Form of Accounting and Administration Service Agreement

EX-10.1 7 ex10-1.htm

 

Exhibit 10.1

 

FORM OF

 

ACCOUNTING AND ADMINISTRATION SERVICE AGREEMENT

 

THIS AGREEMENT is made and entered into as of this ___ day of ____________, 2020, by and between DYNAMIC SHARES TRUST, a Delaware statutory trust, having its principal office and place of business at 401 W Superior St, Suite 300, Chicago, IL 60654 (the “Trust”), on behalf of its series listed in Appendix A and all future series of the Trust (each a “Fund”, and collectively the “Funds” as applicable) Dynamic Shares LLC, a Delaware limited liability company, (the “Sponsor”), and THE NOTTINGHAM COMPANY, a North Carolina business corporation, having its principal office and place of business at 116 South Franklin Street, Rocky Mount, North Carolina 27804 (the “Administrator”).

 

WHEREAS, the Administrator is in the business of providing fund accounting and administration services for the benefit of its customers; and

 

WHEREAS, the Trust desires to retain the Administrator to provide such fund accounting and administration services to each series of the Trust listed in Appendix A hereof (and as periodically amended); and

 

WHEREAS, the Administrator is willing to provide such fund accounting and administration services on the terms and conditions set forth in this agreement;

 

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, the Trust and the Administrator hereby agree as follows:

 

1.	APPOINTMENT OF THE ADMINISTRATOR

 

(a)

The Trust, on behalf of each Fund listed in Appendix A, hereby retains the Administrator to provide the accounting and administrative services enumerated in Appendix B hereof, for the period and on the terms set forth in this Agreement.

 

(b)

The Administrator hereby agrees to be retained and to furnish the services enumerated in Appendix B, for the period and on the terms set forth in this Agreement, in return for the compensation as provided in Section 4 of this Agreement.

 

2.

SERVICES AND DUTIES OF THE ADMINISTRATOR

 

(a)

With respect to each Fund, the Administrator shall provide, or cause to be provided, the accounting and administrative duties as set forth in Appendix B. The Administrator shall exercise reasonable customary care in the performance of its duties under this Agreement.

 

(b)

The Administrator may from time to time adopt procedures, or modify its procedures, to implement the terms of this Agreement. However, at all times the Administrator will perform its services and duties in compliance with, and according to, the policies and direction of the Trust.

 

(c)

The parties hereby mutually agree that the services and duties of the Administrator shall be confined to those matters expressly set forth in Appendix B or otherwise herein, and no implied duties are assumed by or may be asserted against the Administrator.

 

 

3.

BOOKS AND RECORDS

 

(a)

Record Maintenance. The Administrator shall maintain customary books and records in connection with its duties as specified in this Agreement. The Administrator shall (i) keep all books and records with respect to each Fund’s books of account, (ii) records of each Fund’s securities transactions, and (iii) all other books and records as required pursuant to Commodity Futures Trading Commission Regulation 1.31 (“CFTC Regulation 1.31”) in connection with the services provided hereunder and Rule 31a-1 and under the 1940 Act, as if the Fund were subject to such requirements, and will maintain those books and records of the Trust and the Fund, and act as the document repository thereof, as required by CFTC regulation 1.31 and according to its normal retention schedule for such books and records. Any such books or records that are prepared and maintained by the Administrator on behalf of the Trust shall be the property of the Trust and will be made available to or surrendered promptly to the Trust on request. Notwithstanding the foregoing, the Administrator shall be entitled to keep copies of any books or records that the Administrator may be required to retain by law or regulation.

 

With prior approval of the Trust and in compliance with applicable law, the Administrator may subcontract to a third party the storage and maintenance of the Trust’s books and records and such costs and expenses shall be the responsibility of the Trust.

 

In case of any request or demand for the inspection of such records by another party, the Administrator will notify the Trust and follow the Trust’s instructions as to permitting or refusing such inspection; provided that the Administrator may exhibit such records as provided in Section 14 of this Agreement and to any person in any case where it is advised by its counsel that it may be held liable for failing to do so, unless (in cases involving potential exposure only to civil liability) the Trust has agreed to indemnify the Administrator against such liability.

 

(b)

Delivery of Documents. The Trust shall provide the Administrator with the necessary documents, records, and other information in its possession or control to enable the Administrator to perform its duties and obligations under this Agreement, including, but not limited to, a copy of the Trust documents and any amendments thereto.

 

(c)

Converting to Administrator’s System. The Trust agrees to cooperate with the Administrator in converting to the Administrator’s data processing system and software (“Administrator’s System”) to the extent necessary for Administrator to perform the Administrator’s duties under this Agreement. Notwithstanding anything to the contrary in this Agreement, the Trust acknowledges and agrees that all computer programs and procedures developed by or for the Administrator to perform its duties and services under this Agreement, including, but not limited to, the Administrator’s Systems, are and shall remain the sole property of the Administrator.

 

4.

FEES, EXPENSES AND OTHER COMPENSATION

 

(a)

Fees. In exchange for the services provided by the Administrator pursuant to Appendix B or otherwise herein, the Trust hereby agrees to pay, or cause to be paid, to the Administrator fees as specified in the Fund specific Appendices hereof. The Administrator will be entitled to additional compensation for any special projects or services requested by the Trust outside the scope of Appendix B or otherwise herein.

 

 

Asset-based compensation will be calculated and accrued daily and paid to the Administrator monthly. For flat fees, partial months will be prorated. Where applicable, the fee shall be calculated based upon the average daily net assets of each Fund. For this purpose, the average daily net assets shall be computed in the manner described in the Trust’s Declaration of Trust or the Trust’s Prospectus or Statement of Additional Information for that Fund.

 

(b)

Special Projects. The Trust may, from time to time, request that the Administrator perform additional tasks above and beyond the general scope of its responsibilities under Appendix B herein. The Trust hereby agrees to pay, or cause to be paid, to the Administrator special project fees as specific in Schedule 1 hereof.

 

(c)

Expenses. The Trust hereby assumes and will pay, or cause to be paid, all expenses of the Trust and the Fund(s) pursuant to Schedule 2 hereof and will allocate the Fund(s)’ portion of such expenses to the Fund(s) for direct payment.

 

(d)

Reimbursement. The Trust will promptly reimburse, or cause to be reimbursed, the Administrator for its reasonable expenses in connection with the Trust’s and the Fund(s)’ activities including, but not limited to:

 

(i)

costs of telephone services (but not telephone equipment) including, but not limited to, long distance telephone and wire charges;

 

(ii)

postage and delivery costs;

 

(iii)

costs to print special forms and stationary;

 

(iv)

copying charges;

 

(v)

costs of financial publications (if any) or professional memberships (e.g. ICI membership) in connection with the Trust’s and the Fund(s)’ activities;

 

(vi)

third party storage fees of the Trust’s and the Fund(s)’ files and records, etc.; and

 

(vii)

any travel and lodging expenses incurred by officers and employees of the Administrator in connection with its services under this agreement.

 

(e)

Compensation from Transactions. The Trust authorizes any entity or person associated with the Administrator that is a member of a national securities exchange to effect any transaction on the exchange for the account of the Trust which is permitted by Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv) thereunder.

 

(f)

Survival of Compensation Rates. All rights of compensation under this Agreement for services performed as of the termination date will survive the termination of this Agreement. In addition, upon liquidation or upon termination of this Agreement as to any Fund, the Administrator shall be entitled to such other compensation as set forth in Appendix C.

 

 

5.

NON-EXCLUSIVITY

 

The services of the Administrator rendered to the Trust are not to be deemed to be exclusive. The Administrator is free to render such services to others and to have other businesses and interests. It is understood that trustees, officers, employees, or shareholders of the Trust are or may be or become interested in the Administrator, as directors, officers, employees, and shareholders or otherwise and that directors, officers, employees, and shareholders of the Administrator and its counsel are or may be or become similarly interested in the Trust, and that the Administrator may be or become interested in the Trust as a shareholder or otherwise.

 

6.

INDEPENDENT CONTRACTOR STATUS

 

The Administrator will, for the purpose of this Agreement, be deemed an independent contractor and, unless otherwise expressly provided or authorized, will have no authority to act or represent the Trust in any way and will not be deemed an agent of the Trust.

 

7.

LIMITATION OF LIABILITY, INDEMNIFICATION, AND RELIANCE

 

For the purposes of this Section 7 the term “Administrator” shall include directors, officers, employees, and other agents of the Administrator, as well as the Administrator itself:

 

(a)

Limitation of Liability. The duties of the Administrator shall be confined to those expressly set forth in this Agreement, and no implied duties are assumed by or may be asserted against the Administrator. The Administrator shall not be liable for any error of judgment, mistake of law, loss or damage suffered by the Fund(s) in connection with any investment, or any act or omission of the Administrator in carrying out its duties under this Agreement, except a loss or damage resulting directly from willful misconduct or gross negligence on the part of the Administrator in the performance of its duties under this Agreement, or from reckless disregard by the Administrator of its obligations under this Agreement.

 

Further, in no event shall the Administrator be liable under any provision of, or in connection with, this agreement (regardless of whether a claim is based on contract, tort, or otherwise) for any damages other than actual and direct damages, and the Administrator shall have no liability for any incidental, indirect, consequential, special, or exemplary damages or losses which the Fund(s) may incur or suffer, whether or not the likelihood or possibility of such damages was known to the Administrator in advance.

 

(b)

Indemnification. Provided that the Administrator has exercised reasonable customary care in the performance of its duties under this Agreement, the Trust assumes full responsibility and will indemnify and defend the Administrator and hold it harmless from and against any and all actions, suits, and claims, whether groundless or otherwise, and from and against any and all losses, damages, costs, charges, reasonable counsel fees, and disbursements, payments, expenses, and liabilities (including reasonable investigation expenses) of every nature and character arising or occurring directly or indirectly out of Administrator’s relationship to the Trust under this Agreement or any of Administrator’s action taken or nonactions with respect to the performance of services under this Agreement; provided, however, Administrator shall not be indemnified against any liability arising out of its own willful misfeasance, bad faith, gross negligence, or reckless disregard in the performance of its duties or its own reckless disregard of its duties or obligations under this Agreement. The indemnity and defense provisions set forth herein shall indefinitely survive the termination of this Agreement.

 

 

The rights hereunder shall include the right to reasonable advances of defense expenses in the event of any pending or threatened litigation with respect to which indemnification hereunder may ultimately be merited. In order that the indemnification provision contained herein shall apply, however, it is understood that if in any case the Trust may be asked to indemnify, defend, or hold the Administrator harmless, the Trust shall be fully and promptly advised of all pertinent facts concerning the situation in question, and it is further understood that the Administrator will use all reasonable care to identify and 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, but failure to do so in good faith will not affect the rights under this Agreement.

 

The Trust will be entitled to participate at its own expense or, if it so elects, to assume the defense of any suit brought to enforce any claims subject to this indemnity provision. If the Trust elects to assume the defense of any such claim, the defense will be conducted by counsel or chosen by the Trust and satisfactory to the Administrator, whose approval will not be unreasonably withheld. In the event the Trust elects to assume the defense of any suit and retain counsel, the Administrator will bear the fees and expenses of any additional counsel retained by it, absent a conflict of interest between the Trust and the Administrator. In the event of a conflict between the Trust and the Administrator or if the Trust does not elect to assume the defense of a suit, the Trust shall reimburse the Administrator for the reasonable fees and expenses of any counsel retained by Administrator.

 

The Administrator may apply to the Trust at any time for instructions and may consult with the Trust’s counsel with respect to any matter arising in connection with the Administrator’s duties, and the Administrator will not be liable or accountable for any action taken or omitted by it in good faith in accordance with such instructions or with the opinion of the Trust’s counsel or auditors. Also, the Administrator will be protected in acting on any document that it reasonably believes to be genuine and to have been signed or presented by the proper person or persons. The Administrator will not be held to have notice of any change of authority of any officers, employee, or agent of the Trust until receipt of written notice thereof from the Trust.

 

Should the foregoing indemnification agreement be found unenforceable or that contribution is required from Administrator, then the Administrator’s aggregate contribution for all losses, claims, damages, or liabilities, including rescission liabilities, shall not exceed the value of all fees earned by and expenses reimbursed to the Administrator pursuant to this Agreement. No person or entity guilty of fraudulent misrepresentation shall be entitled to contribution from any person or entity that is not so guilty.

 

Performance by the Administrator of its obligations under this Agreement does not absolve or release the Trust or the Trust’s Sponsor or commodity pool operator from its fiduciary responsibilities to the Funds or the Funds’ shareholders.

 

(c)

Reliance. Except to the extent that the Administrator may be liable pursuant to this Section 7, the Administrator shall not be liable for any action taken or failure to act in good faith in reliance upon:

 

(i)

Advice from the Trust or from counsel to the Trust;

 

 

(ii)

Any oral instruction which it receives and which it reasonably believes in good faith (pursuant to procedures mutually agreed to by the Administrator and the Advisors) was transmitted by the person or persons authorized by the Trust to give such oral instruction;

 

(iii)

Any written instruction or certified copy of any resolution of the Trust, and the Administrator may rely upon the genuineness of any such document, copy or facsimile thereof reasonably believed in good faith by the Administrator to have been validly executed; or

 

(iv)

Any signature, instruction, request, letter of transmittal, certificate, opinion of counsel, statement, instrument, report, notice, consent, order, or other document reasonably believed in good faith by the Administrator to be genuine and to have been signed or presented by the Trust or other proper party or parties;

 

and the Administrator shall not be under any duty or obligation to inquire into the validity or invalidity or authority or lack of authority of any statement, oral or written instruction, resolution, signature, request, letter of transmittal, certificate, opinion of counsel, instrument, report, notice, consent, order, or any other document or instrument which the Administrator reasonably believes in good faith to be genuine.

 

(d)

Errors of Others. The Administrator shall not be liable for the errors of other service providers to the Trust, 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 the Administrator) and errors in information provided by an commodity pool operator (including prices and pricing formulas and the untimely transmission of trade information) or custodian to the Trust; except or unless any of the Administrator’s actions or inaction is a direct or proximate cause of the error.

 

(e)

Reliance on Electronic Instructions. If the Trust has the ability to originate electronic instructions to the Administrator in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information, then in such event the Administrator shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established and agreed upon by the Administrator and the Advisors.

 

(f)

If the Trust requires for the Administrator to provide the Fund with portfolio compliance services, such services shall be provided pursuant to the terms of this Section 7 (the “Portfolio Compliance Services”). The precise compliance review and testing services to be provided shall be as directed by each Fund and as mutually agreed between Administrator and such Fund, and the results of Administrator’s Portfolio Compliance Services shall be detailed in a portfolio compliance summary report (the “Compliance Summary Report”) prepared on a periodic basis as mutually agreed. Each Compliance Summary Report shall be subject to review and approval by the respective Fund.

 

(g)

A Fund will examine each Compliance Summary Report delivered to it by Administrator and notify Administrator of any error, omission or discrepancy within ten (10) days of its receipt. The Fund agrees to notify Administrator promptly in writing if it fails to receive any such Compliance Summary Report. The Fund further acknowledges that unless it notifies Administrator of any error, omission or discrepancy within 10 days, such Compliance Summary Report shall be deemed final and shall not be reissued. In addition, if the Fund learns of any out-of-compliance condition before receiving a Compliance Summary Report reflecting such condition, the Fund will notify Administrator of such condition within one (1) business day after discovery thereof.

 

 

(h)

While Administrator will endeavor to identify out-of-compliance conditions, Administrator does not and could not for the fees charged, make any guarantees, representations, or warranties with respect to its ability to identify all such conditions. In the event of any errors or omissions in the performance of Portfolio Compliance Services, the Fund’s sole and exclusive remedy and Administrator’s sole liability shall be limited to re-performance by Administrator of the Portfolio Compliance Services affected and in connection therewith the correction of any error or omission, if practicable and the preparation of a corrected report, at no cost to the Fund.

 

8.

EFFECTIVE DATE, DURATION AND TERMINATION

 

(a)

Effective Date. This Agreement shall become effective on the date first written above.

 

(b)

Duration. This Agreement shall remain effective for a period of three years. Thereafter, this Agreement shall continue in full force and effect unless terminated by either party.

 

(c)

Termination. This Agreement may be terminated by either party at the end of the initial term or any renewal term by giving not less than ninety (90) days’ prior written notice to the other party. This Agreement may also be terminated at any time as follows:

 

(i)

By mutual written agreement of the parties; or

 

(ii)

For cause – in the event of willful misconduct, gross negligence, or breach of this Agreement by the non-moving party. Such termination requires giving not less than thirty (30) days’ prior written notice to the other party.

 

Unless terminated for cause, the Administrator shall be paid either a Termination or Liquidation fee (as appropriate). Said fee is not a penalty but an extra fee to compensate the Administrator for its service in assisting in transferring records and reports or otherwise wrapping up its services under this Agreement for such Fund. The relevant fee shall be as follows:

 

Upon the termination of this Agreement with respect to any Fund:

 

(i)

A fee equal to the compensation paid (or payable to) the Administrator for the two months immediately prior to such termination.

 

Upon the liquidation of any Fund:

 

(i)

In lieu of the foregoing termination fee, a liquidation fee equal to the compensation paid (or payable to) the Administrator for the three months immediately prior such termination.

 

Termination and Liquidation fees shall be paid promptly upon termination or liquidation, respectively.

 

 

Termination and Liquidation fees shall be in addition to reimbursing the Administrator for its reasonable out-of-pocket expenses in connection with the Administrator’s activities in effecting such termination or liquidation. This includes, but is not limited to, the cost of delivering to the Trust or its designee the Trust’s records and documents or copies thereof.

 

(d)

Cooperation and Good Faith. Upon termination of this Agreement, the Administrator and the Trust agree to cooperate in good faith in transferring records and other information in the Administrator’s possession and wrapping up their relationship under this Agreement in a commercially reasonable manner.

 

(e)

Reimbursement. Upon termination of this Agreement for any reason, the Trust shall pay to the Administrator such compensation as may be due to the Administrator under this Agreement for services performed prior to the date of termination, including any out-of-pocket reimbursements due and payable hereunder.

 

(f)

Termination Fee. The above-referenced termination fee is not a penalty, but a charge to compensate the Administrator for its services in assisting in transferring records and reports and otherwise wrapping up its services under this Agreement. Notwithstanding the foregoing, the Administrator shall not be entitled to the termination fee if the Administrator elects to terminate this Agreement or the Administrator is terminated due to its willful misconduct, gross negligence, or breach of this Agreement.

 

(g)

Survival of Certain Obligations. The obligations of Sections 4, 7, 8, 13, and 14 shall survive any termination of this Agreement.

 

9.

AMENDMENTS

 

No provision of this Agreement may be amended, modified, or waived in any manner except by a written instrument signed by the party against which the enforcement of such is sought.

 

10.

ASSIGNMENT AND SUBCONTRACTING

 

(a)

Assignment. The parties hereby mutually consent that:

 

(a)

Without the express written consent of both parties, any assignment or attempted assignment of this Agreement constitutes a breach of the Agreement; and

 

(b)

Any such assignment or attempted assignment is void; and

 

(c)

Any such assignment or attempted assignment will immediately terminate this Agreement.

 

However, to the extent that such express written consent is sought, the parties also agree that such consent will not be unreasonably withheld or delayed.

 

In the event that this Agreement is successfully assigned, either by express written consent of the parties or in any way otherwise, this Agreement shall be binding upon the respective assigns.

 

(b)

Subcontracting. The parties hereby mutually consent that the Administrator may, at its expense unless otherwise provided in the Agreement, subcontract with any entity or person concerning the provision of the services contemplated hereunder. The Administrator shall not, however, be relieved of any of its obligations under this Agreement by the appointment of such subcontractor. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors.

 

 

11.

ADDITIONAL FUNDS AND CLASSES

 

If the Trust establishes one or more series of Shares or one or more classes of Shares after the effectiveness of this Agreement, such series of Shares or classes of Shares, as the case may be, shall become Funds and classes under this Agreement. However, either the Administrator or the Trust may elect in writing not to make any such series or classes subject to this Agreement.

 

12.

DISTINCTION OF FUNDS

 

Notwithstanding any other provision of this Agreement, the parties agree that the assets and liabilities of each Fund of the Trust are separate and distinct from the assets and liabilities of each other Fund 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. In cases where there are multiple funds managed by the same Sponsor or commodity pool operator, every attempt will be made to allocate expenses among the funds in a manner that represents the division of expense required for each fund’s operations.

 

13.

PROPRIETARY INFORMATION

 

(a)

Proprietary Information of the Administrator. The Trust acknowledges that the databases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals maintained by the Administrator on databases under the control and ownership of the Administrator or a third party constitute copyrighted, trade secret, or other proprietary information (collectively, “the Administrator’s Proprietary Information”) of substantial value to the Administrator or the third party. The Trust agrees to treat all Proprietary Information as proprietary to the Administrator and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided under this Agreement.

 

(b)

Proprietary Information of the Trust. The Administrator acknowledges that the Shareholder list and all information related to Shareholders furnished to the Administrator by the Trust or by a Shareholder in connection with this Agreement (collectively, “Customer Data”), all information regarding the Trust Portfolios, arrangements with brokerage firms, compensation paid to or by the Trust, trading strategies and all such related information (collectively, “the Trust’s Proprietary Information”) constitute proprietary information of substantial value to the Trust. In no event shall the Administrator’s Proprietary Information be deemed the Trust’s Proprietary Information or Customer Data. The Administrator agrees to treat all of the Trust’s Proprietary Information and Customer Data as proprietary to the Trust and further agrees that it shall not divulge any of the Trust’s Proprietary Information or Customer Data to any person or organization except as may be provided under this Agreement or as may be directed by the Trust or as may be duly requested by regulatory authorities.

 

(c)

Employee Notification. Each party agrees to take reasonable efforts to advise its employees of their obligations pursuant to this Section 13. The obligations of this Section shall survive any earlier termination of this Agreement.

 

 

14.

CONFIDENTIALITY

 

The Administrator and the Trust agree that all books, records, information, and data pertaining to the business of the other party, which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement, shall remain confidential, and shall not be voluntarily disclosed to any other person, except that the Administrator may:

 

(a)

Prepare or assist in the preparation of periodic reports to shareholders and regulatory bodies such as the SEC;

 

(b)

Provide information typically supplied in the investment company industry to companies that track or report price, performance or other information regarding investment companies;

 

(c)

Release such other information as approved in writing by the Trust which approval shall not be unreasonably withheld;

 

(d)

Release such information as is necessary when the Administrator is exposed to civil or criminal liability for failure to comply when divulgence is requested by a duly constitutional authority or when so requested by the Trust or Advisors;

 

(e)

In accordance with Section 248.11 of Regulation S-P (17 CFR 248.1 – 248.30) (“Reg S-P”), the Administrator will not directly, or indirectly through an affiliate, disclose any non-public personal information as defined in Reg S-P, received from the Fund to any person that is not affiliated with the Fund or with the Administrator and provided that any such information disclosed to an affiliate of the Administrator shall be under the same limitations on non-disclosure.

 

For the purposes of this section, the following records and other information shall not be considered confidential:

 

(a)

Any record or other information that is or becomes publicly available through no fault of the Administrator;

 

(b)

Any record and other information that is released by the Trust in a public release;

 

(c)

Any record or other information that is lawfully obtained from third parties who are not under an obligation to keep such information confidential; or

 

(d)

Any record or other information previously known by Administrator.

 

15.

COMPLIANCE

 

The Administrator undertakes to comply with all applicable requirements for the Securities Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, and other laws, rules, and regulations of governmental authorities having jurisdiction with respect to the duties to be performed by the Administrator under this Agreement.

 

16.

TRUST OBLIGATION

 

It is understood that this Agreement has been executed on behalf of the Trust by an officer of the Trust in his capacity as an officer and not individually. The obligations of this Agreement shall only be binding upon the assets and property of each Fund and shall not be binding upon any trustee, officer, or shareholder of the Trust individually.

 

 

17.

REPRESENTATIONS AND WARRANTIES

 

Representations of the Administrator. The Administrator represents and warrants to the Trust that:

 

(i)

It is a corporation duly organized and existing and in good standing under the laws of the State of North Carolina;

 

(ii)

It is empowered under applicable laws and by its organizational documents to enter into this Agreement and perform its duties under this Agreement; and

 

(iii)

It has access to the necessary facilities, equipment, and personnel to perform its duties and obligations under this Agreement.

 

(iv)

Its fees and charges set out in this Agreement are solely to cover administrative expenses and not distribution expenses.

 

Representations of the Trust. The Trust represents and warrants to the Administrator that:

 

(i)

It is a Trust duly organized and existing and in good standing under the laws of the State of Delaware;

 

(ii)

It is empowered under applicable laws and by its Organizational Documents to enter into and perform this Agreement;

 

(iii)

All proceedings required by said Organizational Documents have been taken to authorize it to enter into and perform this Agreement; and

 

(iv)

A registration statement under the Securities Act of 1933, as amended, on behalf of each of the Funds is currently effective (or will be effective when the Administrator first performs services under this Agreement) and will remain effective during the term of this Agreement, and appropriate state securities law filings as required, have been or will be made and will continue to be made, with respect to all Shares of the Fund being offered for sale.

 

18.

LEGAL CONSTRUCTION

 

(a)

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 affected by such determination, 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.

 

(b)

Interpretation. If any provision of this Agreement, or portion thereof, is capable of two interpretations, one of which would render the provision, or portion thereof, void and the other which would render the provision, or portion thereof, valid, then the provision, or portion thereof, shall have the same meaning which renders it valid.

 

 

(c)

Construction. The language used herein shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against either party.

 

19.

NOTICE

 

Any notice required or permitted to be given by either party to the other party shall be in writing and will be deemed sufficient if personally delivered or sent by registered or certified mail, postage prepaid, addressed by the party giving notice to the other party at the following addresses (or such other address for a party as shall be specific by like notice):

 

(a)

To the Trust:

 

Dynamic Shares Trust

401 W Superior St, Suite 300

Chicago, IL 60654

Attn: Weixuan Zhang

 

(b)

To the Sponsor:

 

Dynamic Shares LLC

401 W Superior St, Suite 300

Chicago, IL 60654

Attn: Weixuan Zhang

 

(c)

To the Administrator:

 

The Nottingham Company

Attn: Legal Department

116 South Franklin Street

Post Office Box 69

Rocky Mount, North Carolina ###-###-####

 

20.

MISCELLANEOUS

 

(a)

Force Majeure. In the event that either party is unable to perform its obligations under the terms of this Agreement because of acts of God, 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 party resulting from such failure to perform or otherwise from such causes.

 

(b)

Arbitration. Any controversy or claim arising out of, or related to, this Agreement, its termination or the breach thereof, shall be settled by binding arbitration by three arbitrators (or by fewer arbitrator(s), if the parties subsequently agree to fewer) in the City of New York, in accordance with the rules then obtaining of the American Arbitration Association, and the arbitrators’ decision shall be binding and final, and judgment upon the award may be entered in any court having jurisdiction thereof.

 

(c)

Headings. Section and paragraph headings in this Agreement are included for convenience only and are not to be used to construe or interpret this Agreement.

 

 

(d)

Entire Agreement. This Agreement, including all appendices, constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.

 

(e)

Multiple Originals. 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 one and the same instrument.

 

(f)

Definitions of Certain Terms. The terms “interested persons” and “affiliated persons,” when used in this Agreement, will have the respective meanings specified in the 1940 Act and the rules and regulations thereunder, subject to such exemptions as granted by the Securities and Exchange Commission.

 

(g)

Governing Law. This Agreement shall be governed by the laws of the State of North Carolina without regard to the principles of conflict of laws, provided that nothing herein shall be construed in a manner inconsistent with the Securities Act of 1933, as amended, or any applicable rule or order of the Securities and Exchange Commission.

 

[Signatures on Following Page]

 

 

REPRESENTATION OF SIGNATORIES. Each of the undersigned expressly warrants and represents that they have full power and authority to sign this Agreement on behalf of the party indicated and that their signature will bind the party indicated to the terms hereof.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

 

DYNAMIC SHARES TRUST
By:
Name:
Title:
DYNAMIC SHARES LLC
By:
Name:
Title:
THE NOTTINGHAM COMPANY
By:
Name:	Katherine M. Honey
Title:	Executive Vice President

 

{Signature Page to Fund Accounting and Administration Service Agreement}

 

 

SCHEDULE 1

 

SPECIAL PROJECT FEES

FUND ACCOUNTING AND ADMINISTRATION SERVICE AGREEMENT

 

Legal & Administrative Projects

 

The Trust may, from time to time, request that the Administrator perform additional tasks above and beyond the general scope of its responsibilities under Appendix B herein. A non-exhaustive list of common services and their fees is included here. Additional services not listed here will be invoiced at a rate agreed to by the Trust and the Administrator.

 

S-1/3 Filing (beyond annual)		$	2,500
424B3 Filing		$	500
Form 8-K Filing		$	500
Proxy and Special Shareholder Meeting		$	5,000

 

Technology Projects

 

The Trust may, from time to time, request that the Administrator create or aid in the creation of specialized reports, databases, or other customized digital products. These may include, but are not limited to, additional data displayed for a Fund’s Advisor or shareholders on its web portal.

 

Each such project will be invoiced at a rate of $500 plus $150 per hour (beyond the first 3) worked by the Administrator’s programming staff.

 

 

SCHEDULE 2

 

FUND EXPENSES

FUND ACCOUNTING AND ADMINISTRATION SERVICE AGREEMENT

 

The Trust hereby assumes and will pay, or cause to be paid, all expenses of the Trust and the Fund(s), either pursuant to those enumerated in this Schedule, or those not otherwise allocated within this Agreement.

 

Such expenses include, but are not limited to, the following:

 

●	Organizational expenses		●	Costs and expenses of Trust meetings
●	Taxes		●	Fees payable to each Fund’s commodity pool operator
●	Brokerage fees and commissions with regard to portfolio transactions of the Fund(s)		●	Auditing and legal expenses of the Trust and the Fund(s)
●	Interest charges, fees, and expenses of the custodian of the Fund(s)’ portfolio securities		●	Cost of maintenance of the Trust’s and Fund(s)’ existence as a legal entity;
●	Costs of fidelity bonds and officers/errors and omissions insurance policies		●	Administrative expenses (including, but not limited to, any fees, expenses, and reimbursements payable to the Administrator under this Agreement)
●	Litigation and other extraordinary or nonrecurring expenses involving the Trust or the Fund(s)		●	Any actual out-of-pocket expenses of the Administrator as provided in this Agreement and as may be agreed upon from time to time
●	Fees and expenses of trustees who are not interested persons of the Trust as that term is defined by law		●	Other expenses relating to the Trust not specified in this Agreement as being the responsibility of the Administrator
●	Fees and expenses of the Trust’s dividend dispersing and transfer agent(s)		●	Outsourced compliance services including compensation of the Chief Compliance Officer of the Trust and Fund(s)
●	Costs and expenses of initial and ongoing registration of the Fund(s)’ shares under Federal and State securities laws		●	Costs of preparing (including typesetting), printing, and mailing reports, prospectuses, statements of additional information, proxy solicitation material, and notices to existing shareholders

 

The Trust recognizes and agrees to pay the following specific amounts associated with the following common expenses. The Trust acknowledges that these expenses are either charged by, or based on charges from, third party service providers, and are therefore subject to change at any time and without notice:

 

1.

Securities Pricing (per item, per pricing day):

 

Equities (including exchange listed derivatives)		$	0.25
Foreign Securities		$	1.00
U.S. Treasuries		$	0.50
Asset Backed Securities		$	1.00
Conv/High Yield Bonds		$	1.50
Municipal Bonds		$	0.50
Corporate Bonds		$	0.50
Corporate Actions (Equities)		$	2.00
Corporate Actions (Foreign Securities)		$	2.00

 

2.

EDGAR Filings:

 

Per Page

$

6.00

 

 

APPENDIX A

 

FUNDS TO BE SERVICED

FUND ACCOUNTING AND ADMINISTRATION SERVICE AGREEMENT

 

1.

Dynamic Short Short-Term Volatility Futures ETF

 

 

APPENDIX B

 

ADMINISTRATOR’S SERVICES

FUND ACCOUNTING AND ADMINISTRATION SERVICE AGREEMENT

 

The Administrator will provide customary administrative services, regulatory reporting, fund accounting, and related portfolio accounting services to the Trust with adequate office space, equipment, personnel, and facilities for handling those services for the Fund(s), and such other services as the Trust may, from time to time, reasonably request, and the Administrator may, from time to time, reasonably determine to be necessary to perform its obligations under this Agreement. In addition, at the request of the Trust, the Administrator will make reports to the Trust concerning the performance of its obligations hereunder.

 

The Administrator shall provide, or cause to be provided by others, the following services:

 

1.

ACCOUNTING AND ADMINISTRATIVE SERVICES

 

Without limiting the generality of the foregoing, the Administrator will:

 

a.

Process and review transactions, input and reconcile the Funds’ investment activity, including but not limited to:

 

●

Investments, including tax lots

 

●

Income

 

●

Dividends

 

●

Capital activity

 

●

Principal paydowns

 

●

Cash activity

 

●

Corporate actions

 

●

Calculation of yields, including SEC yields and dividend yields when applicable

 

b.

Reconcile positions against the records of the custodian or other applicable party including:

 

●

Securities, futures and over-the-counter (“OTC”) holdings

 

●

Cash including cash transfers, fees assessed and other investment related cash transactions

 

●

Trade settlements

 

●

ETF share reconciliation with DTCC

 

●

Commission expense and reimbursements, if applicable

 

●

Daily variation margin

 

c.

Update each security, futures, and OTC position as to the following:

 

●

Daily valuation

 

●

Market prices obtained from approved sources or Fair Valuation obtained from an Authorized Person of the Fund

 

 

d.

Perform investment accounting including:

 

i.

Amortization/accretion at the individual tax lot level

 

ii.

Determine realized and unrealized capital gains/losses

 

iii.

General ledger entries

 

iv.

Daily accruing of expenses and other expense related transactions

 

v.

Book value calculations

 

vi.

Trade date + 1 accounting

 

vii.

Daily NAV Calculation – Calculation of the NAV as of the earlier of 4:00 p.m. Eastern or close of Fund’s benchmark.

 

e.

Disseminated the NAV and portfolio holdings as follows:

 

i.

Provide daily NAV and holding data to Morningstar, Lipper, and other organizations as requested by the Sponsor

 

ii.

Create and transmit NAV, IIV data, and holding files on a daily basis to the FTP site(s) designated by the Sponsor

 

f.

Provide accounting reports in connection with the annual audit and other audits and examinations by regulatory agencies

 

g.

Provide internet-based access to fund accounting data

 

h.

Provide position reporting

 

i.

Prepare, review and file quarterly reports on Form 10-Q and annual reports on Form 10-K in accordance with U.S. GAAP and with deference to Sponsor preferences in a timely fashion, which may include:

 

i.

Statements of Financial Condition

 

ii.

Schedules of Investments

 

iii.

Statements of Operations

 

iv.

Statements of Changes in Shareholders’ Equity

 

v.

Statements of Cash Flows

 

vi.

Notes to Financial Statements

 

vii.

Trust Combined Statements

 

j.

Review/Prepare other financial data included in the 10-Qs and 10-Ks.

 

k.

Prepare quarterly reports on Form 10-Q for the Fund for each of the first three fiscal quarters of the Funds, and annual report on Form 10-K for the Funds fiscal year, or as requested by the Sponsor. The preparation of each Form 10-Q and 10-K includes facilitating delivery of the filing to the printer, coordination of all printer and author edits, the review of printer drafts and the review of final printer invoices.

 

l.

Upon review and approval of each form 10-K and 10-Q by the Sponsor’s Principal Financial Officer (or such person performing such functions), the Administrator shall edgarize and file, or cause to be edgarized and filed, such reports (including the XBRL versions) with the SEC, CFTC and/or NFA, as required, including any applicable executive officer certifications or other exhibits to such reports.

 

 

m.

Coordinate with Auditors the review of the quarterly report in the 10-Q and the audit of the annual report in the 10-K.

 

n.

Prepare monthly account statements in conformity with CFTC Regulations within 20 days after month end.

 

o.

Prepare quarterly CPO-PQR reporting within a mutually agreed upon timeframe following the quarter end.

 

p.

Prepare annual report that is filed electronically with NFA (PFS) within a mutually agreed upon timeframe following the Funds fiscal year end.

 

q.

Prepare Liquidation Statements in accordance with NFA regulations in a timely manner.

 

r.

Prepare and coordinate the annual shareholder mailing within 90 days of the Funds’ fiscal year subject to final review by the Funds’ Sponsor in compliance with the requirements of CFTC Rule 4.22(c). In consultation with the Funds Sponsor, facilitate delivery of the filing to the printer. Such preparation includes the coordination of all printer and author edits, the review of printer drafts and review of final printer invoices.

 

s.

Prepare Seed Financial Statements as needed.

 

t.

Determine monthly management fees payable and prepare authorizations for disbursements.

 

u.

Prepare a quarterly report listing any known material errors/compliance violations that occurred with respect to the Administrator’s procedures.

 

v.

Provide assets and/or calculations of license fees to license providers.

 

w.

Prepare, update and maintain regulatory calendars with respect to services provided .

 

x.

As requested by the Sponsor, assist with requests for information/documentation from the SEC, CFTC, NFA, applicable exchanges, and other regulatory authorities to the extent Administrator is in possession of such information.

 

y.

Provide the Sponsor sub-certifications relating to Sarbanes-Oxley attestation for Form 10-K, and Form 10-Q filings.

 

z.

Assist in responses for inquiries from the SEC and other regulatory authorities required.

 

aa.

Establish expense accruals, maintain expense files and coordinate payment of invoices.

 

bb.

Monitor Expense reductions related to Offering costs.

 

cc.

Prepare fund budgets and recommendations for adjustments as necessary.

 

dd.

Prepare monthly Fund expense analysis.

 

ee.

Prepare stock split info as needed.

 

ff.

Provide financial data for S-1/S-3 and other regulatory filings.

 

gg.

Prepare statistical reports for information services.

 

hh.

Calculate and maintain total return information.

 

ii.

Prepare performance data every other month within ten days of month-end for inclusion in S-1/S-3 and as requested by Sponsor.

 

jj.

Obtain Tax ID numbers, CUSIP numbers, ISIN numbers, and NSCC CUSIPs/Symbols.

 

 

kk.

Coordinate and facilitate DCP meetings, including preparing agendas and providing minutes.

 

ll.

Establish control accounts for the new funds.

 

mm.

Provide accounting and other data to the Sponsor and its Tax Accountants in support of the preparation of the K-1’s and the related filings.

 

nn.

Assist in coordinating the filing of the Fidelity Bond with the SEC.

 

oo.

Assist with and/or coordinate such other filings, notices and regulatory matters, including Form 8-K, on such terms and conditions as the parties hereto may mutually agree upon in writing from time to time.

 

pp.

Assist the Fund in the handling of SEC examinations by providing requested documents in the possession of Administrator that are on the SEC examination request list and any other information that may be required by rule or regulation.

 

qq.

At the request of the Fund Sponsor, review miscellaneous materials and reports prepared by Sponsor, auditors, outside Counsel, etc. and provide comments as appropriate.

 

rr.

Prepare initial draft of annual update to the Funds’ registration statement on Form S-1/3 and coordinate with counsel regarding the filing of the Form S-1/3 with the SEC and NFA.

 

ss.

Maintain books and records, compliance materials and other Fund Documents prepared by Administrator.

 

tt.

IRS CIRCULAR 230 DISCLOSURE:

 

To ensure compliance with requirements imposed by the Internal Revenue Service, Administrator informs the Fund that any U.S. tax advice contained in any communication from Administrator to the Fund (including any future communications) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein or therein.

 

2.

LEGAL SERVICES

 

Trust and Fund shall be responsible for all legal fees incurred by the Trust and Fund.

 

3.

OTHER SERVICES

 

The Administrator will perform other services for the Trust as agreed to by the Administrator and the Trust from time to time. The Administrator shall be entitled to additional compensation for such other services.

 

 

APPENDIX C

 

FEES AND COMPENSATION

FUND ACCOUNTING AND ADMINISTRATION SERVICE AGREEMENT

 

Dynamic Short Short-Term Volatility Futures ETF

 

1.

Fund Accounting and Administration Fees

 

Fund Accounting Fees

 

●

Base Fee: $1,667 per month minimum

 

●

Asset-Based Fee: 1 basis point (0.01%) per year

 

Administration Fees

 

●

Asset-Based Fee: (minimum of $4,167 per month)

 

Net Assets		Annual Fee
On the first $250 million			0.07	%
On the next $250 million			0.06	%
On the next $500 million			0.04	%
On assets over $1 billion			0.035	%

 

2.

Portfolio Compliance Services

 

The Administrator provides monitoring and reporting of a Fund’s compliance with SEC and IRS regulations, as well as the policies and investment limitations as set forth in its offering documents.

 

For these services, each Fund will be invoiced at a rate of $625 per month.

 

3.

Miscellaneous Compensation

 

(a)

ETF website requirement:

 

The Administrator’s Information Technology and Programming team will seamlessly link requisite data feeds to a website designed and created for the Fund.

 

For these services, the Fund will be invoiced at a rate of $387.50 per month.

 

(b)

Use of the Authorized Participant Portal: $1,000 per month.