TRANSFER AGENT AGREEMENT
THIS TRANSFER AGENT AGREEMENT ("Agreement"), is made and entered into
this 22nd day of January, 2003 by and between The Pennsylvania Avenue
Funds, a Delaware business trust (hereinafter called the "Trust")
presently having a portfolio named the Pennsylvania Avenue Event-Driven
Fund (hereinafter called the "Fund"), and Pennsylvania Avenue Advisers
LLC, a District of Columbia limited liability company (hereinafter
called the "Transfer Agent").
W I T N E S S E T H:
WHEREAS, the Fund, an open-end, non-diversified investment company
registered under the Investment Company Act of 1940 (the "1940 Act"),
wishes to retain the Transfer Agent to provide Transfer, Redemption and
Dividend Disbursing services to the Fund and also has agreed to act for
the Fund in other respects as hereinafter stated; and
WHEREAS, the Transfer Agent is willing to furnish such services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE AGENT
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby employs and appoints the Agent to act as transfer agent
and dividend disbursing agent.
The Fund is authorized to issue separate series of shares of
beneficial interest representing interests in separate investment
portfolios (each, a "Portfolio"). The parties intend that each
Portfolio, as set forth in Appendix A, established by the Trust, now
or in the future, be covered by the terms and conditions of this
Agreement.
The Agent shall perform all of the customary services of a transfer
agent and 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:
A. Receive orders for the purchase of shares, with prompt delivery,
where appropriate, of payment and supporting documentation to the
Fund's custodian;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated shares
being held in the appropriate shareholder account;
C. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Fund's custodian;
D. Pay monies (upon receipt from the Fund's custodian, where
relevant) in accordance with the instructions of redeeming
shareholders;
E. Process transfers of shares in accordance with the shareholder's
instructions;
F. Process exchanges between any Portfolio;
G. Prepare and transmit payments for dividends and distributions
declared by the Fund;
H. Make changes to shareholder records, including, but not limited
to, address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
I. Record the issuance of shares of the Fund and maintain, pursuant
to Rule 17Ad-10(e) under the Securities Exchange Act of 1934 ("1934
Act"), a record of the total number of shares of the Fund which are
authorized, issued and outstanding and such other records as are
required to be maintained by a transfer agent for open-end registered
investment companies by the rules under the 1934 Act;
J. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
K. Mail shareholder reports and the Fund's most current prospectus
and statement of additional information to current shareholders;
L. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends
and distributions for all shareholders;
M. Provide shareholder account information upon request of the Fund
and prepare and mail confirmations and statements of account to
shareholders for all purchases, redemptions and other confirmable
transactions as agreed upon by the Fund and the Agent; and
N. Provide a Blue Sky System that will enable the Fund to monitor the
total number of shares sold in each state. In addition, the Fund
shall identify to the Agent in writing those transactions and assets
to be treated as exempt from any Blue Sky reporting requirements
applicable to the Fund for each state. The responsibility of the
Agent for the Fund's Blue Sky state registration status is solely
limited to the initial compliance by the Fund and the reporting of
such transactions to the Fund.
The foregoing services shall be provided in a manner consistent with
the policies of the Fund as communicated to the Agent.
2. COMPENSATION
The Fund agrees to pay the Agent such fees as set forth in Appendix
A for performance of the duties listed in this Agreement in addition
to any out-of-pocket expenses incurred by the Agent. Such out-of-
pocket expenses may include the following: printing, postage, forms,
stationery, record retention, mailing, insertion, programming,
labels, shareholder lists and proxy expenses. These fees and out-of-
pocket expenses may be modified from time to time subject to mutual
written agreement between the Fund and the Agent.
The Fund agrees to pay all fees and out-of-pocket expenses within ten
(10) business days following receipt of the billing notice.
3. REPRESENTATIONS OF AGENT
The Agent represents and warrants to the Trust that:
A. It is a limited liability company duly organized, existing and in
good standing under the laws of the District of Columbia;
B. It is a registered transfer agent under the 1934 Act;
C. It is duly qualified to carry on its business in the District of
Columbia;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize
it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the Securities
Act of 1933, as amended, the 1934 Act, the 1940 Act and any laws,
rules, and regulations of governmental authorities having
jurisdiction over its operations.
4. REPRESENTATIONS OF THE FUND
The Trust represent and warrants to the Agent that:
A. The Trust is an open-end management investment company under the
1940 Act;
B. The Trust is a Delaware business trust organized, existing, and in
good standing under the laws of Delaware;
C. The Trust is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and perform this
Agreement;
D. All necessary proceedings required by the Declaration of Trust
have been taken to authorize the Trust to enter into and perform this
Agreement;
E. The Trust will comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act, and any laws, rules and regulations
of governmental authorities having jurisdiction over its operations;
and
F. A registration statement under the 1933 Act is currently effective
or will become effective before any public offering commences and
will remain effective, and appropriate state securities law filings
have been made or will become effective before any public offering
commences and will continue to be made, with respect to all shares of
the Fund being offered for sale.
5. COVENANTS OF THE FUND AND AGENT
The Trust shall furnish the Agent a certified copy of the resolution
of the Board of Trustees of the Trust ("Board") authorizing the
appointment of the Agent and the execution of this Agreement. The
Trust shall provide to the Agent a copy of the Declaration of Trust,
By-Laws of the Fund, and all amendments.
The Agent 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 1940 Act, and the rules
thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by
the Agent hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such
section and rules and will be surrendered to the Fund on and in
accordance with its request.
6. INDEMNIFICATION; REMEDIES UPON BREACH
The Agent shall exercise reasonable care and act in good faith in the
performance of its duties under this Agreement. The Agent shall not
be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with matters to which this
Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond
the Agent's control, except a loss resulting from the Agent's refusal
or failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the
performance of its duties under this Agreement. Notwithstanding any
other provision of this Agreement, the Trust shall indemnify and hold
harmless the Agent from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable attorneys'
fees) which the Agent may sustain or incur or which may be asserted
against the Agent by any person arising out of or attributed to any
action taken or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing standards, or (ii) in
reliance upon any written or oral instruction for a proper corporate
purpose provided to the Agent by any duly authorized officer of the
Trust, such duly authorized officer to be included in a list of
authorized officers furnished to the Agent and as amended from time
to time in writing by resolution of the Board of Trustees of the
Trust.
Further, the Trust will indemnify and hold the Agent harmless against
any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any
claim, demand, action, or suit as a result of the negligence of the
Trust (unless contributed to by the Agent's breach of this Agreement
or other agreements between the Fund and the Agent, or the Agent's
own negligence or bad faith); or as a result of the Agent acting upon
telephone instructions relating to the exchange or redemption of
shares received by the Agent and reasonably believed by the Agent
under a standard of care customarily used in the investment company
industry to have originated from the record owner of the subject
shares; or as a result of acting in reliance upon any genuine
instrument or stock certificate signed, countersigned, or executed by
any person or persons authorized to sign, countersign, or execute the
same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all
reasonable steps to minimize service interruptions for any period
that such interruption continues beyond the Agent's control. The
Agent will make every reasonable effort to restore any lost or
damaged data and correct any errors resulting from such a breakdown
at the expense of the Agent. The Agent agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties,
making reasonable provision for emergency use of electrical data
processing equipment to the extent appropriate equipment is
available. Representatives of the Trust shall be entitled to inspect
the Agent's premises and operating capabilities at any time during
regular business hours of the Agent, upon reasonable notice to the
Agent.
Regardless of the above, the Agent reserves the right to reprocess
and correct administrative errors at its own expense.
In order that the indemnification provisions contained in this
section shall apply, it is understood that in any case in which the
Trust may be asked to indemnify or hold the Agent harmless, the Trust
shall be fully and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood that the
Agent will use all reasonable care to notify the Trust promptly
concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the
Trust. The Trust shall have the option to defend the Agent against
any claim which may be the subject of this indemnification. In the
event that the Trust so elect, the Trust will so notify the Agent and
thereupon the Trust shall take over complete defense of the claim,
and the Agent shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
section. The Agent shall in no case confess any claim or make any
compromise in any case in which the Trust may be asked to indemnify
the Agent except with the Fund prior written consent.
The Agent shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees) which the Trust
may sustain or incur or which may be asserted against the Trust by
any person arising out of or attributed to any action taken or
omitted to be taken by the Agent as a result of the Agent's refusal
or failure to comply with the terms of this Agreement, or from its
bad faith, negligence, or willful misconduct of the Agent or any of
its employees and agents.
7. CONFIDENTIALITY
The Agent agrees on behalf of itself and its employees and agents to
treat confidentially all records and other information relative to
the Trust and its shareholders and shall not disclose to any other
party, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may
not be withheld where the Agent may be exposed to civil or criminal
contempt proceedings for failure to comply after being requested to
divulge such information by duly constituted authorities.
8. RECORDS
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem
advisable and is acceptable to the Trust but not inconsistent with
the rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act, and the rules thereunder. The
Agent agrees that all such records prepared or maintained by the
Agent relating to the services to be performed by the Agent hereunder
are the property of the Trust and will be preserved, maintained, and
made available with such section and rules of the 1940 Act and will
be promptly surrendered to the Trust on and in accordance with its
request.
9. NOTICE
Any notice required to be given by the parties to each other under
the terms of this Agreement shall be in writing, addressed and
delivered, or mailed to the principal place of business of the other
party.
10. CHOICE OF LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Delaware.
Trustees and shareholders of the Trust shall not be personally liable
for obligations of the Trust in connection with any matter arising
from or in connection with this Agreement.
11. TERMS OF AGREEMENT
A. This Agreement shall become effective upon its execution and shall
continue until terminated by either party upon ninety (90) days'
written notice given by one party to the other party.
B. This Agreement may be amended by the mutual written consent of
both parties.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the written consent of the other
party.
D. In the event that the Trust gives to the Agent its written
intention to terminate and appoint a successor transfer agent, the
Agent agrees to cooperate in the transfer of its duties and
responsibilities to the successor, including any and all relevant
books, records and other data established or maintained by the Agent
under this Agreement.
E. Should the Trust exercise its right to terminate this Agreement,
except where such termination follows a breach of this Agreement by
the Agent, all out-of-pocket expenses associated with the movement of
records and material will be paid by the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective
officers thereunto duly authorized.
Pennsylvania Avenue Funds By __/s/ THOMAS_KIRCHNER _______
XXXXXX XXXXXXXX, President
Pennsylvania Avenue Funds By _____/s/_GARY_TERNULLO_______
XXXX XXXXXXXX, Trustee
Pennsylvania Avenue Funds By ___/s/_GALE_WITOONCHATREE____
XXXX WITOONCHATREE, Trustee
Pennsylvania Avenue Advisers LLC By __/s/ THOMAS_KIRCHNER __
XXXXXX XXXXXXXX, Managing Member
Appendix A
Portfolios and Fees
Portfolios of the Trust: The Pennsylvania Avenue Event-Driven Fund
The Agent shall receive an annual rate of 0.10% of the average daily
assets, payable monthly, for daily assets of the Portfolio exceeding
$5,000,000.00
No compensation shall be payable for days on which assets do not
exceed $5,000,000.00
