TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
THE PRINCIPLED EQUITY MARKET FUND
AND
CARDINAL INVESTMENT SERVICES, INC.
TABLE OF CONTENTS
Page
1. Article 1 Terms of Appointment; Duties of the Company 1
2. Article 2 Fees and Expenses.......................... 2
3. Article 3 Representations and Warranties of the 2
Company.................................... 2
4. Article 4 Representations and Warranties of the Trust 3
5. Article 5 Indemnification............................ 3
6. Article 6 Covenants of the Trust and the Company..... 5
7. Article 7 Termination of Agreement................... 5
8. Article 8 Assignment................................. 5
9. Article 9 Amendment.................................. 6
10. Article 10 Massachusetts Law to Apply................. 6
11. Article 11 Merger of Agreement........................ 6
12. Article 12 Limitation of Liability.................... 6
APPENDICES
Appendix ........................... Fee Schedule A-1
A
TRANSFER AGENCY AND SERVICE AGREEMENT
......AGREEMENT made as of the 1st day of April, 1999 by and between THE
PRINCIPLED EQUITY MARKET FUND, a Massachusetts business trust having its
principal office and place of business at Xxxxxxx Place, 10 Xxxxxxx Road, Xxxxxx
Centre, Massachusetts ("the Trust"), and CARDINAL INVESTMENT SERVICES, INC., an
Illinois corporation having its principal office and place of business at 000
Xxxxxxxx Xxxxxx, Xxxxx 0, Xxxxxx, Xxxxxxxxxxxxx ("the Company"),
W I T N E S S E T H:
......WHEREAS, the Trust desires to appoint the Company as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Company desires to accept such appointment;
......NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1. Terms of Appointment; Duties of the Company
......1.01 Subject to the terms and conditions set forth in this Agreement, the
Trust hereby employs and appoints the Company to act as, and the Company agrees
to act as, transfer agent for the Trust's authorized and issued shares of
beneficial interest without par value ("Shares"), and dividend disbursing agent
in connection with any accumulation, open-account or similar plans provided to
the shareholders of the Trust ("Shareholders") and set out in the prospectus and
statement of additional information of the Trust corresponding to the date of
this Agreement.
......1.02 The Company agrees that it will perform the
following services:
......(a) In accordance with procedures established from time to time by
agreement between the Trust and the Company, the Company shall:
...........(i) receive for acceptance and processing, order for
the purchase of Shares, and promptly deliver payment and
appropriate documentation therefor to the custodian of the Trust
authorized pursuant to the Trust's governing documents (the
"Custodian");
...........(ii) pursuant to purchase orders or other appropriate
instructions, issue the appropriate number of Shares and hold
such Shares in the appropriate Shareholder account, and, if
requested and properly authorized, issue appropriate certificates
therefor;
...........(iii) receive for acceptance and processing, redemption
requests and redemption directions, and deliver the appropriate
documentation therefor to the Custodian;
...........(iv) at the appropriate time as and when it receives
moneys paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the appropriate
manner such moneys as instructed by the redeeming Shareholders;
...........(v) effect transfer of Shares by the registered owners
thereof upon receipt of appropriate documentation;
........... (vi) prepare and transmit payments for dividends and
distributions declared by the Trust; and
...........(vii) maintain records of account for and advise the
Trust and its Shareholders as to the foregoing.
......(b) In addition to and not in lieu of the services set forth in paragraph
(a) above, the Company shall perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to: (i) maintaining all Shareholder accounts, (ii) preparing Shareholder
mailing lists, (iii) mailing proxies, (iv) receiving and tabulating proxies, (v)
mailing of additional information to current Shareholders, (vi) withholding
taxes on U.S. residents and non-resident alien accounts where applicable, (vii)
preparing and filing U.S. Treasury Department Forms 1099 and other appropriate
forms required with respect to dividends and distributions by federal
authorities for all registered Shareholders, (viii) preparing and mailing
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, (ix) preparing and mailing activity statements for Shareholders, and
(x) providing Shareholder account information. The Trust shall provide the
Company with any information required in connection with the furnishing of the
foregoing services.
......(c) Procedures applicable to the service provided under this Agreement may
be established from time to time by agreement between the Trust and the Company.
Article 2. Fees and Expenses
......2.01 For performance by the Company pursuant to this Agreement, the Trust
agrees to pay the Company monthly a fee at the annual rate disclosed in Appendix
A of this Agreement as Transfer Agent for the Trust. Such fees and out-of-pocket
expenses and advances identified under Section 2.02 below may be changed from
time to time subject to mutual written agreement between the Trust and the
Company.
......2.02 In addition to the fee paid under Appendix A of this Agreement, the
Trust agrees to reimburse the Company for all out-of-pocket expenses or advances
incurred by the Company in performing its duties as Transfer Agent hereunder. In
addition, any other expenses incurred by the Company at the request or with the
consent of the Trust will be reimbursed by the Trust.
......2.03 The Trust agrees to pay all fees and reimbursable expenses promptly.
Postage and cost of materials for mailing of dividends, proxies, Trust reports
and other mailings to all Shareholder accounts shall be advanced to the Company
by the Trust in immediately available funds prior to the mailing date of such
materials.
Article 3. Representations and Warranties of the Company
......The Company represents and warrants to the Trust that:
......3.01 It is a corporation duly organized and existing and in good standing
under the laws of State of Illinois.
......3.02 It is duly qualified to carry on its business in The
Commonwealth of Massachusetts.
......3.03 It is empowered under applicable laws and by its charter and bylaws
to enter into and perform this Agreement.
......3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
......3.05 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4. Representations and Warranties of the Trust
......The Trust represents and warrants to the Company that:
......4.01 It is an unincorporated business trust duly organized and existing
and in good standing under the laws of The Commonwealth of Massachusetts.
......4.02 It is empowered under applicable laws and by its governing documents
to enter into and perform this Agreement.
......4.03 All proceedings required by said governing documents have been taken
to authorize it to enter into and perform this Agreement.
......4.04 It is an investment company registered under the Investment Company
Act of 1940.
......4.05 A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made with respect to all
Shares of each of the Trust being offered for sale; information to the contrary
will result in immediate notification to the Company.
Article 5. Indemnification
......5.01 The Company shall not be responsible for, and the Trust shall
indemnify and hold the Company, its officers, directors, employees and agents
harmless from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities arising out of or attributable to:
......(a) all actions of the Company or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct;
......(b) the Trust's refusal or failure to comply with the terms of this
Agreement, or the Trust's lack of good faith, negligence or willful misconduct,
or the breach of any representation or warranty of the Trust hereunder;
......(c) the reliance on or use by the Company or its agents or subcontractors
of information, records or documents which (i) are received by the Company or
its agents or subcontractors and furnished to it by or on behalf of the Trust,
and (ii) have been prepared and/or maintained by the Trust or any other person
or firm (other than the Company or its agents or subcontractors) on behalf of
the Trust;
......(d) the reliance on, or the carrying out by the Company or
its agents or subcontractors of, any instructions or requests of
the Trust's representatives; or
......(e) the offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or regulations of
any state including, without limitation, any requirement that such Shares be
registered in such state, or in violation of any stop order or other
determination or ruling by any federal agency or any state with respect to the
offer or sale of such Shares in such state.
......5.02 The Company shall indemnify and hold the Trust harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to the Company's refusal
or failure to comply with the terms of this Agreement, or the Company's lack of
good faith, negligence or willful misconduct, or the breach of any
representation or warranty of the Company hereunder.
......5.03 At any time the Company may apply to any officer of the Trust for
instructions, and may consult with the Trust's legal counsel with respect to any
matter arising in connection with the services to be performed by the Company
under this Agreement, and the Company and its agents or subcontractors shall not
be liable and shall be indemnified by the Trust for any action taken or omitted
by it in reliance upon such instructions or upon the opinion of such counsel.
The Company, its agents and subcontractors shall be protected and indemnified in
acting upon any papers or documents furnished by or on behalf of the Trusts,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instructions, information, data, records or documents
provided the Company or its agents or subcontractors by telephone, in person, or
by machine readable input, facsimile, CRT data entry or other similar means
authorized by the Trust, and the Company, its officers, directors, employees,
agents and subcontractors shall not be held to have notice of any change of
authority of any person until receipt of written notice thereof from the Trust.
The Company, its officers, directors, employees, agents and subcontractors shall
also be protected and indemnified in recognizing Share certificates which are
reasonably believed to bear the proper manual or facsimile signatures of the
officers of the Trust, and the proper countersignature of any former transfer
agent or registrar, or of a co-transfer agent or co-registrar.
......5.04 In the event either party is unable to perform its obligations under
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 to the other for any damages
resulting from such failure to perform or otherwise from such causes.
......5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
......5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6. Covenants of the Trust and the Company
......6.01 The Trust shall promptly furnish to the Company the
following:
......(a) a certified copy of the resolution of the Board of Trustees of the
Trust authorizing the appointment of the Company and the execution and delivery
of this Agreement.
......(b) A copy of the Declaration of Trust and Bylaws of the
Trusts and all amendments thereto.
......6.02 The Company hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Trust for safekeeping of Share
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.
......6.03 The Company shall keep records relating to the services to be
performed hereunder in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder, the Company agrees that
all such records prepared or maintained by the Company relating to the services
to be performed by the Company hereunder are the property of the Trust and will
be preserved, maintained at the expense of the Trust and made available in
accordance with such section, rules and regulations, and will be surrendered
promptly to the Trust at its request.
......6.04 The Company 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 as may be required by law.
......6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trust, the Company will endeavor to notify the Trust
and to secure instructions from an authorized officer of the Trusts as to such
inspection. The Company reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person, unless
the Trust indemnify the Company to its reasonable satisfaction against such
liability.
Article 7. Termination of Agreement
......7.01 This Agreement may be terminated by either party upon at least ninty
(90) days written notice to the other.
......7.02 Should the Trust exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, the Company reserves the right to charge for any other
reasonable expenses associated with such termination, but not more than an
amount equivalent to the average of the most recent three (3) months' fees.
Article 8. Assignment
......8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
......8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
Article 9. Amendment
......9.01 This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 10 Massachusetts Law to Apply
......10.01 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 11 Merger of Agreement
......11.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
Article 12. Limitation of Liability
......12.01 A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Trust as
trustees and not individually and that the obligations of this Agreement are not
binding upon the Trustees or holders of Shares individually but are binding only
upon the assets or property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
THE PRINCIPLED EQUITY MARKET FUND
By:/s/ XXXXX X.X. XXXXXX
President
CARDINAL INVESTMENT SERVICES, INC.
By:/S/ XXXXXXXXXXX X. XXXXXXXX
President
A-1
Appendix A
Transfer Agent and Service Fee $6,000 annual rate, paid monthly for
the calendar year 1999.
$12,000 annual rate, paid monthly for
the calendar year 2000 and thereafter
A-1
ADMINISTRATION AGREEMENT
BETWEEN
THE PRINCIPLED EQUITY MARKET FUND
AND
CARDINAL INVESTMENT SERVICES, INC.
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 1st day of March, 1999, by and between THE PRINCIPLED
EQUITY MARKET FUND, a Massachusetts BUSINESS TRUST (the "Trust"), and Cardinal
Investment Services, Incorporated, an Illinois corporation (the
"Administrator").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end investment management company; and
WHEREAS, the Trust desires that the Administrator perform certain
administrative services for the Trust and the Administrator is willing to
provide those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Administrator hereby agree as
follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
The Trust hereby appoints the Administrator, and the Administrator hereby
agrees, to act as administrator of the Trust for the period and on the terms
set forth in this Agreement.
SECTION 2. DUTIES OF THE ADMINISTRATOR AND THE TRUST
(a) Subject to the direction and control of the Board of Trustees (the
"Board") and the officers of the Trust, the Administrator shall manage all
aspects of the Trust's operations with respect to the Trust except those that
are the responsibility of F. L. Xxxxxx Investment Management Corporation, any
other investment adviser or investment subadviser to the Trust (collectively,
the "Adviser") or any other service provider hired by the Trust, all in such
manner and to such extent as may be authorized by the Board.
(b) With respect to the Trust, the Administrator shall:
(i) at the Trust's expense, provide the Trust with, or arrange for the
provision of, the services of persons competent to perform such legal,
administrative and clerical functions not otherwise described in this
Section 2(b) as are necessary to provide effective operation of the Trust;
(ii) oversee (A) the preparation and maintenance by the Adviser and the
Trust's custodian, transfer agent, dividend disbursing agent and fund
accountant in such form, for such periods and in such locations as may be
required by applicable United States law, of all documents and records
relating to the operation of the Trust required to be prepared or
maintained by the Trust or its agents pursuant to applicable law; (B) the
reconciliation of account information and balances among the Adviser and
the Trust's custodian, transfer agent, dividend disbursing agent and fund
accountant; (C) the transmission of purchase and redemption orders for
shares of stock of the Trust ("Shares"); (D) the notification to the
Adviser of available funds for investment; and (E) the performance of fund
accounting, including the calculation of the net asset value of the
Shares;
(iii) oversee the performance of administrative and professional services
rendered to the Trust by others, including its custodian, transfer agent
and dividend disbursing agent as well as legal, auditing, shareholder
servicing and other services performed for the Trust;
(iv) file or oversee the filing of each document required to be filed by
the Trust in either written or, if required, electronic format (e.g.,
electronic data gathering analysis and retrieval system or "XXXXX") with
the SEC;
(v) assist in and oversee the preparation, filing and
printing and the periodic updating of the Registration
Statement and Prospectus;
(vi) oversee the preparation and filing of the Trust's
tax returns;
(vii) oversee the preparation of financial statements
and related reports to the Trust's shareholders, the SEC and
state and other securities administrators;
(viii) assist in and oversee the preparation and printing
of proxy and information statements and any other
communications to shareholders;
(ix) provide the Trust with adequate general office space and facilities
and provide persons suitable to the Board to serve as officers of the
Trust;
(x) assist in the preparation, filing and maintenance of
the Trust's Organic Documents and Minutes of Meetings of
Trustees, Board Committees and Shareholders;
(xi) with the cooperation of the Trust's counsel, Advisers, the officers
of the Trust and other relevant parties, prepare and disseminate materials
for meetings of the Board;
(xii)assist the Trust in maintaining its existence and good
standing under applicable state law;
(xiii) oversee the determination of the amount of and supervise the
declaration of dividends and other distributions to shareholders as
necessary to, among other things, maintain the qualification of each Fund
as a regulated investment company under the Internal Revenue Code of 1986,
as amended (the "Code"), and prepare and distribute to appropriate parties
notices announcing the declaration of dividends and other distributions to
shareholders;
(xiv) calculate, review and account for Trust expenses
and report on Trust expenses on a periodic basis;
(xv) authorize the payment of Trust expenses and pay, from
Trust assets, all bills of the Trust;
(xvi) prepare Trust budgets, pro-forma financial
statements, expense and profit/loss projections and fee
waiver/expense reimbursement projections on a periodic basis;
(xvii) prepare financial statement expense information;
(xviii) assist the Trust in the selection of other service
providers, such as independent accountants, law firms and
proxy solicitors;
(xix) perform such other recordkeeping, reporting and other tasks as may
be specified from time to time in the procedures adopted by the Board;
provided, that the Administrator need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements;
(xx) calculate the net asset value per share with the
frequency prescribed in the Trust's then-current Prospectus;
(xxi) calculate each item of income, expense, deduction, credit, gain and
loss, if any, as required by the Trust and in conformance with generally
accepted accounting practice ("GAAP"), the SEC's Regulation S-X (or any
successor regulation) and the Internal Revenue Code of 1986, as amended
(or any successor laws)(the "Code");
(xxii) maintain the Trust's general ledger and record all income,
expenses, capital share activity and security transactions of the Trust;
(xxiii) calculate the total return for the Trust and such other measure of
performance as may be agreed upon between the parties hereto;
(xxiv) provide the Trust and such other persons as the Trust may direct
with the following reports (A) a current security position report, (B) a
summary report of transactions and pending maturities (including the
principal, cost, and accrued interest on each portfolio security in
maturity date order), and (C) a current cash position report;
(xxv) prepare and record, as of each time when the net asset value of the
Trust is calculated or as otherwise directed by the Trust, a valuation of
the assets of the Trust (unless otherwise specified in or in accordance
with this Agreement, based upon the use of outside services normally used
and contracted for this purpose by the Administrator in the case of
securities for which information and market price or yield quotations are
readily available and based upon evaluations conducted in accordance with
the Trust's instructions in the case of all other assets) ;
(xxvi) make such adjustments over such periods as the Advisor deems
necessary to reflect over-accruals or under-accruals of estimated expenses
or income;
(xxvii) request any necessary information from the Advisor and the Trust's
transfer agent and distributor in order to prepare, and prepare, the
Trust's Form N-SAR;
(xxviii) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Advisor, any regulatory
body in any requested review of the Trust's books and records maintained
by the Administrator ;
(xxix) prepare semi-annual financial statements and oversee the production
of the semiannual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers;
(xxx)file the Trust's semi-annual financial statements with the SEC or
ensure that the Trust's semi-annual financial statements are filed with
the SEC;
(xxxi) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xxxii) assist in preparing the data required to update the
Trust's registration statement;
(xxxiii) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xxxiv) transmit to and receive from the Trust's transfer agent
appropriate data to reconcile Shares outstanding on a daily basis and
other data with the transfer agent;
(xxxv) periodically reconcile all appropriate data with the
Trust's custodian;
(xxxvi) verify investment trade tickets when received from an investment
adviser and maintain individual ledgers and historical tax lots for each
security; and
(xxxvii) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the Board;
provided, that the Administrator need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
(c) The Administrator shall prepare and maintain on behalf of the Trust
the following books and records of the Trust, and each Class thereof, pursuant
to Rule 3la-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of cash
and all other debits and credits, as required by subsection (b)(1) of the
Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by subsection
(b)(2) of the Rule (but not including the ledgers required by subsection
(b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the Trust
for, or in connection with, the purchase or sale of securities, and all
other portfolio purchases or sales, as required by subsections (b)(5) and
(b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct or
indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except
shareholder accounts) as required by subsection (b)(8) of
the Rule; and
(vi) Other records required by the Rule or any successor rule or pursuant
to interpretations thereof to be kept by closed-end management investment
companies, but limited to those provisions of the Rule applicable to
portfolio transactions and as agreed upon between the parties hereto.
(d) The Administrator shall provide such other services and assistance
relating to the affairs of the Trust as the Trust or an Adviser may, from time
to time, reasonably request pursuant to mutually acceptable compensation
agreements.
(e) The Administrator shall maintain records relating to its services,
such as journals, ledger accounts and other records, as are required to be
maintained under the 1940 Act and Rule 31a-1 thereunder. The books and records
pertaining to the Trust that are in possession of the Administrator shall be
the property of the Trust. The Trust, or the Trust's authorized
representatives, shall have access to such books and records at all times
during the Administrator's normal business hours. Upon the reasonable request
of the Trust, copies of any such books and records shall be provided promptly
by the Administrator to the Trust or the Trust's authorized representatives. In
the event the Trust designates a successor that assumes any of the
Administrator's obligations hereunder, the Administrator shall, at the expense
and direction of the Trust, transfer to such successor all relevant books,
records and other data established or maintained by the Administrator under
this Agreement.
(f) Nothing contained herein shall be construed to require the
Administrator to perform any service that could cause the Administrator to be
deemed an investment adviser for purposes of the 1940 Act or the Investment
Advisers Act of 1940, as amended, or that could cause a Trust to act in
contravention of the Trust's Prospectus or any provision of the 0000 Xxx. All
references to any law in this Agreement shall be deemed to include reference to
the applicable rules and regulations promulgated under authority of the law and
all official interpretations of such law or rules or regulations.
(g) In order for the Administrator to perform the services required by
this Section 2, the Trust (i) shall cause all service providers to the Trust to
furnish any and all information to the Administrator, and assist the
Administrator as may be required and (ii) shall ensure that the Administrator
has access to all records and documents maintained by the Trust or any service
provider to the Trust.
SECTION 3. STANDARD OF CARE AND RELIANCE
(a) The Administrator shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by the
Administrator in writing. The Administrator shall use its best judgment and
efforts in rendering the services described in this Agreement. The
Administrator shall not be liable to the Trust or any of the Trust's
shareholders for any action or inaction of the Administrator relating to any
event whatsoever in the absence of bad faith, willful misfeasance or gross
negligence in the performance of the Administrator's duties or obligations
under this Agreement or by reason of the Administrator's reckless disregard of
its duties and obligations under this Agreement.
(b) The Trust agrees to indemnify and hold harmless the Administrator, its
employees, agents, directors, officers and managers and any person who controls
the Administrator within the meaning of section 15 of the Securities Act or
section 20 of the Securities Exchange Act of 1934, as amended, ("The
Administrator Indemnitees") against and from any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character
arising out of or in any way related to the Administrator's actions taken or
failures to act with respect to the Trust that are consistent with the standard
of care set forth in Section 3(a) or based, if applicable, on good faith
reliance upon an item described in Section 3(d)(a "Claim"). The Trust shall not
be required to indemnify any Administrator Indemnitee if, prior to confessing
any Claim against the the Administrator Indemnitee, the Administrator or the
the Administrator Indemnitee does not give the Trust written notice of and
reasonable opportunity to defend against the Claim in its own name or in the
name of the the Administrator Indemnitee.
(c) The Administrator agrees to indemnify and hold harmless the Trust, its
employees, agents, trustees and officers against and from any and all claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses of every nature and
character arising out of the Administrator's actions taken or failures to act
with respect to the Trust that are not consistent with the standard of care set
forth in Section 3(a). The Administrator shall not be required to indemnify the
Trust if, prior to confessing any Claim against the Trust, the Trust does not
give the Administrator written notice of and reasonable opportunity to defend
against the Claim in its own name or in the name of the Trust.
(d) An Administrator Indemnitee shall not be liable for any action taken
or failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the Trust
or counsel to the Administrator, and upon statements of accountants,
brokers and other persons reasonably believed in good faith by the
Administrator to be expert in the matters upon which they are consulted;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons authorized
by the Board to give such oral instruction. The Administrator shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction;
(iii) any written instruction or certified copy of any resolution of the
Board, and the Administrator may rely upon the genuineness of any such
document or copy 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 no Administrator Indemnitee
shall be under any duty or obligation to inquire into the validity or
invalidity or authority or lack thereof 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.
(e) 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 investment adviser (including prices and pricing
formulas and the untimely transmission of trade information), custodian or
transfer agent to the Trust.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the administrative services provided by the
Administrator pursuant to this Agreement, the Trust shall pay the
Administrator, with respect to each Class of the Trust, the fees set forth in
Appendix A hereto. These fees shall be accrued by the Trust daily and shall be
payable monthly in arrears on the first day of each calendar month for services
performed under this Agreement during the prior calendar month.
If fees begin to accrue in the middle of a month or if this Agreement
terminates before the end of any month, all fees for the period from that date
to the end of that month or from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement the Trust shall pay
to the Administrator such compensation as shall be payable prior to the
effective date of termination.
(b) Notwithstanding anything in this Agreement to the contrary, the
Administrator and its affiliated persons may receive compensation or
reimbursement from the Trust with respect to (i) the provision of services on
behalf of the Trust in accordance with any Plan or Service Plan, (ii) the
provision of shareholder support or other services, and (iii) service as a
trustee or officer of the Trust.
(c) The Trust shall be responsible for and assumes the obligation for
payment of all of its expenses, including: (a) the fee payable under this
Agreement; (b) the fees payable to each Adviser under an agreement between the
Adviser and the Trust; (c) expenses of issue, repurchase and redemption of
Shares; (d) interest charges, taxes and brokerage fees and commissions; (e)
premiums of insurance for the Trust, its trustees and officers and fidelity
bond premiums; (f) fees, interest charges and expenses of third parties,
including the Trust's independent accountant, legal counsel, custodian,
transfer agent, dividend disbursing agent and fund accountant; (g) fees of
pricing, interest, dividend, credit and other reporting services; (h) costs of
membership in trade associations; (i) telecommunications expenses; (j) funds
transmission expenses; (k) auditing, legal and compliance expenses; (l) costs
of forming the Trust and maintaining its existence; (m) costs of preparing,
filing and printing the Trust's Prospectuses, subscription application forms
and shareholder reports and other communications and delivering them to
existing shareholders, whether of record or beneficial; (n) expenses of
meetings of shareholders and proxy solicitations therefor; (o) costs of
maintaining books of original entry for portfolio and fund accounting and other
required books and accounts, of calculating the net asset value of Shares and
of preparing tax returns; (p) costs of reproduction, stationery, supplies and
postage; (q) fees and expenses of the Trust's trustees; (r) compensation of the
Trust's officers and employees and costs of other personnel (who may be
employees of the Adviser, the Administrator or their respective affiliated
persons) performing services for the Trust; (s) costs of Board, Board
committee, shareholder and other corporate meetings; (t) SEC registration fees
and related expenses; (u) state, territory or foreign securities laws
registration fees and related expenses; and (v) all fees and expenses paid by
the Trust in accordance with any Plan or Service Plan or agreement related to
similar manners.
(d) Should the Trust exercise its right to terminate this Agreement, the
Trust shall reimburse the Administrator for all out-of-pocket expenses and
employee time (at 150% of salary) associated with the copying and movement of
records and material to any successor person and providing assistance to any
successor person in the establishment of the accounts and records necessary to
carry out the successor's responsibilities.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective on the date hereof, shall remain
in full force and effect for one year from the date hereof and shall continue
in full force and effect for successive periods of one year thereafter,
provided that continuance is approved at least annually by a vote of a majority
of Trustees of the Trust.
(b) This Agreement may be terminated at any time, without the payment of
any penalty (i) by the vote of the Board of Trustees of the Trust or by the
Administrator, upon at least ninty (90) days written notice to the other party,
or upon such shorter notice as may be mutually agreed upon.
(c) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either the Administrator or the Trust
except by the specific written consent of the other party. All terms and
provisions of this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto.
SECTION 6. CONFIDENTIALITY.
The Administrator agrees to treat all records and other information
related to the Trust as proprietary information of the Trust and, on behalf of
itself and its employees, to keep confidential all such information, 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; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
the Administrator may be exposed to civil or criminal contempt proceedings for
failure to release the information, when requested to divulge such information
by duly constituted authorities or when so requested by the Trust.
SECTIONS 7. FORCE MAJEURE
The Administrator shall not be responsible or liable for any 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, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent the
Administrator's obligations hereunder are to oversee or monitor the activities
of third parties, the Administrator shall not be liable for any failure or
delay in the performance of the Administrator's duties caused, directly or
indirectly, by the failure or delay of such third parties in performing their
respective duties or cooperating reasonably and in a timely manner with the
Administrator .
SECTION 8. ACTIVITIES OF THE ADMINISTRATOR
(a) Except to the extent necessary to perform the Administrator's
obligations under this Agreement, nothing herein shall be deemed to limit or
restrict the Administrator's right, or the right of any of the Administrator's
managers, officers or employees who also may be a trustee, officer or employee
of the Trust, or persons who are otherwise affiliated persons of the Trust, to
engage in any other business or to devote time and attention to the management
or other aspects of any other business, whether of a similar or dissimilar
nature, or to render services of any kind to any other corporation, trust,
firm, individual or association.
(b) The Administrator may subcontract any or all of its responsibilities
pursuant to this Agreement to one or more corporations, trusts, firms,
individuals or associations, which may be affiliated persons of the
Administrator, who agree to comply with the terms of this Agreement; provided,
that any such subcontracting shall not relieve the Administrator of its
responsibilities hereunder. The Administrator may pay those persons for their
services, but no such payment will increase the Administrator's compensation
from the Trust.
SECTION 9. COOPERATION WITH INDEPENDENT ACCOUNTANTS
The Administrator shall cooperate with the Trust's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of the Trust shall not be
liable for any obligations of the Trust under this Agreement, and the
Administrator agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust to which
the Administrator's rights or claims relate in settlement of such rights or
claims, and not to the trustees of the Trust or the shareholders of the Trust.
SECTION 11. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(b) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the Commonwealth of Massachusetts.
(d) This Agreement 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) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) 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.
(j) No affiliated person, employee, agent, director, officer or manager of
the Administrator shall be liable at law or in equity for the Administrator's
obligations under this Agreement.
(k) Each of the undersigned 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.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to
be duly executed as of the date first written above .
THE PRINCIPLED EQUITY MARKET FUND
By:/S/XXXXX X.X. XXXXXX
President
CARDINAL INVESTMENT SERVICES, INC.
By:/S/XXXXXXXXXXX X. XXXXXXXX
President
Appendix A
Administration Fee $28,000 annual rate, paid monthly
for the calendar year 1999
and thereafter.
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