FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 5 day of January,
2001, by and between IPS Advisory, Inc., an Ohio corporation (the "Advisor"), as
investment advisor for the IPS Funds, (the "Trust"), and Firstar Mutual Fund
Services, LLC, a limited liability company organized under the laws of the State
of Wisconsin ("FMFS").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Trust is authorized to create separate series, each with
its own separate investment portfolio;
WHEREAS, FMFS is a limited liability corporation and, among other
things, is in the business of providing mutual fund accounting services to
investment companies; and
WHEREAS, the Advisor desires to retain FMFS to provide accounting
services to each series of the Trust listed on Exhibit A attached hereto, (each
a "Fund" and collectively the "Funds"), as it may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Advisor and FMFS agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
The Advisor hereby appoints FMFS as Fund Accountant of the Trust on the
terms and conditions set forth in this Agreement, and FMFS hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated from the investment
manager.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Trustees of the Trust and apply
those prices to the portfolio positions. For those securities
where market quotations are not readily available, determine the
fair value for such securities by a method approved, in good
faith, by the Board of Trustees of the Trust.
(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identify
them as, short-term or long-term; account for periodic
distributions of gains or losses to shareholders and maintain
undistributed gain or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Trust as to methodology, rate or
dollar amount.
(2) Record payments for Fund expenses upon receipt of
written authorization from the Trust.
(3) Account for Fund expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed
upon by FMFS and the Trust.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share activity
as reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Trust.
(3) Determine net investment income (earnings) for the
Funds as of each valuation date. Account for periodic
distributions of earnings to shareholders and maintain
undistributed net investment income balances as of each valuation
date.
(4) Maintain a general ledger and other accounts, books,
and financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of the Funds according
to the accounting policies and procedures set forth in the Funds'
Prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of Fund
operations at such time as required by the nature and
characteristics of the Funds.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed upon from time
to time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment
portfolio of the Funds to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales
using the tax lot relief method designated by the Trust.
(4) Provide the necessary financial information to support
the taxable components of income and capital gains distributions
to the transfer agent to support tax reporting to the
shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the Funds' accounting
records available to the Trust, the Securities and Exchange
Commission, and the outside auditors.
(2) Maintain accounting records according to the
1940 Act and regulations provided thereunder
F. FMFS will perform the following accounting functions on a
daily basis:
(1) Reconcile cash and investment balances of each
Portfolio with the Custodian, and provide the Advisor with the
beginning cash balance available for investment purposes;
(2) Update the cash availability throughout the day as
required by the Advisor;
(3) Transmit or mail a copy of the portfolio valuation
to the Advisor;
(4) Review the impact of current day's activity on a per
share basis, review changes in market value of securities, and
review yields for reasonableness.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings;
(2) Supply various Trust, Portfolio and class statistical
data as requested on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, obtain prices from a pricing source selected by FMFS
but approved by the Board of Trustees and apply those prices to the portfolio
positions of the Funds. For those securities where market quotations are not
readily available, the Advisor shall determine the fair value for such
securities by a method approved, in good faith, by the Board of Trustees of the
Trust.
If the Advisor desires to provide a price that varies from the pricing source,
the Advisor shall promptly notify and supply FMFS with the valuation of any such
security on each valuation date. All pricing changes made by the Advisor will be
in writing and must specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Trustees of the Trust that affects
accounting practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by the FMFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
FMFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect the
service provided to the Trust under this Agreement.
6. COMPENSATION
FMFS shall be compensated for providing the services set forth in this Agreement
in accordance with the Fee Schedule attached hereto as Exhibit A and as mutually
agreed upon and amended from time to time. The Advisor agrees to pay all fees
and reimbursable expenses within ten (10) business days following the receipt of
the billing notice. Notwithstanding anything to the contrary, amounts owed by
the Advisor to FMFS shall only be paid out of the assets and property of the
particular Fund involved.
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's control, except a loss
arising out of or relating to FMFS's refusal or failure to comply with
the terms of this Agreement or from bad faith, negligence, or willful
misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, if
FMFS has exercised reasonable care in the performance of its duties
under this Agreement, the Advisor shall indemnify and hold harmless
FMFS 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 FMFS may
sustain or incur or which may be asserted against FMFS by any person
arising out of any action taken or omitted to be taken by it in
performing the services hereunder, except for any and all claims,
demands, losses, expenses, and liabilities arising out of or relating
to FMFS's refusal or failure to comply with the terms of this Agreement
or from bad faith, negligence or from willful misconduct on its part in
performance of its duties under this Agreement, (i) in accordance with
the foregoing standards, or (ii) in reliance upon any written or oral
instruction provided to FMFS by any duly authorized officer of the
Trust, such duly authorized officer to be included in a list of
authorized officers furnished to FMFS and as amended from time to time
in writing by resolution of the Board of Trustees of the Trust.
FMFS 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 any action taken or omitted to be taken by FMFS as a result of
FMFS's refusal or failure to comply with the terms of this Agreement,
its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FMFS shall take all
reasonable steps to minimize service interruptions for any period that
such interruption continues beyond FMFS's control. FMFS 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 FMFS. FMFS
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 Advisor shall be
entitled to inspect FMFS's premises and operating capabilities at any
time during regular business hours of FMFS, upon reasonable notice to
FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee harmless,
the indemnitor shall be fully and promptly advised of all pertinent
facts concerning the situation in question, and it is further
understood that the indemnitee will use all reasonable care to notify
the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim which may be the subject of this
indemnification. In the event that the indemnitor so elects, it will so
notify the indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. Indemnitee shall in no
case confess any claim or make any compromise in any case in which the
indemnitor will be asked to indemnify the indemnitee except with the
indemnitor's prior written consent.
C. FMFS is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Declaration of Trust of the
Trust and agrees that any obligations assumed by the Trust pursuant to
this Agreement shall be limited in all cases to the Trust and its
assets, and if the liability relates to one or more series, the
obligations hereunder shall be limited to the respective assets of such
series. FMFS further agrees that it shall not seek satisfaction of any
such obligation from the shareholder or any individual shareholder of a
series of the Trust, nor from the Trustees or any individual Trustee of
the Trust.
8. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.
9. RECORDS
FMFS shall keep records relating to the services to be performed hereunder, in
the form and manner, and for such period as it may deem advisable and is
agreeable to the Advisor but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act,
and the rules thereunder. FMFS agrees that all such records prepared or
maintained by FMFS relating to the services to be performed by FMFS hereunder
are the property of the Trust and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and will be
promptly surrendered to the Trust on and in accordance with their request.
10. DATA NECESSARY TO PERFORM SERVICES
The Advisor or its agent, which may be FMFS, shall furnish to FMFS the data
necessary to perform the services described herein at such times and in such
form as mutually agreed upon. If FMFS is also acting in another capacity for the
Advisor, nothing herein shall be deemed to relieve FMFS of any of its
obligations in such capacity.
11. NOTIFICATION OF ERROR
The Advisor will notify FMFS of any balancing or control error caused by FMFS
the later of: within three (3) business days after receipt of any reports
rendered by FMFS to the Trust; within three (3) business days after discovery of
any error or omission not covered in the balancing or control procedure, or
within three (3) business days of receiving notice from any shareholder.
12. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and employees to
treat confidentially and as proprietary information of the Trust all records and
other information relative to the Trust and prior, present, or potential
shareholders of the Trust (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, 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 FMFS may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
13. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and will continue in
effect for a period of three years. During the initial three-year term of this
Agreement, if the Advisor terminates any services with FMFS, the Advisor agrees
to compensate Firstar an amount equal to the fees remaining under the initial
three year Agreement. Subsequent to the initial three-year term, this Agreement
may be terminated by either party upon giving ninety (90) days prior written
notice to the other party or such shorter period as is mutually agreed upon by
the parties. However, this Agreement may be amended by mutual written consent of
the parties.
14. NOTICES
Notices of any kind to be given by either party to the other party shall be in
writing and shall be duly given if mailed or delivered as follows: Notice to
FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Advisor shall be sent to:
IPS Advisory, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx X-000
Xxxxxxxxx, XX 00000
15. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any of FMFS's
duties or responsibilities hereunder is designated by the Advisor by written
notice to FMFS, FMFS will promptly, upon such termination and at the expense of
the Advisor transfer to such successor all relevant books, records,
correspondence and other data established or maintained by FMFS under this
Agreement in a form reasonably acceptable to the Advisor (if such form differs
from the form in which FMFS has maintained the same, the Advisor shall pay any
expenses associated with transferring the same to such form), and will cooperate
in the transfer of such duties and responsibilities, including provision for
assistance from FMFS's personnel in the establishment of books, records and
other data by such successor.
16. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or regulation promulgated by the SEC thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.
IPS ADVISORY, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: /s/ Xxxxxxx X'Xxxxx By: /s/ Xxxxxx Xxxxxxxxx
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Attest: /s/ Xxxxx Xxxxxxxxx Attest: /s/ Xxxx XxXxx
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