FORM OF AGREEMENT
AGENCY AGREEMENT
THIS AGREEMENT made the 11th day of July, 2005, by and between THE
ARBITRAGE FUND, a business trust existing under the laws of the State of
Delaware, having its principal place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx,
XX (the "Fund"), and DST SYSTEMS, INC., a corporation existing under the laws of
the State of Delaware, having its principal place of business at 000 Xxxx 00xx
Xxxxxx, 0xx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 ("DST"):
WITNESSETH:
WHEREAS, the Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. DOCUMENTS TO BE FILED WITH APPOINTMENT.
In connection with the appointment of DST as Transfer Agent and Dividend
Disbursing Agent for the Fund, there will be filed with DST the following
documents:
A. A certified copy of the resolutions of the Board of Trustees of the Fund
appointing DST as Transfer Agent and Dividend Disbursing Agent,
approving the form of this Agreement, and designating certain persons to
sign stock certificates, if any, and give written instructions and
requests on behalf of the Fund;
B. A certified copy of the Declaration of Trust of the Fund and all
amendments thereto;
C. A certified copy of the Bylaws of the Fund;
D. Copies of Registration Statements and amendments thereto, filed with the
Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates, in the forms
approved by the Board of Trustees of the Fund, with a certificate of the
Secretary of the Fund, as to such approval;
F. Specimens of the signatures of the officers of the Fund authorized to
sign stock certificates and individuals authorized to sign written
instructions and requests;
G. An opinion of counsel for the Fund with respect to:
(1) The Fund's organization and existence under the laws of its state of
organization,
(2) The status of all shares of stock of the Fund covered by the
appointment under the Securities Act of 1933, as amended, and any
other applicable federal or state statute, and
(3) That all issued shares are, and all unissued shares will be, when
issued, validly issued, fully paid and nonassessable.
2. CERTAIN REPRESENTATIONS AND WARRANTIES OF DST.
DST represents and warrants to the Fund that:
A. It is a corporation duly organized and existing and in good standing
under the laws of Delaware.
B. It is duly qualified to carry on its business in the State of Missouri.
C. It is empowered under applicable laws and by its Declaration of Trust
and Bylaws to enter into and perform the services contemplated in this
Agreement.
D. It is registered as a transfer agent to the extent required under the
Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
3. CERTAIN REPRESENTATIONS AND WARRANTIES OF THE FUND.
The Fund represents and warrants to DST that:
A. It is a business trust duly organized and existing and in good standing
under the laws of the State of Delaware.
B. It is an open-end diversified management investment company registered
under the Investment Company Act of 1940, as amended.
C. A registration statement under the Securities Act of 1933 has been filed
and will be effective with respect to all shares of the Fund being
offered for sale.
D. All requisite steps have been and will continue to be taken to register
the Fund's shares for sale in all applicable states and such
registration will be effective at all times shares are offered for sale
in such state.
E. The Fund is empowered under applicable laws and by its charter and
Bylaws to enter into and perform this Agreement.
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4. SCOPE OF APPOINTMENT.
A. Subject to the conditions set forth in this Agreement, the Fund hereby
appoints DST as Transfer Agent and Dividend Disbursing Agent.
B. DST hereby accepts such appointment and agrees that it will act as the
Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees that it
will also act as agent in connection with the Fund's periodic withdrawal
payment accounts and other open accounts or similar plans for
shareholders, if any.
C. The Fund agrees to use its reasonable efforts to deliver to
DST in Kansas City, Missouri, as soon as they are available,
all of its shareholder account records.
D. DST, utilizing TA2000TM, DST's computerized data processing system for
securityholder accounting (the "TA2000 System"), will perform the
following services as transfer and dividend disbursing agent for the
Fund, and as agent of the Fund for shareholder accounts thereof, in a
timely manner: (i) issuing (including countersigning), transferring and
canceling share certificates; (ii) maintaining on the TA2000 System
shareholder accounts; (iii) accepting and effectuating the registration
and maintenance of accounts through Networking and the purchase,
redemption, transfer and exchange of shares in such accounts through
Fund/SERV (Networking and Fund/SERV being programs operated by the
National Securities Clearing Corporation ("NSCC") on behalf of NSCC's
participants, including the Funds), in accordance with instructions
transmitted to and received by DST by transmission from NSCC on behalf
of broker-dealers and banks which have been established by, or in
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accordance with the instructions of, an Authorized Person, as
hereinafter defined, on the Dealer File maintained by DST; (iv) issuing
instructions to the Funds' banks for the settlement of transactions
between the Funds and NSCC (acting on behalf of its broker-dealer and
bank participants); (v) providing account and transaction information
from each affected Fund's records on TA2000 in accordance with NSCC's
Networking and Fund/SERV rules for those broker-dealers; (vi)
maintaining shareholder accounts on TA2000 through Networking; (vii)
providing transaction journals; (viii) once annually preparing
shareholder meeting lists for use in connection with the annual meeting
and certifying a copy of such list; (ix) mailing shareholder reports and
prospectuses; (x) withholding, as required by federal law, taxes on
shareholder accounts, preparing, filing and mailing U.S. Treasury
Department Forms 1099, 1042, and 1042S and performing and paying backup
withholding as required for all shareholders; (xi) disbursing income
dividends and capital gains distributions to shareholders and recording
reinvestment of dividends and distributions in shares of the Fund; (xii)
preparing and mailing confirmation forms to shareholders and dealers, as
instructed, for all purchases and liquidations of shares of the Fund and
other confirmable transactions in shareholders' accounts; (xiii)
providing or making available on-line daily and monthly reports as
provided by the TA2000 System and as requested by the Fund or its
management company; (xiv) maintaining those records necessary to carry
out DST's duties hereunder, including all information reasonably
required by the Fund to account for all transactions in the Fund shares;
(xv) calculating the appropriate sales charge with respect to each
purchase of the Fund shares as instructed by an Authorized Person, as
hereinafter defined, determining the portion of each sales charge
payable to the dealer participating in a sale in accordance with
schedules and instructions delivered to DST by the Fund's principal
underwriter or distributor (hereinafter "principal underwriter") or an
Authorized Person from time to time, disbursing dealer commissions
collected to such dealers, determining the portion of each sales charge
payable to such principal underwriter and disbursing such commissions to
the principal underwriter; (xvi) receiving correspondence pertaining to
any former, existing or new shareholder account, processing such
correspondence for proper recordkeeping, and responding promptly to
shareholder correspondence; mailing to dealers confirmations of wire
order trades; mailing copies of shareholder statements to shareholders
and registered representatives of dealers in accordance with the
instructions of an Authorized Person; (xvii) processing, generally on
the date of receipt, purchases or redemptions or instructions to settle
any mail or wire order purchases or redemptions received in proper order
as set forth in the prospectus, rejecting promptly any requests not
received in proper order (as defined by an Authorized Person or the
Procedures as hereinafter defined), and causing exchanges of shares to
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be executed in accordance with the instructions of Authorized Persons,
the applicable prospectus and the general exchange privilege applicable;
(xviii) providing to the person designated by an Authorized Person the
daily Blue Sky reports generated by the Blue Sky module of TA2000 with
respect to purchases of shares of the Funds on TA2000; and (xix)
providing to the Fund escheatment reports as requested by an Authorized
Person with respect to the status of accounts and outstanding checks on
TA2000.
E. At the request of an Authorized Person, DST shall use reasonable efforts
to provide the services set forth in Section 4.D. in connection with
transactions (i) on behalf of retirement plans and participants in
retirement plans and transactions ordered by brokers as part of a "no
transaction fee" program ("NTF"), the processing of which transactions
require DST to use methods and procedures other than those usually
employed by DST to perform shareholder servicing agent services, (ii)
involving the provision of information to DST after the commencement of
the nightly processing cycle of the TA2000 System or (iii) which require
more manual intervention by DST, either in the entry of data or in the
modification or amendment of reports generated by the TA2000 System than
is usually required by non-retirement plan, non-NTF and pre-nightly
transactions, (the "Exception Services").
F. DST shall use reasonable efforts to provide, reasonably promptly under
the circumstances, the same services with respect to any new, additional
functions or features or any changes or improvements to existing
functions or features as provided for in the Fund's instructions,
prospectus or application as amended from time to time, for the Fund
provided (i) DST is advised in advance by the Fund of any changes
therein and (ii) the TA2000 System and the mode of operations utilized
by DST as then constituted supports such additional functions and
features. If any addition to, improvement of or change in the features
and functions currently provided by the TA2000 System or the operations
as requested by the Fund requires an enhancement or modification to the
TA2000 System or to operations as presently conducted by DST, DST shall
not be liable therefore until such modification or enhancement is
installed on the TA2000 System or new mode of operation is instituted.
If any new, additional function or feature or change or improvement to
existing functions or features or new service or mode of operation
measurably increases DST's cost of performing the services required
hereunder at the current level of service, DST shall advise the Fund of
the amount of such increase and if the Fund elects to utilize such
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function, feature or service, DST shall be entitled to increase its fees
by the amount of the increase in costs. In no event shall DST be
responsible for or liable to provide any additional function, feature,
improvement or change in method of operation until it has consented
thereto in writing.
G. The Fund shall add new series to the TA2000 System upon at least thirty
(30) days' prior written notice to DST provided that the requirements of
the new series are generally consistent with services then being
provided by DST under this Agreement. Rates or charges for additional
series shall be as set forth in Exhibit A, as hereinafter defined, for
the remainder of the contract term except as such series use functions,
features or characteristics for which DST has imposed an additional
charge as part of its standard pricing schedule. In the latter event,
rates and charges shall be in accordance with DST's then-standard
pricing schedule.
5. LIMIT OF AUTHORITY.
Unless otherwise expressly limited by the resolution of appointment or by
subsequent action by the Fund, the appointment of DST as Transfer Agent will
be construed to cover the full amount of authorized stock of the class or
classes for which DST is appointed as the same will, from time to time, be
constituted, and any subsequent increases in such authorized amount.
In case of such increase the Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited, a certified
copy of a resolution of the Board of Trustees of the Fund increasing the
authority of DST;
B. A certified copy of the amendment to the Declaration of Trust of the
Fund authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of the
increased stock, and an opinion of counsel that the order or consent of
no other governmental or regulatory authority is required;
D. Opinion of counsel for the Fund stating:
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(1) The status of the additional shares of stock of the Fund under
the Securities Act of 1933, as amended, and any other applicable
federal or state statute; and
(2) That the additional shares are, or when issued will be, validly
issued, fully paid and nonassessable.
6. COMPENSATION AND EXPENSES.
A. In consideration for its services hereunder as Transfer Agent and
Dividend Disbursing Agent, the Fund will pay to DST from time to time a
reasonable compensation for all services rendered as Agent, and also,
all its reasonable billable expenses, charges, counsel fees, and other
disbursements ("Compensation and Expenses") incurred in connection with
the agency. Such compensation is set forth in a separate schedule to be
agreed to by the Fund and DST, a copy of which is attached hereto as
Exhibit A. If the Fund has not paid such Compensation and Expenses to
DST within a reasonable time, DST may charge against any monies held
under this Agreement, the amount of any Compensation and/or Expenses for
which it shall be entitled to reimbursement under this Agreement.
B. The Fund also agrees promptly to reimburse DST for all reasonable
billable expenses or disbursements incurred by DST in connection with
the performance of services under this Agreement including, but not
limited to, expenses for postage, express delivery services, freight
charges, envelopes, checks, drafts, forms (continuous or otherwise),
specially requested reports and statements, telephone calls, telegraphs,
stationery supplies, counsel fees, outside printing and mailing firms
(including DST Output, LLC), magnetic tapes, reels or cartridges (if
sent to the Fund or to a third party at the Fund's request) and magnetic
tape handling charges, off-site record storage, media for storage of
records (e.g., microfilm, microfiche, optical platters, computer tapes),
computer equipment installed at the Fund's request at the Fund's or a
third party's premises, telecommunications equipment,
telephone/telecommunication lines between the Fund and its agents, on
one hand, and DST on the other, proxy soliciting, processing and/or
tabulating costs, second-site backup computer facility, transmission of
statement data for remote printing or processing, and National
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Securities Clearing Corporation ("NSCC") transaction fees to the extent
any of the foregoing are paid by DST. The Fund agrees to pay postage
expenses at least one day in advance if so requested. In addition, any
other expenses incurred by DST at the request or with the consent of the
Fund will be promptly reimbursed by the Fund.
C. Amounts due hereunder shall be due and paid on or before the thirtieth
(30th) business day after receipt of the statement therefor by the Fund
(the "Due Date"). The Fund is aware that its failure to pay all amounts
in a timely fashion so that they will be received by DST on or before
the Due Date will give rise to costs to DST not contemplated by this
Agreement, including but not limited to carrying, processing and
accounting charges. Accordingly, subject to Section 6.D. hereof, in the
event that any amounts due hereunder are not received by DST by the Due
Date, the Fund shall pay a late charge equal to the lesser of the
maximum amount permitted by applicable law or the product of one and
one-half percent (1.5%) per month times the amount overdue times the
number of months from the Due Date up to and including the day on which
payment is received by DST. The parties hereby agree that such late
charge represents a fair and reasonable computation of the costs
incurred by reason of late payment or payment of amounts not properly
due. Acceptance of such late charge shall in no event constitute a
waiver of the Fund's or DST's default or prevent the non-defaulting
party from exercising any other rights and remedies available to it.
D. In the event that any charges are disputed, the Fund shall, on or before
the Due Date, pay all undisputed amounts due hereunder and notify DST in
writing of any disputed charges for billable expenses which it is
disputing in good faith. Payment for such disputed charges shall be due
on or before the close of the fifth (5th) business day after the day on
which DST provides to the Fund documentation which an objective observer
would agree reasonably supports the disputed charges (the "Revised Due
Date"). Late charges shall not begin to accrue as to charges disputed in
good faith until the first business day after the Revised Due Date.
E. The fees and charges set forth on Exhibit A shall increase or may be
increased as follows:
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(1) On the first day of each new term, in accordance with the "Fee
Increases" provision in Exhibit A;
(2) DST may increase the fees and charges set forth on Exhibit A
upon at least ninety (90) days prior written notice, if changes
in existing laws, rules or regulations: (i) require substantial
system modifications or (ii) materially increase cost of
performance hereunder;
(3) DST may charge for additional features of TA2000 used by the
Fund which features are not consistent with the Fund's current
processing requirements; and
(4) In the event DST, at the Fund's request or direction, performs
Exception Services, DST shall be entitled to increase the fees
and charges for such Exception Services from those set forth on
Exhibit A to the extent such Exception Services increase DST's
cost of performance.
If DST notifies the Fund of an increase in fees or charges
pursuant to subparagraph (2) of this Section 6.E., the parties shall
confer, diligently and in good faith and agree upon a new fee to cover
the amount necessary, but not more than such amount, to reimburse DST
for the Fund's aliquot portion of the cost of developing the new
software to comply with regulatory charges and for the increased cost
of operation.
If DST notifies the Fund of an increase in fees or charges
under subparagraphs (3) or (4) of this Section 6.E., the parties shall
confer, diligently and in good faith, and agree upon a new fee to cover
such new fund feature.
7. OPERATION OF DST SYSTEM.
In connection with the performance of its services under this Agreement, DST
is responsible for such items as:
A. That entries in DST's records, and in the Fund's records on the TA2000
System created by DST, reflect the orders, instructions, and other
information received by DST from the Fund, the Fund's distributor,
manager or principal underwriter, the Fund's investment adviser, the
Fund's sponsor, the Fund's custodian, or the Fund's administrator (each
an "Authorized Person"), broker-dealers or shareholders;
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B. That shareholder lists, shareholder account verifications, confirmations
and other shareholder account information to be produced from its
records or data be available and accurately reflect the data in the
Fund's records on the TA2000 System;
C. The accurate and timely issuance of dividend and distribution checks in
accordance with instructions received from the Fund and the data in the
Fund's records on the TA2000 System;
D. That redemption transactions and payments be effected timely, under
normal circumstances on the day of receipt, and accurately in accordance
with redemption instructions received by DST from Authorized Persons,
broker-dealers or shareholders and the data in the Fund's records on the
TA2000 System;
E. The deposit daily in the Fund's appropriate special bank account of all
checks and payments received by DST from NSCC, broker-dealers or
shareholders for investment in shares;
F. Notwithstanding anything herein to the contrary, with respect to "as of"
adjustments, DST will not assume one hundred percent (100%)
responsibility for losses resulting from "as ofs" due to clerical errors
or misinterpretations of shareholder instructions, but DST will discuss
with the Fund DST's accepting liability for an "as of" on a case-by-case
basis and may accept financial responsibility for a particular situation
resulting in a financial loss to the Fund where such loss is "material",
as hereinafter defined, and, under the particular facts at issue, DST in
its discretion believes DST's conduct was culpable and DST's conduct is
the sole cause of the loss. A loss is "material" for purposes of this
Section 7.F. when it results in a pricing error on a given day which is
(i) greater than a negligible amount per shareholder, (ii) equals or
exceeds one ($.01) full cent per share times the number of shares
outstanding or (iii) equals or exceeds the product of one-half of one
percent (_%) times Fund's Net Asset Value per share times the number of
shares outstanding (or, in case of (ii) or (iii), such other amounts as
may be adopted by applicable accounting or regulatory authorities from
time to time). When DST concludes that it should contribute to the
settlement of a loss, DST's responsibility will commence with that
portion of the loss over $0.01 per share calculated on the basis of the
total value of all shares owned by the affected portfolio (i.e., on the
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basis of the value of the shares of the total portfolio, including all
classes of that portfolio, not just those of the affected class);
G. The requiring of proper forms of instructions, signatures and signature
guarantees and any necessary documents supporting the opening of
shareholder accounts, transfers, redemptions and other shareholder
account transactions, all in conformance with DST's present procedures
as set forth in its Legal Manual, Third Party Check Procedures,
Checkwriting Draft Procedures, and Signature Guarantee Procedures
(collectively the "Procedures") with such changes or deviations
therefrom as may be from time to time required or approved by the Fund,
its investment adviser or principal underwriter, or its or DST's counsel
and the rejection of orders or instructions not in good order in
accordance with the applicable prospectus or the Procedures;
H. The maintenance of customary records in connection with its agency, and
particularly those records required to be maintained pursuant to
subparagraph (2)(iv) of paragraph (b) of Rule 31a-1 under the Investment
Company Act of 1940, if any; and
I. The maintenance of a current, duplicate set of the Fund's essential
records at a secure separate location, in a form available and usable
forthwith in the event of any breakdown or disaster disrupting its main
operation.
8. INDEMNIFICATION.
A. DST shall at all times use reasonable care, due diligence and act in
good faith in performing its duties under this Agreement. DST shall
provide its services as Transfer Agent in accordance with Section 17A of
the Securities Exchange Act of 1934, and the rules and regulations
thereunder. In the absence of bad faith, willful misconduct, knowing
violations of applicable law pertaining to the manner in which transfer
agency services are to be performed by DST (excluding any violations
arising directly or indirectly out of the actions or omissions to act of
third parties unaffiliated with DST), reckless disregard of the
performance of its duties, or negligence on its part, DST shall not be
liable for any action taken, suffered, or omitted by it or for any error
of judgment made by it in the performance of its duties under this
Agreement. For those activities or actions delineated in the Procedures,
DST shall be presumed to have used reasonable care, due diligence and
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acted in good faith if it has acted in accordance with the Procedures,
copies of which have been provided to the Fund and reviewed and approved
by the Fund's counsel, as amended from time to time with approval of
counsel, or for any deviation therefrom approved by the Fund or DST
counsel.
B. DST shall not be responsible for, and the Fund shall indemnify and hold
DST harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability which may be
asserted against DST or for which DST may be held to be liable, arising
out of or attributable to:
(1) All actions of DST required to be taken by DST pursuant to this
Agreement, provided that DST has acted in good faith and with
due diligence and reasonable care;
(2) The Fund's refusal or failure to comply with the terms of this
Agreement, the Fund's negligence or willful misconduct, or the
breach of any representation or warranty of the Fund hereunder;
(3) The good faith reliance on, or the carrying out of, any written
or oral instructions or requests of persons designated by the
Fund in writing (see Exhibit B) from time to time as authorized
to give instructions on its behalf or representatives of an
Authorized Person or DST's good faith reliance on, or use of,
information, data, records and documents received from, or which
have been prepared and/or maintained by the Fund, its investment
advisor, its sponsor or its principal underwriter;
(4) Defaults by dealers or shareowners with respect to payment for
share orders previously entered;
(5) The offer or sale of the Fund's shares in violation of any
requirement under federal securities laws or regulations or the
securities laws or regulations of any state or in violation of
any stop order or other determination or ruling by any federal
agency or state with respect to the offer or sale of such shares
in such state (unless such violation results from DST's failure
to comply with written instructions of the Fund or of any
officer of the Fund that no offers or sales be permitted to
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remain in the Fund's securityholder records in or to residents
of such state);
(6) The Fund's errors and mistakes in the use of the TA2000 System,
the data center, computer and related equipment used to access
the TA2000 System (the "DST Facilities"), and control procedures
relating thereto in the verification of output and in the remote
input of data;
(7) Errors, inaccuracies, and omissions in, or errors, inaccuracies
or omissions of DST arising out of or resulting from such
errors, inaccuracies and omissions in, the Fund's records,
shareholder and other records, delivered to DST hereunder by the
Fund or its prior agent(s);
(8) Actions or omissions to act by the Fund or agents designated by
the Fund with respect to duties assumed thereby as provided for
in Section 21 hereof;
(9) DST's performance of Exception Services except where DST acted
or omitted to act in bad faith, with reckless disregard of its
obligations or with gross negligence; and
(10) Any inaccuracies in dates in Fund's shareholder information or
history as converted, or any (i) difficulties or inability of
DST or any third party to manipulate or process date data, or
(ii) lack of functionality (including any errors resulting from
the "windowing" (currently 1950 to 2049) of client's historical
records or non-Year 2000 compliant data provided to DST by third
parties) which, in case of (i) or (ii) above, arises out of or
results from the failure of Fund's records to contain date data
feeds in an eight digit, full century format, or any other such
Year 2000 complaint format for data feeds specified from time to
time by DST.
C. Except where DST is entitled to indemnification under Section 8.B.
hereof and with respect to "as ofs" set forth in Section 7.F., DST shall
indemnify and hold the Fund harmless from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of DST's failure to comply with the terms of this
Agreement or arising out of or attributable to DST's negligence or
willful misconduct or breach of any representation or warranty of DST
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hereunder; provided, however, that DST's cumulative liability during any
term of this Agreement with respect to, arising from or arising in
connection with this Agreement, or from all services provided or omitted
to be provided under this Agreement, whether in contract, or in tort, or
otherwise, is limited to, and shall not exceed, the amounts paid
hereunder by the Fund to DST as fees and charges, but not including
reimbursable expenses, during the six (6) months immediately preceding
the event giving rise to DST's liability.
D. IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL EITHER PARTY TO THIS
AGREEMENT BE LIABLE TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE
OTHER PARTY, FOR CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT
UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY
THEREOF.
E. Promptly after receipt by an indemnified person of notice of the
commencement of any action, such indemnified person will, if a claim in
respect thereto is to be made against an indemnifying party hereunder,
notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party will not relieve an
indemnifying party from any liability that it may have to any
indemnified person for contribution or otherwise under the indemnity
agreement contained herein except to the extent it is prejudiced as a
proximate result of such failure to timely notify. In case any such
action is brought against any indemnified person and such indemnified
person seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, assume the defense thereof (in its own name or
in the name and on behalf of any indemnified party or both with counsel
reasonably satisfactory to such indemnified person); provided, however,
if the defendants in any such action include both the indemnified person
and an indemnifying party and the indemnified person shall have
reasonably concluded that there may be a conflict between the positions
of the indemnified person and an indemnifying party in conducting the
defense of any such action or that there may be legal defenses available
to it and/or other indemnified persons which are inconsistent with those
available to an indemnifying party, the indemnified person or
indemnified persons shall have the right to select one separate counsel
(in addition to local counsel) to assume such legal defense and to
otherwise participate in the defense of such action on behalf of such
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indemnified person or indemnified persons at such indemnified party's
sole expense. Upon receipt of notice from an indemnifying party to such
indemnified person of its election so to assume the defense of such
action and approval by the indemnified person of counsel, which approval
shall not be unreasonably withheld (and any disapproval shall be
accompanied by a written statement of the reasons therefor), the
indemnifying party will not be liable to such indemnified person
hereunder for any legal or other expenses subsequently incurred by such
indemnified person in connection with the defense thereof. An
indemnifying party will not settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified persons are
actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional
release of each indemnified person from all liability arising out of
such claim, action, suit or proceeding. An indemnified party will not,
without the prior written consent of the indemnifying party settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder. If it
does so, it waives its right to indemnification therefor.
9. CERTAIN COVENANTS OF DST AND THE FUND.
A. All requisite steps will be taken by the Fund from time to time when and
as necessary to register the Fund's shares for sale in all states in
which the Fund's shares shall at the time be offered for sale and
require registration. If at any time the Fund will receive notice of any
stop order or other proceeding in any such state affecting such
registration or the sale of the Fund's shares, or of any stop order or
other proceeding under the federal securities laws affecting the sale of
the Fund's shares, the Fund will give prompt notice thereof to DST.
B. DST hereby agrees to perform such transfer agency functions as are set
forth in Section 4.D. above and establish and maintain facilities and
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procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms, and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices, and to carry such insurance as it
considers adequate and reasonably available.
C. To the extent required by Section 31 of the Investment Company Act of
1940 as amended and Rules thereunder, DST agrees that all records
maintained by DST relating to the services to be performed by DST under
this Agreement are the property of the Fund and will be preserved and
will be surrendered promptly to the Fund on request.
D. DST agrees to furnish the Fund annual reports of its financial
condition, consisting of a balance sheet, earnings statement and any
other financial information reasonably requested by the Fund. The annual
financial statements will be certified by DST's certified public
accountants.
E. DST represents and agrees that it will use its reasonable efforts to
keep current on the trends of the investment company industry relating
to shareholder services and will use its reasonable efforts to continue
to modernize and improve.
F. DST will permit the Fund and its authorized representatives (subject to
execution of DST's standard confidentiality and non-use agreement) to
make periodic inspections of its operations as such would involve the
Fund at reasonable times during business hours. DST will permit duly
authorized federal examiners to make periodic inspections of its
operations as such would involve the Fund to obtain, INTER ALIA,
information and records relating to DST's performance of its Compliance
+ Program obligations and to inspect DST's operations for purposes of
the Program." Any costs imposed by such examiners in connection with
such examination (other than fines or other penalties) shall be paid by
the Fund.
G. DST agrees to use its reasonable efforts to provide in Kansas City at
the Fund's expense two (2) man weeks of training for the Fund's
personnel in connection with use and operation of the TA2000 System. All
travel and reimbursable expenses incurred by the Fund's personnel in
connection with and during training at DST's Facility shall be borne by
the Fund. At the Fund's option and expense, DST also agrees to use its
reasonable efforts to provide an additional two (2) man weeks of
training at the Fund's facility for the Fund's personnel in connection
16
with the conversion to the TA2000 System. Reasonable travel, per diem
and reimbursable expenses incurred by DST personnel in connection with
and during training at the Fund's facility or in connection with the
conversion shall be borne by the Fund.
10. RECAPITALIZATION OR READJUSTMENT.
In case of any recapitalization, readjustment or other change in the
capital structure of the Fund requiring a change in the form of stock
certificates, DST will issue or register certificates in the new form
in exchange for, or in transfer of, the outstanding certificates in the
old form, upon receiving:
A. Written instructions from an officer of the Fund;
B. Certified copy of the amendment to the Declaration of Trust or
other document effecting the change;
C. Certified copy of the order or consent of each governmental or
regulatory authority, required by law to the issuance of the
stock in the new form, and an opinion of counsel that the
order or consent of no other government or regulatory
authority is required;
D. Specimens of the new certificates in the form approved by the
Board of Trustees of the Fund, with a certificate of the
Secretary of the Fund as to such approval;
E. Opinion of counsel for the Fund stating:
(1) The status of the shares of stock of the Fund in the
new form under the Securities Act of 1933, as amended
and any other applicable federal or state statute;
and
(2) That the issued shares in the new form are, and all
unissued shares will be, when issued, validly issued,
fully paid and nonassessable.
11. STOCK CERTIFICATES.
The Fund will furnish DST with a sufficient supply of blank stock
certificates and from time to time will renew such supply upon the
request of DST. Such certificates will be signed manually or by
facsimile signatures of the officers of the Fund authorized by law and
by bylaws to sign stock certificates, and if required, will bear the
corporate seal or facsimile thereof.
17
12. DEATH, RESIGNATION OR REMOVAL OF SIGNING OFFICER.
The Fund will file promptly with DST written notice of any change in
the officers authorized to sign stock certificates, written
instructions or requests, together with two signature cards bearing the
specimen signature of each newly authorized officer. In case any
officer of the Fund who will have signed manually or whose facsimile
signature will have been affixed to blank stock certificates will die,
resign, or be removed prior to the issuance of such certificates, DST
may issue or register such stock certificates as the stock certificates
of the Fund notwithstanding such death, resignation, or removal, until
specifically directed to the contrary by the Fund in writing. In the
absence of such direction, the Fund will file promptly with DST such
approval, adoption, or ratification as may be required by law.
13. FUTURE AMENDMENTS OF CHARTER AND BYLAWS.
The Fund will promptly file with DST copies of all material amendments
to its Declaration of Trust or Bylaws made after the date of this
Agreement.
14. INSTRUCTIONS, OPINION OF COUNSEL AND SIGNATURES.
At any time DST may apply to any person authorized by the Fund to give
instructions to DST, and may with the approval of a Fund officer
consult with legal counsel for the Fund, or DST's own legal counsel at
the expense of the Fund, with respect to any matter arising in
connection with the agency and it will not be liable for any action
taken or omitted by it in good faith in reliance upon such instructions
or upon the opinion of such counsel. DST will be protected in acting
upon any paper or document reasonably believed by it to be genuine and
to have been signed by the proper person or persons and will not be
held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund. It will also be
protected in recognizing stock certificates which it reasonably
believes to bear the proper manual or facsimile signatures of the
officers of the Fund, and the proper countersignature of any former
Transfer Agent or Registrar, or of a co-Transfer Agent or co-Registrar.
15. FORCE MAJEURE AND DISASTER RECOVERY PLANS.
A. DST shall not be responsible or liable for its failure or delay in
performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation: any interruption, loss or
malfunction of any utility, transportation, computer (hardware or
18
software) or communication service; inability to obtain labor, material,
equipment or transportation, or a delay in mails; governmental or
exchange action, statute, ordinance, rulings, regulations or direction;
war, strike, riot, emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornados, acts of
God or public enemy, revolutions, or insurrection; or any other cause,
contingency, circumstance or delay not subject to DST's reasonable
control which prevents or hinders DST's performance hereunder.
B. DST currently maintains an agreement with a third party whereby DST is
to be permitted to use on a "shared use" basis a "hot site" (the
"Recovery Facility") maintained by such party in event of a disaster
rendering the DST Facilities inoperable. DST has developed and is
continually revising a business contingency plan (the "Business
Contingency Plan") detailing which, how, when, and by whom data
maintained by DST at the DST Facilities will be installed and operated
at the Recovery Facility. Provided the Fund is paying its pro rata
portion of the charge therefor, DST would, in event of a disaster
rendering the DST Facilities inoperable, use reasonable efforts to
convert the TA2000 System containing the designated the Fund data to the
computers at the Recovery Facility in accordance with the then current
Business Contingency Plan.
C. DST also currently maintains, separate from the area in which the
operations which provides the services to the Fund hereunder are
located, a Crisis Management Center consisting of phones, computers and
the other equipment necessary to operate a full service transfer agency
business in the event one of its operations areas is rendered
inoperable. The transfer of operations to other operating areas or to
the Crisis Management Center is also covered in DST's Business
Contingency Plan.
16. CERTIFICATION OF DOCUMENTS.
The required copy of the Declaration of Trust of the Fund and copies of
all amendments thereto will be certified by the Secretary of State (or
other appropriate official) of the State of Organization, and if such
Declaration of Trust and amendments are required by law to be also
filed with a county, city or other officer of official body, a
certificate of such filing will appear on the certified copy submitted
to DST. A copy of the order or consent of each governmental or
regulatory authority required by law to the issuance of the stock will
be certified by the Secretary or Clerk of such governmental or
regulatory authority, under proper seal of such authority. The copy of
19
the Bylaws and copies of all amendments thereto, and copies of
resolutions of the Board of Trustees of the Fund, will be certified by
the Secretary or an Assistant Secretary of the Fund under the Fund's
seal.
17. RECORDS.
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained
pursuant to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under
the Investment Company Act of 1940, if any.
18. DISPOSITION OF BOOKS, RECORDS AND CANCELED CERTIFICATES.
DST may send periodically to the Fund, or to where designated by the
Secretary or an Assistant Secretary of the Fund, all books, documents,
and all records no longer deemed needed for current purposes and stock
certificates which have been canceled in transfer or in exchange, upon
the understanding that such books, documents, records, and stock
certificates will be maintained by the Fund under and in accordance
with the requirements of Section 17Ad-7 adopted under the Securities
Exchange Act of 1934, including by way of example and not limitation
Section 17Ad-7(g) thereof. Such materials will not be destroyed by the
Fund without the consent of DST (which consent will not be unreasonably
withheld), but will be safely stored for possible future reference.
19. PROVISIONS RELATING TO DST AS TRANSFER AGENT.
A. DST will make original issues of stock certificates upon written request
of an officer of the Fund and upon being furnished with a certified copy
of a resolution of the Board of Trustees authorizing such original
issue, an opinion of counsel as outlined in subparagraphs 1.D. and G. of
this Agreement, any documents required by Sections 5. or 10. of this
Agreement, and necessary funds for the payment of any original issue
tax.
B. Before making any original issue of certificates the Fund will furnish
DST with sufficient funds to pay all required taxes on the original
issue of the stock, if any. The Fund will furnish DST such evidence as
may be required by DST to show the actual value of the stock. If no
taxes are payable DST will be furnished with an opinion of outside
counsel to that effect.
20
C. Shares of stock will be transferred and new certificates issued in
transfer, or shares of stock accepted for redemption and funds remitted
therefor, or book entry transfer be effected, upon surrender of the old
certificates in form or receipt by DST of instructions deemed by DST
properly endorsed for transfer or redemption accompanied by such
documents as DST may deem necessary to evidence the authority of the
person making the transfer or redemption. DST reserves the right to
refuse to transfer or redeem shares until it is satisfied that the
endorsement or signature on the certificate or any other document is
valid and genuine, and for that purpose it may require a guaranty of
signature in accordance with the Signature Guarantee Procedures. DST
also reserves the right to refuse to transfer or redeem shares until it
is satisfied that the requested transfer or redemption is legally
authorized, and it will incur no liability for the refusal in good faith
to make transfers or redemptions which, in its judgment, are improper or
unauthorized. DST may, in effecting transfers or redemptions, rely upon
the Procedures, Fund in not requiring complete fiduciary documentation.
In cases in which DST is not directed or otherwise required to maintain
the consolidated records of shareholder's accounts, DST will not be
liable for any loss which may arise by reason of not having such
records.
D. When mail is used for delivery of stock certificates, DST will forward
stock certificates in "nonnegotiable" form by first class or registered
mail and stock certificates in "negotiable" form by registered mail, all
such mail deliveries to be covered while in transit to the addressee by
insurance arranged for by DST.
E. DST will issue and mail subscription warrants, certificates representing
stock dividends, exchanges or split ups, or act as Conversion Agent upon
receiving written instructions from any officer of the Fund and such
other documents as DST deems necessary.
F. DST will issue, transfer, and split up certificates and will issue
certificates of stock representing full shares upon surrender of scrip
certificates aggregating one full share or more when presented to DST
21
for that purpose upon receiving written instructions from an officer of
the Fund and such other documents as DST may deem necessary.
G. DST may issue new certificates in place of certificates represented to
have been lost, destroyed, stolen or otherwise wrongfully taken upon
receiving instructions from the Fund and indemnity satisfactory to DST
and the Fund, and may issue new certificates in exchange for, and upon
surrender of, mutilated certificates. Such instructions from the Fund
will be in such form as will be approved by the Board of Trustees of the
Fund and will be in accordance with the provisions of law and the bylaws
of the Fund governing such matter.
H. DST will supply a shareholder's list to the Fund for its annual meeting
upon receiving a request from an officer of the Fund. It will also, at
the expense of the Fund, supply lists at such other times as may be
requested by an officer of the Fund.
I. Upon receipt of written instructions of an officer of the Fund, DST
will, at the expense of the Fund, address and mail notices to
shareholders.
J. In case of any request or demand for the inspection of the stock books
of the Fund or any other books in the possession of DST, DST will
endeavor to notify the Fund and to secure instructions as to permitting
or refusing such inspection. DST reserves the right, however, to exhibit
the stock books or other books to any person in case it is advised by
its counsel that it may be held responsible for the failure to exhibit
the stock books or other books to such person.
(K) (1) DST shall assist the Fund to fulfill the Fund's responsibilities
under certain provisions of USA PATRIOT Act, Xxxxxxxx-Xxxxx Act,
Title V of Gramm Xxxxx Xxxxxx Act, Securities Act of 1933,
Securities and Exchange Act of 1934, and Investment Company Act of
1940, including, INTER ALIA, Rule 38a-1, by complying with
Compliance +(TM), a compliance program that focuses on certain
business processes that represent key activities of the transfer
agent/service provider function (the "Compliance + Program"), a
copy of which has hitherto been made available to Fund. These
business processes are anti-money laundering, certificate
processing, correspondence processing, fingerprinting, lost
shareholder processing, reconciliation and control, transaction
processing, customer identification, transfer agent administration
22
and safeguarding fund assets and securities. DST reserves the right
to make changes thereto as experience suggests alternative and
better ways to perform the affected function. DST shall provide you
with written notice of any such changes.
(2) DST shall perform the procedures set forth in the Compliance +
Program, as amended by DST from time to time, which pertain to
DST's performance of those transfer agency services in accordance
with the terms and conditions set forth in this Agreement, (ii)
implement and maintain internal controls and procedures reasonably
necessary to insure that our employees act in accordance with the
Compliance + Program, and (iii) provide you with written notice of
any material changes made to the Program as attached hereto.
(3) Notwithstanding the foregoing, DST's obligations shall be
solely as are set forth in this Section and in the Compliance +
Program, as amended, and any of obligations under the enumerated
Acts and Regulations that DST has not agreed to perform on your
behalf under the Compliance + Program or under this Agreement shall
remain your sole obligation.
20. PROVISIONS RELATING TO DIVIDEND DISBURSING AND PAYING AGENCY.
A. DST will, at the expense of the Fund, provide a special form of check
containing the imprint of any device or other matter desired by the
Fund. Said checks must, however, be of a form and size convenient for
use by DST.
B. If the Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be furnished
DST within a reasonable time prior to the date of mailing of the
dividend checks, at the expense of the Fund.
C. If the Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to DST but
the size and form of said envelopes will be subject to the approval of
DST. If stamped envelopes are used, they must be furnished by the Fund;
or if postage stamps are to be affixed to the envelopes, the stamps or
the cash necessary for such stamps must be furnished by the Fund.
23
D. DST, acting as agent for the Fund, is hereby authorized (1) to establish
in the name of, and to maintain on behalf of, the Fund, on the usual
terms and conditions prevalent in the industry, including limits or caps
based on fees paid over some period of time on the maximum liability of
such Banks, as hereinafter defined, one or more deposit accounts at a
nationally or regionally known banking institution (the "Bank") into
which DST shall deposit the funds DST receives for payment of dividends,
distributions, purchases of Fund shares, redemptions of Fund shares,
commissions, corporate re-organizations (including recapitalizations or
liquidations) or any other disbursements made by DST on behalf of the
Fund provided for in this Agreement, (2) to draw checks upon such
accounts, to issue orders or instructions to the Bank for the payment
out of such accounts as necessary or appropriate to accomplish the
purposes for which such funds were provided to DST, and (3) to
establish, to implement and to transact Fund business through Automated
Clearinghouse ("ACH"), Draft Processing, Wire Transfer and any other
banking relationships, arrangements and agreements with such Bank as are
necessary or appropriate to fulfill DST's obligations under this
Agreement. DST, acting as agent for the Fund, is also hereby authorized
to execute on behalf and in the name of the Fund, on the usual terms and
conditions prevalent in the industry, including limits or caps based on
fees paid over some period of time on the maximum liability of such
Banks, agreements with banks for ACH, wire transfer, draft processing
services, as well as any other services which are necessary or
appropriate for DST to utilize to accomplish the purposes of this
Agreement. In each of the foregoing situations the Fund shall be liable
on such agreements with the Bank as if it itself had executed the
agreement. DST shall not be liable for any Adverse Consequences arising
out of or resulting from errors or omissions of the Bank provided,
however, that DST shall have acted in good faith, with due diligence and
without negligence.
E. DST is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees thereof
allege either that they have not received the checks or that such checks
have been mislaid, lost, stolen, destroyed or through no fault of
24
theirs, are otherwise beyond their control, and cannot be produced by
them for presentation and collection, and, to issue and deliver
duplicate checks in replacement thereof.
21. ASSUMPTION OF DUTIES BY THE FUND OR AGENTS DESIGNATED BY THE FUND.
A. The Fund or its designated agents other than DST may assume certain
duties and responsibilities of DST or those services of Transfer Agent
and Dividend Disbursing Agent as those terms are referred to in Section
4.D. of this Agreement including but not limited to answering and
responding to telephone inquiries from shareholders and brokers,
accepting shareholder and broker instructions (either or both oral and
written) and transmitting orders based on such instructions to DST,
preparing and mailing confirmations, obtaining certified TIN numbers,
classifying the status of shareholders and shareholder accounts under
applicable tax law, establishing shareholder accounts on the TA2000
System and assigning social codes and Taxpayer Identification Number
codes thereof, and disbursing monies of the Fund, said assumption to be
embodied in writing to be signed by both parties.
B. To the extent the Fund or its agent or affiliate assumes such duties and
responsibilities, DST shall be relieved from all responsibility and
liability therefor and is hereby indemnified and held harmless against
any liability therefrom and in the same manner and degree as provided
for in Section 8 hereof.
C. Initially the Fund or its designees shall be responsible for the
following: (i) answer and respond to phone calls from shareholders and
broker-dealers, and (ii) scan items into DST's AWDTM System as such
calls or items are received by the Fund, and (iii) enter and confirm
wire order trades.
22. TERMINATION OF AGREEMENT.
A. This Agreement shall be in effect for an initial period of three (3)
years and thereafter may be terminated by either party as of the last
day of the then current term by the giving to the other party of at
least six (6) month's prior written notice, provided, however, that the
effective date of any termination shall not occur during the period from
December 15 through March 30 of any year to avoid adversely impacting
year end. If such notice is not given by either party to the other at
least six (6) months prior to the end of the then current term, this
25
Agreement shall automatically extend for the longer of additional,
successive three (3) year terms or for the period set forth in any new
Fee Schedule as the period during which such Fee Schedule shall be
effective, each such successive three (3) year term or other period set
forth in any new Fee Schedule, as applicable, being a new "term" of this
Agreement, upon the expiration of any term hereof unless terminated as
hereinafter provided in Section 22. B.
B. Each party, in addition to any other rights and remedies, shall have the
right to terminate this Agreement forthwith upon the occurrence at any
time of any of the following events with respect to the other party:
(1) The bankruptcy of the other party or its assigns or
the appointment of a receiver for the other party or
its assigns; or
(2) Failure by the other party or its assigns to perform
its duties in accordance with the Agreement, which
failure materially adversely affects the business
operations of the first party and which failure
continues for thirty (30) days after receipt of
written notice from the first party.
C. In the event of termination, the Fund will promptly pay DST all amounts
due to DST hereunder and DST will use its reasonable efforts to transfer
the records of the Fund to the designated successor transfer agent, to
provide reasonable assistance to the Fund and its designated successor
transfer agent, and to provide other information relating to its
services provided hereunder (subject to the recompense of DST for such
assistance at its standard rates and fees for personnel then in effect
at that time); provided, however, as used herein "reasonable assistance"
and "other information" shall not include assisting any new service or
system provider to modify, alter, enhance, or improve its system or to
improve, enhance, or alter its current system, or to provide any new,
functionality or to require DST to disclose any DST Confidential
Information, as hereinafter defined, or any information which is
otherwise confidential to DST.
23. CONFIDENTIALITY.
A. DST agrees that, except as provided in the last sentence of Section
19.J. hereof, or as otherwise required by law, DST will keep
confidential all records of and information in its possession relating
26
to the Fund or its shareholders or shareholder accounts and will not
disclose the same to any person except at the request or with the
consent of the Fund.
B. The Fund agrees to keep confidential all financial statements and other
financial records received from DST, the terms and provisions of this
Agreement, all accountant's reports relating to DST, and all manuals,
systems and other technical information and data, not publicly
disclosed, relating to DST's operations and programs furnished to it by
DST pursuant to this Agreement and will not disclose the same to any
person except at the request or with the consent of DST.
C. (1) The Fund acknowledges that DST has proprietary rights in and to the
TA2000 System used to perform services hereunder including, but not
limited to the maintenance of shareholder accounts and records,
processing of related information and generation of output,
including, without limitation any changes or modifications of the
TA2000 System and any other DST programs, data bases, supporting
documentation, or procedures (collectively "DST Confidential
Information") which the Fund's access to the TA2000 System or
computer hardware or software may permit the Fund or its employees
or agents to become aware of or to access and that the DST
Confidential Information constitutes confidential material and trade
secrets of DST. The Fund agrees to maintain the confidentiality of
the DST Confidential Information.
(2) The Fund acknowledges that any unauthorized use, misuse,
disclosure or taking of DST Confidential Information which is
confidential as provided by law, or which is a xxxx secret, residing
or existing internal or external to a computer, computer system, or
computer network, or the knowing and unauthorized accessing or
causing to be accessed of any computer, computer system, or computer
network, may be subject to civil liabilities and criminal penalties
under applicable state law. The Fund will advise all of its
employees and agents who have access to any DST Confidential
Information or to any computer equipment capable of accessing DST or
DST hardware or software of the foregoing.
27
(3) The Fund acknowledges that disclosure of the DST Confidential
Information may give rise to an irreparable injury to DST
inadequately compensable in damages. Accordingly, DST may seek
(without the posting of any bond or other security) injunctive
relief against the breach of the foregoing undertaking of
confidentiality and nondisclosure, in addition to any other legal
remedies which may be available, and the Fund consents to the
obtaining of such injunctive relief. All of the undertakings and
obligations relating to confidentiality and nondisclosure, whether
contained in this Section or elsewhere in this Agreement shall
survive the termination or expiration of this Agreement for a period
of ten (10) years.
24. CHANGES AND MODIFICATIONS.
A. During the term of this Agreement DST will use on behalf of the Fund
without additional cost all modifications, enhancements, or changes
which DST may make to the TA2000 System in the normal course of its
business and which are applicable to functions and features offered by
the Fund, unless substantially all DST clients are charged separately
for such modifications, enhancements or changes, including, without
limitation, substantial system revisions or modifications necessitated
by changes in existing laws, rules or regulations. The Fund agrees to
pay DST promptly for modifications and improvements that are charged for
separately at the rate provided for in DST's standard pricing schedule
which shall be identical for substantially all clients, if a standard
pricing schedule shall exist. If there is no standard pricing schedule,
the parties shall mutually agree upon the rates to be charged.
B. DST shall have the right, at any time and from time to time, to alter
and modify any systems, programs, procedures or facilities used or
employed in performing its duties and obligations hereunder; provided
that the Fund will be notified as promptly as possible prior to
implementation of such alterations and modifications and that no such
alteration or modification or deletion shall materially adversely change
or affect the operations and procedures of the Fund in using or
employing the TA2000 System or DST Facilities hereunder or the reports
to be generated by such system and facilities hereunder, unless the Fund
is given thirty (30) days prior notice to allow the Fund to change its
28
procedures and DST provides the Fund with revised operating procedures
and controls.
C. All enhancements, improvements, changes, modifications or new features
added to the TA2000 System however developed or paid for shall be, and
shall remain, the confidential and exclusive property of, and
proprietary to, DST.
25. SUBCONTRACTORS.
Nothing herein shall impose any duty upon DST in connection with or
make DST liable for the actions or omissions to act of unaffiliated
third parties such as, by way of example and not limitation, Airborne
Services, the U.S. mails and telecommunication companies, provided, if
DST selected such company, DST shall have exercised due care in
selecting the same.
26. LIMITATIONS ON LIABILITY.
A. If the Fund is comprised of more than one Portfolio, each Portfolio
shall be regarded for all purposes hereunder as a separate party apart
from each other Portfolio. Unless the context otherwise requires, with
respect to every transaction covered by this Agreement, every reference
herein to the Fund shall be deemed to relate solely to the particular
Portfolio to which such transaction relates. Under no circumstances
shall the rights, obligations or remedies with respect to a particular
Portfolio constitute a right, obligation or remedy applicable to any
other Portfolio. The use of this single document to memorialize the
separate agreement of each Portfolio is understood to be for clerical
convenience only and shall not constitute any basis for joining the
Portfolios for any reason.
B. Notice is hereby given that a copy of the Fund's Trust Agreement and all
amendments thereto is on file with the Secretary of State of the state
of its organization; that this Agreement has been executed on behalf of
the Fund by the undersigned duly authorized representative of the Fund
in his/her capacity as such and not individually; and that the
obligations of this Agreement shall only be binding upon the assets and
property of the Fund and shall not be binding upon any trustee, officer
or shareholder of the Fund individually.
29
27. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the
State of Missouri, excluding that body of law applicable to choice of
law.
B. All terms and provisions of this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
C. The representations and warranties, and the indemnification extended
hereunder, if any, are intended to and shall continue after and survive
the expiration, termination or cancellation of this Agreement.
D. No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by each
party hereto.
E. The captions in this Agreement are included for convenience of reference
only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
F. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
H. This Agreement may not be assigned by the Fund or DST without the prior
written consent of the other.
I. Neither the execution nor performance of this Agreement shall be deemed
to create a partnership or joint venture by and between the Fund and
DST. It is understood and agreed that all services performed hereunder
by DST shall be as an independent contractor and not as an employee of
the Fund. This Agreement is between DST and the Fund and neither this
Agreement nor the performance of services under it shall create any
30
rights in any third parties. There are no third party beneficiaries
hereto.
J. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by any party hereunder shall not affect
any rights or obligations of any other party hereunder.
K. The failure of either party to insist upon the performance of any terms
or conditions of this Agreement or to enforce any rights resulting from
any breach of any of the terms or conditions of this Agreement,
including the payment of damages, shall not be construed as a continuing
or permanent waiver of any such terms, conditions, rights or privileges,
but the same shall continue and remain in full force and effect as if no
such forbearance or waiver had occurred.
L. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or agreement or
proposal with respect to the subject matter hereof, whether oral or
written, and this Agreement may not be modified except by written
instrument executed by both parties.
M. All notices to be given hereunder shall be deemed properly given if
delivered in person or if sent by U.S. mail, first class, postage
prepaid, or if sent by facsimile and thereafter confirmed by mail as
follows:
If to DST:
DST Systems, Inc.
000 X 00xx Xxxxxx 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Group Vice President-Full Service
Facsimile No.: 000-000-0000
With a copy of non-operational notices to:
DST Systems, Inc.
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Legal Department
Facsimile No.: 000-000-0000
31
If to the Fund:
Water Island Capital, LLC
000 Xxxxx Xxx., Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
Facsimile No.: 000-000-0000
or to such other address as shall have been specified in
writing by the party to whom such notice is to be given.
N. DST and the Fund (including all agents of the Fund) agree that, during
any term of this Agreement and for twelve (12) months after its
termination, neither party will solicit for employment or offer
employment to any employees of the other.
O. The representations and warranties contained herein shall survive the
execution of this Agreement. The representations and warranties
contained in this Section, Section 27.O. and the provisions of Section 8
hereof shall survive the termination of the Agreement and the
performance of services hereunder until any statute of limitations
applicable to the matter at issues shall have expired.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers, to be effective as of the
day and year first above written.
DST SYSTEMS, INC.
By:
--------------------------------------------
Title:
-----------------------------------------
THE ARBITRAGE FUND
By: /s/
-------------------------------------------
Title /s/:
-----------------------------------------
32
EXHIBIT A, P. 1
FULL SERVICE
FEE SCHEDULE
ARBITRAGE FUNDS
TRANSFER AGENCY FEE SCHEDULE
JULY 1, 2005 - JUNE 30, 2009
A. COMPLEX/CUSIP MINIMUM FEES
Complex Minimum Fee (Includes 2 CUSIPS) $50,000 per year
CUSIPS Greater Than 2 $17,500 per CUSIP per year
(NOTE: MINIMUM APPLIES UNLESS CHARGES INCLUDED IN SECTION B EXCEED THE MINIMUM.)
B. ACCOUNT MAINTENANCE AND PROCESSING FEES
Open Accounts
Level 3 Accounts $25.00 per account per year
Xxx-Xxxxx 0 Accounts $30.00 per account per year
Closed Accounts $3.50 per account per year
C. OTHER SERVICES
Lost Shareholder Compliance $1.40 per lost S/H account +
$1.80 per database match
12b-1 Processing $0.21 per open & closed acct
per cycle
CDSC/Sharelot Processing $2.34 per account per year
Anti-Money Laundering Fees
Foreign Accts $0.20 per open acct per year
Non-Foreign Accts $0.15 per open acct per year
(subject to a $100 monthly management company minimum)
Ad-Hoc Reporting (Total of 5 of any type bundled monthly):
Multi File Reports $475 per report
Single Reports $300 per report
Escheatment Costs $150 per CUSIP per filing +
$1.78 per item + OOP Costs
Telephone Calls (Inbound + Outbound) $4.50
Omnibus Accountlets
Remote $0.60 per accountlet
Full Service $0.85 per accountlet
33
EXHIBIT A, P.2
FULL SERVICE
FEE SCHEDULE
Short-Term Trader
90 Days Or Less $0.06 per account
91 Days - 180 Days $0.12 per account
181 Days - 270 Days $0.18 per account
271 Days - 366 Days $0.24 per account
367 Days - 2 Years $0.36 per account
TA2000 Voice System Exhibit 1
NSCC Exhibit 2
Financial Intermediary Interfaces Exhibit 3
Fund Closing/Deconversion Exhibit 4
Vision(R) Exhibit 5
Conversion/Acquisition Costs - Out of Pocket expenses including, but not
limited to travel and accommodations, programming, training,
equipment installation, etc.
* Computer/Technical Support (2005 Rates) Business Analyst/Tester:
Dedicated $113,722 per year
On-Request $100.90 per hour
COBOL Programmer:
Dedicated $191,738 per year
On-Request $152.30 per hour
Workstation Programmer:
Dedicated $219,754 per year
On-Request $180.40 per hour
Full Service Support:
Senior Staff Support $75.00 per hour
Staff Support $55.00 per hour
Clerical Support $45.00 per hour
D. SHAREHOLDER PAID FEES
Fiduciary Fee (Paid by Shareholder) $15.00 per SSN per year
Per plan type
34
EXHIBIT A, P.3
FULL SERVICE
FEE SCHEDULE
E. AWD(R)
Remote AWD Client Desktop/User $2,184 per year
Remote AWD Data Center Connection $2,600 per year
NOTES TO THE ABOVE FEE SCHEDULE
OPEN AND CLOSED ACCOUNTS FEES
The monthly fee for an open account shall be charged in the month during which
an account is opened through the month in which such account is closed. The
monthly fee for a closed account shall be charged in the month following the
month during which such account is closed and shall cease to be charged in the
month following the Purge Date, as hereinafter defined. The "Purge Date" for any
year shall be any day after June 1st of that year, as selected by the Fund,
provided that written notification is presented to DST at least forty-five (45)
days prior to the Purge Date.
FEE INCREASES
The fees and charges set forth in this fee schedule shall increase annually upon
each anniversary of this Agreement over the fees and charges during the prior 12
months in an amount based on the annual percentage of change in the Consumer
Price Index (CPI-U) in the Kansas City, Missouri-Kansas Standard Metropolitan
Statistical Area, All Items, Base 1982-1984=100, as last reported by the U.S.
Bureau of Labor Statistics. Items marked by an "*" are subject to change with 60
days notice. In the event that this Agreement was not signed as of the first day
of the month, the fees and charges increase shall be effective as of the first
day of the month immediately following the month during which the anniversary
occurred.
LATE FEES
Any fees or reimbursable expenses not paid within 30 days of the date of the
original invoice will be charged a late payment fee of 1.5% per month until
payment is received.
REIMBURSABLE EXPENSES
This schedule does not include reimbursable expenses that are incurred on the
Fund's behalf. Examples of reimbursable expenses include, but are not limited to
the items listed below.
REIMBURSABLE EXPENSES
Forms and Postage (to be paid in advance if so requested)
Mailing Services
Computer Hardware and Software - specific to Fund or installed at remote
site at Fund's direction
Telecommunications Equipment and Lines/Long Distance Charges
Magnetic Tapes, Reels or Cartridges
35
EXHIBIT A, P.4
FULL SERVICE
FEE SCHEDULE
Magnetic Tape Handling Charges
Microfiche/Microfilm
Freight Charges
Printing
Bank Wire and ACH Charges
Proxy Processing - per proxy mailed not including postage
Includes: Proxy Card, Printing, Outgoing Envelope, Return Envelope,
Tabulation and Certification
T.I.N. Certification (W8 & W9)
(Postage associated with the return envelope is included)
Off-site Record Storage
Second Site Disaster Backup Fee (per account) Currently $.20, subject to
change annually Travel, Per Diem and other Billables incurred by DST
personnel traveling to, at and from the Fund at the request of the Fund.
36
TA2000 VOICE SYSTEM EXHIBIT 1, P.1
FEE SCHEDULE
PER CALL SERVICE FEE
Utilization of DST's TA2000 Voice System is based on a service fee of $.23 per
call. Each call has a maximum duration of seven (7) minutes. This charge is a
flat rate regardless of the number or type of transactions that a shareholder
processes during the call. A given call could result in inquiries and/or
transactions being processed for various funds in the complex. Therefore, on a
monthly basis, DST will report the number of inquiries and/or transactions
processed by fund. A percentage of the total will be derived and reported for
each fund. As a result of this process, DST will allocate the charges among the
individual funds.
MULTIPLE CALL FLOWS
An additional fee of $525 per month will be charged for each additional call
flow that requires different flows, functions, vocabulary, processing, rules or
access method. An additional fee of $210 per month will be charged for each
additional call flow that is identical in flows, functions, vocabulary,
processing rules or access method.
MINIMUM MONTHLY CHARGE
DST's commitment to the reliability and continued enhancement of the TA2000
Voice System necessitates a minimum monthly charge for the service. The minimum
monthly charge will only be assessed when it is greater than the monthly service
fees. The minimum monthly charge will be implemented on a graduated basis based
on the number of CUSIPS and shareholders in a fund complex and is the sum of the
CUSIP and account charges. The schedule for this charge is as follows:
YEARS CHARGE PER CHARGE PER
OF CUSIP AUTHORIZED SHAREHOLDER
SERVICE FOR SERVICE* ACCOUNT**
1 $ 56 $.003
2 $ 83 $.004
3 $111 $.005
* CUSIPS ADDED TO THE SERVICE will be subject to the same
minimums being charged to the other CUSIPS in the complex at
the time the CUSIPS are added.
** THE PER ACCOUNT CHARGE is based on the total number of
shareholder accounts in authorized CUSIPS at the end of each
month.
OUT OF POCKET COSTS
Each fund complex will require a unique WATS number for their shareholders to
call. Each WATS number will require a specific number of trunks to service a
given volume of shareholder calls. All installation and monthly usage charges
associated with these will be billed through monthly out-of-pocket invoices.
37
EXHIBIT 2, P.1
NSCC FEES AND OUT-OF-POCKET EXPENSES
DST FEES
DST charges $1,663 per CUSIP per year for the NSCC platform
NSCC PARTICIPANT FEES
The NSCC charges $40 per month per NSCC Participant any for CPU
access/shared line costs.
A combined participant base fee of $200 per month is charged for the
following services:
FUND/SERV:
The NSCC charges an activity charge of $.175 per inputted transaction.
Transactions include purchases, redemptions and exchanges.
NETWORKING:
- $.02 per account for funds paying dividends on a monthly basis
- $.01 per account for funds paying dividends other than monthly
COMMISSION SETTLEMENT:
- $.30 per hundred records, per month, for one to 500,000 records;
there is a $50 per month minimum processing charge
- $.20 per hundred records, per month, for 500,001 to 1,000,000 records
- $.10 per hundred records, per month, for 1,000,001 records and above
MUTUAL FUND PROFILE SERVICE MONTHLY MEMBERSHIP FEE
- $325.00 per month
SETTLING BANK FEES
The fund may be charged fees by the Funds Settling Bank at which the
net settlement account resides for monthly maintenance of this account.
These are negotiated directly between the Fund and the Settling Bank.
38
EXHIBIT 3, P.1
FINANCIAL INTERMEDIARY/THIRD PARTY ADMINISTRATOR FEES
BASE FEE (PER INTERMEDIARY PER MONTH) $111.00
PHONE CALLS (INBOUND/OUTBOUND) $4.44 (1)
TRANSACTIONS:
Manual Same Day (T) Processing/Settlement
Environments (not processed until money received) $3.88/each (1)
Manual or Automated Non-Same Day (T+x) Processing/
Settlement Environments (systematic "as-of" T NAV,
adjusted supersheets, expedited money movement) $12.20/each
ALL INBOUND ELECTRONIC DATA TRANSMISSIONS
Data Transmissions/Interfaces:
First 10 Intermediaries $56/intermediary/mo
Next 15 Intermediaries $44/intermediary/mo
Intermediaries over 25 $34/intermediary/mo
Initial Set-up Standard Programming/Client Services Fees
Note: DST will assess charges to receivers of outbound electronic data
transmissions comprised of an initial setup fee, and a monthly fee based on the
number of management companies being accessed.
(1) If the Transfer Agency fee agreement has lower stated rates for phone calls
and manual same day (T) transactions DST will honor those stated rates.
39
EXHIBIT 0, X.0
XXXX XXXXXXX / XXXXXXXXXXXX FEE SCHEDULE
================================================================================
Fees effective as of fund closing or deconversion:
Closed Accounts As stated in fee schedule
Closed CUSIP Fee $167 per closed CUSIP per month
Above charges are effective through May of the following year to
compensate DST for tax reporting and statement production.
Programming
As required at DST's then current standard rates.
Reimbursable Expenses
This schedule does not include reimbursable expenses that are incurred on
the Fund's behalf. Examples of such reimbursable expenses include but are
not limited to forms, postage, mailing services, telephone line/long
distance charges, transmission of statement data for remote print/mail
operations, remote client hardware, document storage, tax certification
mailings, magnetic tapes, printing, microfiche, Fed wire bank charges, ACH
bank charges, NSCC charges, as required or incurred, etc. Reimbursable
expenses are billed separately from Account Maintenance and Programming
fees on a monthly basis.
40
EXHIBIT 5, P.1
VISION(R) MUTUAL FUND GATEWAY(1)
================================================================================
ID CHARGES
NUMBER OF ID BREAKPOINTS ID CHARGE BREAKPOINTS
------------------------ ---------------------
1 - 500 $5.00 per month/per ID for each of the first 500 IDs
501 - 1,000 $4.00 per month/per ID for each of the next 500 IDs
1,001 - 2,000 $3.00 per month/per ID for each of the next 1,000 IDs
2,001 - 3,000 $2.00 per month/per ID for each of the next 1,000 IDs
3,001 - + No charge for each additional ID over 3,000
INQUIRY
Initial Set-up Fee None
Standard Per View Charge $0.05
Global Book of Business - Rep $0.025
Global Book of Business - Dealer (Vision Home Office) $0.025
Statement Retrieval Charge $0.05
Monthly Minimum None
Monthly Statement Interface Support Charge (1) $1,300
A view is defined as the complete process of an information request being
initiated by the Vision User to the underlying record keeping system, including,
but not limited to, requests for statement presentment, and the corresponding
response returned from the underlying record keeping system to the Vision User's
browser. Each statement presented shall be a separate view and therefore be a
separate charge, i.e., any related statement or historical statement, even if
referred to on the requested statement, shall be a separate Per View Charge.
Further, the Per View Charges do not cover any charges or expenses the Customer
may incur from their statement vendor.
(1) THE MONTHLY STATEMENT INTERFACE SUPPORT CHARGE SHALL ONLY BE IMPOSED IF
CUSTOMER ELECTS TO OFFER MONTHLY STATEMENTS AS A PART OF THE VISION SERVICES. IF
CUSTOMER USES DST OUTPUT, LLC OR A SUBSIDIARY OF DST OUTPUT, LLC AS ITS
STATEMENT VENDOR, THE MONTHLY STATEMENT INTERFACE SUPPORT CHARGE WILL BE WAIVED.
EMAIL ALERTS
Per email charge $0.05 regardless of the number
of confirmations included in
the email
TRANSACTION PROCESSING
Initial Set-up Fee
Existing FAN Users $2,500
All Others $5,000
Purchase, Redemption, Exchange, Maintenance $0.10 each
----------------------
(1) Requires execution of a separate agreement.
41
EXHIBIT 5, P.2
VISION(R) MUTUAL FUND GATEWAY
================================================================================
NSCC Reject Processing (per reject) $0.10 each
New Account Establishment (each new account $0.35
transaction may contain one or more new accounts)
Monthly Minimum (2) the greater of $500 or
actual usage charge
(2) Per View Charges and Per ID Charges shall not be considered with calculating
the monthly minimum charge for Transaction Processing. $500 monthly minimum does
not apply to NSCC Reject Processing.
VOLUME DISCOUNTS
Discount Schedule (monthly) (3)
$7,500 - $15,000 20%
$15,001 - $30,000 25%
$30,001 - $45,000 30%
$45,001 - +35%
(3) Volume discounts apply to all Inquiry and Transaction Processing fees. ID
charges and Email Alerts are not included in discount calculations. The
percentage discount is applied incrementally to the dollars associated with each
breakpoint.
42
