CFA may disclose such information as required
by law or in connection with any requested disclosure to a regulatory authority
with appropriate jurisdiction after prior notification to the
Company.
Upon termination of this Agreement, CFA
shall return to the Company all copies of confidential or non-public personal
information received from the Company hereunder, other than materials or
information required to be retained by CFA under applicable laws or
regulations. CFA hereby agrees to dispose of any “consumer report
information,” as such term is defined in Regulation S-P.
Section 13. Holidays. Except
as required by laws and regulations governing investment companies, nothing
contained in this Agreement is intended to or shall require CFA, in any capacity
hereunder, to perform any functions or duties on any holiday or other day of
special observance on which CFA is closed. Functions or duties
normally scheduled to be performed on such days shall be performed on, and as
of, the next business day on which both the Company and CFA are
open. CFA will be open for business on days when the Company is open
for business and/or as otherwise set forth in the Fund’s prospectus(es) and
Statement(s) of Additional Information.
Section 14. Termination. This
Agreement shall remain in effect until terminated.
This Agreement may be terminated by
either party at any time, without the payment of a penalty upon ninety (90)
days’ written notice to other party. Any termination shall be
effective as of the date specified in the notice or upon such later date as may
be mutually agreed upon by the parties. Upon notice of termination of
this Agreement by either party, CFA shall promptly transfer to the successor
administrator the original or copies of all books and records maintained by CFA
under this Agreement including, in the case of records maintained on computer
systems, copies of such records in machine-readable form, and shall cooperate
with, and provide reasonable assistance to, the successor administrator in the
establishment of the books and records necessary to carry out the successor
administrator’s responsibilities. If this Agreement is terminated by
the Company, the Company shall be responsible for all reasonable out-of-pocket
expenses or costs associated with the movement of records and materials to the
successor administrator. Additionally, CFA reserves the right to
charge for any other reasonable expenses associated with such
termination.
Section 15. Notice. Any
notice or other communication required by or permitted to be given in connection
with this Agreement shall be in writing, and shall be delivered in person or
sent by first-class mail, postage prepaid, to the respective parties at their
last known address, except that oral instructions may be given if authorized by
the Board and preceded by a certificate from the Company’s Secretary so
attesting. Notices to the Company shall be directed to 0000 Xxxxx
Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, Attention: Mr. Xxxx Xxxxx,
III; and notices to CFA shall be directed to: 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxx 00000, Attention: Mr. Xxxx Xxxxx, III.
Section
16. Execution in
Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed, shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
Section 17. Assignment; Third Party
Beneficiaries. 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 either party
without the written consent of the other party. This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
permitted successors and assigns.
Section 18. Services Not
Exclusive. The services of CFA to the Company are not deemed
exclusive, and CFA shall be free to render similar services to others, to the
extent that such service does not affect CFA’s ability to perform its duties and
obligations hereunder.
Section
19. Headings. All
Section headings contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and will not affect in any way the
meaning or interpretation of this Agreement. Words used herein,
regardless of the number and gender specifically used, will be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the contract requires.
Section 20. Entire
Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements to the subject matter thereof.
Section 21. Consequential
Damages. Neither party to this Agreement shall be liable to
the other party for consequential damages under any provision of this
Agreement.
Section
22. Amendments. This
Agreement may be amended from time to time by a writing executed by the Company
and CFA. The compensation stated in Schedule A attached hereto may be
adjusted from time to time by the execution of a new schedule signed by both of
the parties.
Section
23. Waiver. Any
term or provision of this Agreement may be waived at any time by the party
entitled to the benefit thereof by written instrument executed by such
party. No failure of either party hereto to exercise any power or
right granted hereunder, or to insist upon strict compliance with any obligation
hereunder, and no custom or practice of the parties with regard to the terms of
performance hereof, will constitute a waiver of the rights of such party to
demand full and exact compliance with the terms of this Agreement.
Section
24. Severability. If
any part, term or provision of this Agreement is held to be illegal, in conflict
with any law or otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and obligations of the
parties shall be construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
Section
25. Force
Majeure. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, acts of
war or terrorism, strikes, equipment or transmission failure or damage
reasonably beyond its control, or other causes reasonably beyond its control,
such party shall not be liable for damages to the other for any damages
resulting from such failure to perform or otherwise from such causes; provided,
however, that this provision shall not imply that CFA is excused from
maintaining reasonable business continuity plans to address potential service
outages.
Section
26. Survival. The
obligations of Sections 3, 5, 6, 7, 8, 9, 10, 11, 12, 17, 20, 21, 23, 24, 25 and
27 shall survive any termination of this Agreement.
Section
27. Governing
Law. This Agreement shall be governed by and construed to be
in accordance with the laws of the State of Maryland, without reference to
choice of law principles thereof, and in accordance with the applicable
provisions of the 1940 Act. To the extent that the applicable laws of
the State of Maryland, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall
control.
1-WA/2589614.12
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by
their duly authorized officers as of the day and year first above
written.
Z-SEVEN FUND, INC.
By: /s/ Xxxxx
Xxxxxx
Xxxxx Xxxxxx
President
COMMONWEALTH FUND ACCOUNTING,
INC.
By: /s/
Xxxx Xxxxx, III
Xxxx Xxxxx, III
Chief Executive Officer
1-WA/2589614.12
Amended
and Restated
Schedule
A
to
the
between
Z-Seven
Fund, Inc. (the “Company”)
and
Commonwealth
Fund Accounting, Inc. (“CFA”)
Dated
as of February 7, 2008
Compensation to be Paid to
CFA:
|
A.
|
For
accounting services, CFA shall be paid monthly at the following annual
rates:
|
|
Name of Fund
|
Accounting Services Fee
|
|
The
Z-Seven Fund, Inc.
|
.05%
of the Fund’s average daily net assets, computed daily and paid monthly,
with a minimum annual fee of
$25,000.
|
|
B.
|
It
is anticipated that the Company’s security trading activity will remain on
average less than 100 trades per month, per portfolio. Should
the Company’s security trading activity exceed an average of 100 trades
per month per portfolio, an additional fee of $2.50 per trade (for trades
in excess of 100 per month) may
apply.
|
|
C.
|
The
Company will pay CFA on a current and ongoing basis for CFA’s reasonable
time and costs required for the correction of any errors or omissions in
the Accounts and Records delivered, or the information provided, to CFA by
the Company. Any such payment shall be in addition to the fees
and charges described above, provided that approval of the amount of such
payments shall be obtained in advance by CFA from the Company if and when
such additional charges would exceed five percent of the usual charges
payable for a period under this
Agreement.
|
|
D.
|
Fund
management will monitor the expense accrual procedures for accuracy and
adequacy based on outstanding liabilities monthly, and promptly
communicate to CFA any adjustment
needed.
|
B-
1-WA/2589614.12
Amended
and Restated Schedule B
to
the
between
Z-Seven
Fund, Inc. (the “Company”)
and
Commonwealth
Fund Accounting, Inc. (“CFA”)
Dated
as of February 7, 2008
Services to be Provided by
CFA:
|
1.
|
Subject
to the direction and control of the Board of Directors of the Company (the
“Board”), CFA shall perform all accounting services with respect to the
Fund except those that are the specific responsibility of any other
service provider hired by the Company, all in such manner and to such
extent as may be authorized by the
Board.
|
|
2.
|
CFA
shall maintain and keep current the following Accounts and Records
relating to the business of the Company, in such form as may be mutually
agreed to between the Company and CFA, and as may be required by the
Investment Company Act of 1940, as amended (the “1940
Act”):
|
|
(a)
|
Cash
Receipts Journal
|
|
(b)
|
Cash
Disbursements Journal
|
|
(c)
|
Dividends
Paid and Payable Schedule
|
|
(d)
|
Purchase
and Sales Journals - Portfolio
Securities
|
|
(e)
|
Subscription
and Redemption Journals
|
|
(f)
|
Security
Ledgers - Transaction Report and Tax Lot
Report
|
|
(g)
|
Broker
Ledger - Commission Report
|
|
(h)
|
Daily
Expense Accruals
|
|
(i)
|
Daily
Interest Accruals
|
|
(j)
|
Daily
Trial Balance
|
|
(k)
|
Portfolio
Interest Receivable and Income
Journal
|
|
(l)
|
Listing
of Portfolio Holdings showing cost, market value and percentage of
portfolio comprised of each
security.
|
|
3.
|
CFA
shall perform ministerial calculations necessary to calculate the
Company’s net asset value daily, in accordance with the Company’s
registration statement and as
follows:
|
|
(a)
|
Portfolio
investments for which market quotations are available to CFA by use of an
automated financial service (a “Pricing Service”) shall be valued based on
the closing prices of the portfolio investment reported by such Pricing
Service, except where the Company has given or caused to be given specific
instructions to utilize a different
value.
|
|
(b)
|
Notwithstanding
any information obtained from a Pricing Service, all portfolio securities
shall be given such values as the Company shall direct by instructions
from the Company’s Pricing Committee, including all restricted securities
and other securities requiring valuation not readily ascertainable solely
by the use of such a Pricing
Service.
|
|
(c)
|
All
financial data reported by CFA under this Agreement shall be stated in
United States dollars or currency. To the extent necessary, CFA
(or its designee) shall convert financial data received in foreign
currencies or values to United States dollars or
currency.
|
|
4.
|
CFA
will supply the Transfer Agent with daily NAV’s for each portfolio by 6:00
p.m. EST.
|
|
5.
|
It
is the responsibility of CFA to be reconciled to the
Custodian. CFA will report any discrepancies to the Custodian,
and shall report any unreconciled items to the
Company.
|
B-
1-WA/2589614.12
