FORM OF
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT, dated as of the 6th day of December, 1996 made
by and between CornerCap Balanced Fund (the "Fund") a corporation
operating as an open-end management investment company, duly
organized and existing under the laws of the State of Massachusetts,
and Commonwealth Fund Accounting, Inc. (the "Company") a corporation
duly organized and existing under the laws of the State of Virginia.
WITNESSETH THAT:
WHEREAS, the Fund consists of a Fund, at present namely
Cornerstone Growth Fund, Inc.
WHEREAS, the Fund desires to appoint the Company 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 Fund as set forth in Section 2 of this Agreement
(the "Accounts and Records") and to perform certain other functions
in connection with such accounts and records; and
WHEREAS, the Company is willing to perform such functions upon
the terms and conditions set forth below; and
WHEREAS, the Fund will cause to be provided certain information
to the Company as set forth below;
WHEREAS, this Agreement will be effective, as to the Balanced
Fund, immediately after the closing of the reorganization
transaction between the Balanced Fund and The Atlanta Growth Fund,
Inc.;
WHEREAS, this Agreement will be effective, as to the Growth
Fund on such date as the parties agree;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto, intending to be
legally bound, do hereby agree as follows:
Section 1. The Fund shall promptly turn over to the Company
such of the Accounts and Records previously maintained by or for it
as are necessary for the Company to perform its functions under this
Agreement. The Fund authorizes the Company to rely on such Accounts
and Records turned over to it and hereby indemnities and holds the
Company, its successors and assigns harmless of and from any and all
expenses, damages, claims, suits, liabilities, actions, demands and
losses whatsoever arising out of or in connection with any error,
omission, inaccuracy or other deficiency of such Accounts and
Records or in the failure of the Fund to provide any portion of such
or to provide any additional information needed by the Company to
knowledgeably perform its functions, within a reasonable time after
requested by the Company.
The Company shall make reasonable efforts to isolate and
correct any inaccuracies, omissions, discrepancies, or other
deficiencies in the Accounts and Records delivered to the Company,
to the extent such matters are disclosed to the Company or are
discovered by it and are relevant to its performance of its
functions under this Agreement. The Fund shall provide the Company
with such assistance as it may reasonably request in connection with
its efforts to correct such matters. The Fund agrees to pay to
Company on a current and ongoing basis for its reasonable time and
costs expended on the correction of such matters, said payment to be
in addition to the fees and charges agreed to for the normal
services rendered under this Agreement, provided the amount of such
payments is approved in advance by the Fund.
Section 2. To the extent it receives the necessary
information from the Fund or its agents by Written or Oral
Instructions, the Company shall maintain and keep current the
following Accounts and Records relating to the business of the Fund,
in such form as may be mutually agreed to between the Fund and the
Company, and as may be required by the Investment Company Act of
1940:
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(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 Holdings
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
(1) Listing of Portfolio Holdings showing cost, market value
and percentage of portfolio comprised of each security.
Unless necessary information to perform the above functions is
furnished by Written or Oral Instructions to the Company to enable
the daily calculation of the Fund's net asset value at 4:15 PM
Eastern time (the close of trading on the New York Stock Exchange),
as provided below in accordance with the rime frame identified in
Section 7, the Company shall incur no liability, and the Fund shall
indemnity and hold harmless the Company from and against any
liability arising from any failure to provide complete information
or from any discrepancy between the information received by the
Company and used in such calculations and any subsequent information
received from the Fund or any of its designated Agents.
Section 3. The Company shall perform the ministerial
calculations necessary to calculate the Fund's net asset value
daily, in accordance with the Fund's current prospectuses and
utilizing the information described in this Section. Portfolio
items for which market quotations are available by the Company's use
of an automated financial information service ("Service") shall be
based on the closing prices of such Service except where the Fund
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has given or caused to be given Specific Written or Oral
Instructions to utilize a different value. All of the portfolio
securities shall be given such values as the Fund provides by
Written or Oral Instructions including all restricted securities and
other securities requiring valuation not readily ascertainable
solely by such Service. The Company shall have no responsibility or
liability for the accuracy of prices quoted by such Service; for the
accuracy of the information supplied by the Fund; or for any loss,
liability, damage, or cost arising out of any inaccuracy of such
data, unless the Company is itself negligent. The Company shall
have no responsibility or duty to include information or valuations
to be provided by the Fund in any computation unless and until it is
timely supplied to the Company in usable form. Unless the necessary
information to calculate the net asset value daily is furnished by
Written or Oral Instructions from the Fund, the Company shall incur
no liability, and the Fund shall indemnity and hold harmless the
Company from and against any liability arising from any failure to
provide complete information or from any discrepancy between the
information received by the Company and used in such calculation and
any subsequent information received from the Fund or any of its
designated agents, provided the Company notifies the Fund promptly
of its need for additional information with which to calculate net
asset value.
Section 4. For all purposes under this Agreement, the
Company is authorized to act upon receipt of the first of any
Written or Oral Instruction it receives from the Fund or its agents
on behalf of the Fund. In cases where the first instruction is an
Oral Instruction that is not in the form of a document or written
record, a confirmatory Written Instruction or Oral Instruction in
the form of a document or written record shall be delivered, and in
cases where the Company receives an Instruction, whether Written or
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Oral, to enter a portfolio transaction on the records, the Fund
shall cause the Broker-Dealer to send a written confirmation to the
Company. The Company shall be entitled to rely on the first
Instruction received, and for any act or omission undertaken in
compliance therewith shall be free of liability and fully
indemnified and held harmless by the Fund, provided however, that in
the event a Written or Oral Instruction received by the Company is
countermanded by a timely later Written or Oral Instruction received
by the Company prior to acing upon such countermanded Instruction,
the Company shall act upon such later Written or Oral Instruction.
The sole obligation of the Company with respect to any follow-up or
confirmatory Written Instruction, Oral Instruction in documentary or
written form, or Broker-Dealer written confirmation shall be to make
reasonable efforts to detect any such discrepancy between the
original Instruction and such confirmation and to report such
discrepancy to the Fund. The Fund shall be responsible, at the
Fund's expense, for taking any action, including any reprocessing,
necessary to correct any discrepancy or error, and to the extent
such action requires the Company to act the Fund shall give the
Company specific Written Instruction as to the action required.
Section 5. At the end of each month, the Fund shall cause
the Custodian to forward to the Company a monthly statement of cash
and portfolio transactions, which will be reconciled with the
Company's Accounts and Records maintained for the Fund. The Company
will report any discrepancies to the Custodian, and report any
unreconciled items to the Fund.
Section 6. The Company shall promptly supply daily and
periodic reports to the Fund as requested by the Fund and agreed
upon by the Company.
Section 7. The Fund shall and shall require each of its
agents (including without limitation its Transfer Agent and its
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Custodian) to provide the Company as of the close of each Business
Day, or on such other schedule as the Fund determines is necessary,
with Written or OraI Instructions (to be delivered to the Company by
10:00 AM the next following business day) containing all data and
information necessary for the Company to maintain the Fund's
Accounts and Records and the Company may conclusively assume that
the information it receives by Written or Oral Instructions is
complete and accurate. The Fund is responsible to provide or cause
to be provided to the Company reports of share purchases,
redemptions, and total shares outstanding on the next business day
after each net asset valuation.
Section 8. The Accounts and Records, in the agreed upon
format, maintained by the Company shall be the property of the Fund,
and shall be made available to the Fund promptly upon request and
shall be maintained for the periods prescribed in Rule 31(a)-2 under
the Investment Company Act of 1940, as amended. The Company shall
assist the Fund's independent auditors, or upon approval of the
Fund, or upon demand, any regulatory body, in any requested review
of the Fund's Accounts and Records, and shall be reimbursed for all
expenses and employee time invested in any such review of the Fund's
Accounts and Records outside of routine and normal periodic reviews
and audits. Upon receipt from the Fund, or its agents, of the
necessary information, the Company shall supply the necessary data
for the Fund or accountant's completion of any necessary tax
returns, questionnaires, periodic reports to shareholders and such
other reports and information requests as the Fund and the Company
shall agree upon from time to time.
Section 9. The Company and the Fund may from time to time
adopt such procedures as they agree upon in writing, and the Company
may conclusively assume that any procedure approved by the Fund or
directed by the Fund, does not conflict with or violate any
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requirements of its Prospectus, Articles of Incorporation, By-Laws,
or any rule or regulation of any regulatory body or governmental
agency. The Fund shall be responsible for notifying the Company of
any changes in regulations or rules which might necessitate changes
in the Company's procedures, and for working out with the Company
such changes.
Section 10.
(a) the Company, its directors, officers, employees,
shareholders and agents shall not be liable for any error or
judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except losses
resulting from willful misfeasance, bad faith or gross negligence on
the part of the Company in the performance of its obligations and
duties under this Agreement.
(b) Any person, even though also a director, officer,
employee, shareholder or agent of the Company, who may be or become
an officer, trustee, employee or agent of the Fund, shall be deemed,
when rendering services to the Fund or acting on any business of the
Fund (other than services or business in connection with the
Company's duties hereunder), to be rendering such services to or
acting solely for the Fund and not as a director, officer, employee,
shareholder or agent of, or one under the control or direction of
the Company even though paid by it.
(c) Notwithstanding any other provision of this
Agreement, the Fund shall indemnity and hold harmless the Company,
its directors, officers, employees, shareholders and agents 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 the Company may sustain or incur or which may be
asserted against the Company by any person by reason of, or as a
result of: (i) any action taken or omitted to be taken by the
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Company in good faith hereunder; (ii) in reliance upon any
certificate, instrument, order or stock certificate or other
document 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 Fund or upon the opinion of legal counsel for the Fund or its
own counsel; or (iii) any action taken or omitted to be taken by the
Company in connection with its appointment in good faith in reliance
upon any law, fact, regulation or interpretation of the same even
though the same may thereafter have been altered, changed, amended
or repealed. However, indemnification under this subparagraph shall
not apply to actions or omissions of the Company or its directors,
officers, employees, shareholders or agents in cases of its or their
own negligence, willful misconduct, bad faith, or reckless disregard
of its or their own duties hereunder.
(d) The Company shall give written notice to the Fund
within ten (10) business days of receipt by the Company of a written
assertion or claim of any threatened or pending legal proceeding
which may be subject to this indemnification. However, the failure
to notify the Fund of such written assertion or claim shall not
operate in any manner whatsoever to relieve the Fund of any
liability arising from this Section or otherwise.
(e) For any legal proceeding giving rise to this
indemnification, the Fund shall be entitled to defend or prosecute
any claim in the name of the Company at its own expense and through
counsel of its own choosing if it gives written notice to the
Company within ten (10) business days of receiving notice of such
claim. Notwithstanding the foregoing, the Company may participate
in the litigation at its own expense through counsel of its own
choosing. If the Fund does choose to defend or prosecute such
claim, then the parties shall cooperate in the defense or
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prosecution thereof and shall furnish such records and other
information as are reasonably necessary.
(f) The Fund shall not settle any claim without the
Company's express written consent which shall not be unreasonably
withheld. The Company shall not settle any claim without the Fund's
express written consent which shall not be unreasonably withheld.
Section 11. All financial data provided to, processed by,
and reported by the Company under this Agreement shall be stated in
United States dollars or currency. The Company shall have no
obligation to convert to, equate, or deal in foreign currencies or
values, and expressly assumes no liability for any currency
conversion or equation computations relating to the affairs of the
Fund.
Section 12. The Fund agrees to pay Company compensation for
its services and to reimburse it for expenses, as set forth in
Schedule A attached hereto, or as shall be set forth in amendments
to such Schedule approved by the Fund and Company. The Fund
authorizes the Company to debit the Fund's custody account for
invoices which are rendered for the services performed for the
Accounting agent function. The invoices for the service will be
sent to the Fund after the debiting with the indication that payment
has been made.
Section 13. Nothing contained in this Agreement is intended
to or shall require the Company, in any capacity hereunder, to
perform any functions or duties on any holiday, day of special
observance or any other day on which the Custodian or the New York
Stock Exchange is closed. Functions or duties normally scheduled to
be performed on such days shall be performed on, and as of, the next
succeeding business day on which both the New York Stock Exchange
and the Custodian are open. Not withstanding the foregoing, the
Company shall compute the net asset value of the Fund on each day
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required pursuant to Rule 22c-I promulgated under the Investment Act
of 1940.
Section 14. 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 15. For purposes of this Agreement, the terms Oral
Instructions and Written Instructions shall mean:
Oral Instructions: The term Oral Instruction shall mean an
authorization, instruction, approval, item or set of data, or
information of any kind transmitted to the Company in person or by
telephone, telegram, telecopy or other mechanical or documentary
means lacking a signature, by a person or persons believed in good
faith by the Company to be a person or persons authorized by a
resolution of the Board of Directors of the Fund, to give Oral
Instructions on behalf of the Fund.
Written Instructions: The term Written Instruction shall
mean an authorization, instruction, approval, item or set of data or
information of any kind transmitted to the Company in original
writing containing original signatures or a copy of such document
transmitted by telecopy including transmission of such signature
believed in good faith by the Company to be the signature of a
person authorized by a resolution of the Board of Directors of the
Fund to given Written instructions on behalf of the Fund.
The Fund shall file with the Company a certified copy of each
resolution of its Board of Directors authorizing execution of
Written Instructions Or the transmittal of Oral Instructions as
provided above.
Section 16. The Fund or the Company may give written notice
to the other of the termination of this Agreement, such termination
to take effect at the time specified in the notice not less than 60
10
days after the giving of the notice. Upon the effective termination
date, subject to payment to the Company by the Fund of all amounts
due to the Company as of said date, the Company shall make available
to the Fund or its designated recordkeeping successor, all of the
records of the Fund maintained under this Agreement then in the
Company's possession.
Section 17. 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 as follows:
If to the Fund:
Cornerstone Growth Fund, Inc.
000 Xxxxxxxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxxxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
If to the Company:
Commonwealth Fund Accounting, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxx
Section 18. This Agreement may be amended from time to time
by supplemental agreement executed by the Fund and the Company and
the compensation stated in Schedule A attached hereto may be
adjusted accordingly as mutually agreed upon.
Section 19. This Agreement shall be governed by the laws of
the Commonwealth of Virginia.
Section 20. This contract sets forth the entire
understanding of the parties with respect to the provisions
contemplated hereby, and supersedes any and all prior agreements,
arrangements and understandings relating to such services.
Section 21. Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without
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invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section 22. The Company expressly agrees that,
notwithstanding anything to the contrary herein, or in law, that it
will look solely to the assets of the Fund for any obligations of
the Fund hereunder and nothing herein shall be construe to create
any personal liability of any Trustee or any shareholder of the
Fund. The Fund expressly acknowledges that the declaration of trust
establishing the CornerCap Balanced Fund, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts,
provides that the name CornerCap Balanced Fund refers to the
Trustees under the Declaration collectively as Trustees, but not as
individuals or personally; and no Trustee, shareholder, officer,
employee or agent of the CornerCap Balanced Fund shall be held to
any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise, in connection with the affairs of said CornerCap Balanced
Fund, but the property of the CornerCap Balanced Fund only shall be
liable.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed by their duly authorized officers and their corporate
seals hereunto duly affixed and attested, as of the day and year
first above written.
CORNERCAP BALANCED FUND
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President
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COMMONWEALTH FUND ACCOUNTING, INC..
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President
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FORTUNE FUND ADMINISTRATION
Fund Accounting
Schedule of Fees
1. DOMESTIC AND ADR SECURITIES ANNUAL BASIC FEE
$12,000 minimum up to $5 million average net assets.
$18,000 minimum up to $10 million average net assets.
$24,000 minimum up to $25 million average net assets.
.0002 on next $75 million of average net assets.
1. Should total assets exceed $100 million per fund, the fee
schedule will be renegotiated.
2. Should the Fund's securities trading activity exced an average
of 100 traes per month per portfolio, an additional fee of
$2.50 will be charged per trade.
ACCOUNTING SERVICES UNIT (ASU)
-- Commonwealth Fund Accounting, Inc. offers the CornerCap Balanced
Fund a comprehensive level of service.
-- Basic Assumptions:
1. The Fund's Administrator will complete all necessary prospectus and
compliance reports, as well as monitoring of the various
limitations and restrictions.
2. Daily Transfer Agent information will be supplied to the Company in
the required format, and within the necessary time constraints
(i.e., trade date plus one by I 1:00 AM EST).
3. The Transfer Agent will remain responsible for reconciliation
of Fund share balances between the Transfer Agent reports and
the Accounting share reports.
4. The Company will supply the Transfer Agent with daily NAV's for
each portfolio by 6:00 PM Eastern time (via fax).
5. The Funds' security trading activity is presently very low, and
will remain on average less than 30 trades per month, per
portfolio.
6. To the extent the Fund requires daily security prices from specific
brokers for domestic and foreign securities, these manual
prices will be obtained by the Funds' investment advisor and
faxed to the Company by 4:00 PM Eastern time for inclusion in
the NAV calculations. In our experience, we believe the Funds'
investment advisors have better success obtaining accurate and
timely quotes from their brokers on a more consistent basis
than Commonwealth Fund Accounting, Inc. would.
It is our understanding that the Fund will supply the Company
with all non-U.S. dollar denominated prices inclusive of local
price, daily foreign exchange rate and U.S. dollar price.
To the extent the Fund owns unlisted ADR's not available on
Bloomberg, we will assume receipt of these daily prices in the
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above stated manner.
7. The Funds' custodian and investment advisor will supply Company with
all required foreign dividend and corporate action information.
For all portfolios, we suggest documentation of clear cut
security variance procedures to minimize NAV miscalculations.
8. All foreign currency and time deposits will be held within the
custodian and sub-custodian network. To the extent tax
accounting requirements for the foreign securities differ from
the "book" requirements, they will be identified by the Fund or
the Fund's independent accountant.
The Funds do not expect to invest in foreign debt instruments,
forward currency xxxxxx, currency trading except for security
settlement purposes, or options and futures. To the extent
this should change, additional fees will apply.
9. The Company will supply timely daily Portfolio Valuation Reports
(via fax) to the Fund's investment advisor identifying current
security positions, original/amortized cost, security market
values and changes in unrealized appreciation/depreciation.
It will be the responsibility of the Fund's investment advisor
to review these reports upon receipt and to promptly notify
the Company of any possible problems", incorrect security
prices or capital change information that could result in an
incorrect Fund NAV.
10. Specific deadlines and complete information will be identified for
all security trades in order to minimize any settlement
problems or NAV errors.
Details of non-money market trades will be called or faxed to
the Company on trade date plus one, no later than I 1:00 AM
Eastern time.
Trade Authorization Forms, with the appropriate officer
signature, should be faxed to the Company on all security
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trades placed by the Fund no later than trade date for money
market instruments, and trade date plus one for non-money
market securities.
There is no assurance that security trades called in after the
above stated deadline can be included in that day's work.
Money market trades will be coordinated directly through the
Custody Unit by the Fund's investment advisor.
Commonwealth Fund Accounting, Inc. will supply the investment
advisor with recommended trade ticket documents to minimize
receipt of incomplete information. (i.e., cusip numbers for all
domestic trades and sedol numbers for all foreign trades would
be supplied by the investment advisor.) We would find it
difficult to be responsible for NAV changes that resulted from
incomplete information about a trade.
11. The Fund does not currently participate in Security Lending. To the
extent it does so in the future, additional fees may apply.
12. Fund management will monitor the expense accrual procedures for
adequacy based on outstanding liabilities monthly, and promptly
communicate to the Company any adjustments needed.
13. Nothing in Schedule A will supersede or modify anything in the
basic Agreement, as the foregoing assumptions relate only to
the fees charged or to be charged by the Company to the Fund.
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