TRANSFER AGENCY AND SERVICE AGREEMENT
EXHIBIT (h)(2)
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AGREEMENT made as of August 12, 2009, by and between TXF Funds, Inc., a Maryland Corporation
having its principal office and place of business at One Leadership Square, Suite 200, 211 North
Xxxxxxxx, Oklahoma City, OK 73102 (the “Fund”) and THE BANK OF NEW YORK MELLON, a New York banking
company having its principal office and place of business at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the “Bank”).
WHEREAS, the Fund desires to appoint the Bank as its transfer agent, dividend disbursing
agent, and agent in connection with certain other activities, and the Bank desires to accept such
appointment;
WHEREAS, the Fund’s designated agents will issue for purchase and redeem Fund shares only in
aggregations of shares known as “Creation Units” (currently 50,000 shares) (each a “Creation Unit”)
principally in kind;
WHEREAS, The Depository Trust Company, a limited purpose trust company organized under the
laws of the State of New York (“DTC”), or its nominee (Cede & Co.), will be the initial record or
registered owner (the “Shareholder”) of all shares;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto
agree as follows:
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto
agree as follows:
1. Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement, the Fund hereby employs
and appoints the Bank to act as, and the Bank agrees to act as its transfer agent for the
authorized and issued shares of beneficial interest, no par value per share of the Fund (“Shares”),
and as the Fund’s dividend disbursing agent.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with the terms and conditions of the form of Participant Agreement, attached
hereto as Exhibit A, the Bank shall:
(i) Perform and facilitate the performance of purchases and redemption of Creation Units;
(ii) Prepare and transmit by means of DTC’s book-entry system payments for dividends and
distributions declared by the Fund;
(iii) Maintain the record of the name and address of the Shareholder and the number of Shares
issued by the Fund and held by the Shareholder;
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(iv) Record the issuance of Shares of the Fund and maintain a record of the total number of
Shares of the Fund, and, which are authorized, based upon data provided to it by the Fund. The
Bank shall have no obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Fund.
(v) Prepare and transmit to the Fund and to any applicable securities exchange (as specified
to the Bank by the Fund) information with respect to purchases and redemptions of Shares;
(vi) On days that the Fund may accept orders for purchases or redemptions, calculate and
transmit to the Bank and the Fund the number of outstanding Shares;
(vii) On days that the Fund may accept orders for purchases or redemptions (pursuant to the
Participant Agreement), transmit to the Bank, the Fund and DTC the amount of Shares purchased on
such day;
(viii) Confirm to DTC the number of Shares issued to the Shareholder, as DTC may reasonably
request;
(ix) Prepare and deliver other reports, information and documents to DTC as DTC may reasonably
request;
(x) Extend the voting rights to the Shareholder and/or beneficial owners of Shares in
accordance with the policies and procedures of DTC for book-entry only securities;
(xi) Maintain those books and records of the Fund specified by the Fund in Schedule A
attached
hereto; and
(xii) Prepare a monthly report of all purchases and redemptions during such month on a gross
transaction basis. The monthly report shall show the counterpart and amount of each purchase on a
daily basis net number of Shares either redeemed or created for such Business Day.
(b) In addition to and neither in lieu nor in contravention of the services set forth in the
above paragraph (a), the Bank shall: perform the customary services of a transfer agent and
dividend disbursing agent including but not limited to: maintaining the account of the Shareholder,
obtaining a list of DTC participants holding interests in the Global Certificate at the request of
the Fund, mailing proxy materials, shareholder reports and prospectuses to the Shareholder or DTC
participants or beneficial owners of Shares at the request of the Fund and those services set forth
on Schedule A attached hereto.
(c) If the Shares are represented by individual Certificates, the Bank shall perform the
services agreed to in writing by the Bank and the Fund.
(d) The Bank shall provide additional services (if any) on behalf of the Fund (i.e.,
escheatment services) which may be agreed upon in writing between the Fund and the Bank.
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2. Fees and Expenses
2.1 The Bank shall receive such consideration for the Transfer Agent’s services provided
pursuant to this Agreement as may be agreed to from time to time in a written fee schedule approved
by the parties and attached hereto.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees to reimburse the Bank
for out-of-pocket expenses, including but not limited to confirmation production, postage, forms,
telephone, microfilm, microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out from time-to-time in the written fee schedule approved by the parties
and attached hereto or relating to dividend distributions and reports (whereas all expenses related
to creations and redemptions of Fund securities shall be borne by the relevant authorized
participant in such creations and redemptions). In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be reimbursed by the Fund.
2.3 The Fund agrees to pay all fees and reimbursable expenses within ten business days
following the receipt of the respective billing notice accompanied by supporting documentation, as
appropriate. Postage for mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Fund at least seven (7) days prior to the
mailing date of such materials.
3. Representations and Warranties of the Bank
3.1 The Bank represents and warrants to the Fund that:
It is a banking company duly organized and existing and in good standing under the laws of the
State of New York.
It is duly qualified to carry on its business in the State of New York.
It is empowered under applicable laws and by its Charter and By-Laws to act as transfer agent
and dividend disbursing agent and to enter into and perform this Agreement.
All requisite corporate proceedings have been taken to authorize it to enter into and perform
this Agreement.
It has and will continue to have access to the necessary facilities, equipment and personnel
to perform its duties and obligations under this Agreement.
4. Representations and Warranties of the Fund
4.1 The Fund represents and warrants to the Bank that:
It is a Corporation duly incorporated and existing and in good standing under the laws of the
State of Maryland.
It is empowered under applicable laws and by its Articles of Incorporation and By-laws to
enter into and perform this Agreement.
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All corporate proceedings required by said Articles of Incorporation and Bylaws have been
taken to authorize it to enter into and perform this Agreement.
A registration statement under the Securities Act of 1933, as amended, on behalf of the Fund
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 the Fund being offered for
sale.
5. [Section Reserved]
6. Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability (“Losses”) arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required to be taken pursuant to
this Agreement, provided that such actions are taken without negligence, or willful misconduct.
(b) The Fund’s negligence or willful misconduct.
(c) The breach of any representation or warranty of the Fund hereunder.
(d) The conclusive reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or performed by the Fund or any other
person or firm on behalf of the Fund including but not limited to any previous transfer agent or
registrar.
(e) The conclusive reliance on, or the carrying out by the Bank or its agents or
subcontractors of, any instructions or requests of the Fund on behalf of the Fund.
(f) 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 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.
6.2 At any time the Bank may apply to any officer of the Fund for instructions, and may
consult with the Fund’s legal counsel with respect to any matter arising in connection with the
services to be performed by the Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the Fund for any action taken or
omitted by it in reliance upon such instructions or upon the advice or opinion of such Fund counsel
(except for actions or omissions by Bank taken with negligence or willful misconduct) and shall
promptly advise the Fund of such advice or opinion. The Bank, its agents and subcontractors shall
be protected and indemnified in acting upon any paper or document, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its agents or subcontractors by
machine readable input, telex, CRT data entry or other similar means
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authorized by the Fund, and shall not be held to have notice of any change of authority of any
person, until receipt of written notice thereof from the Fund.
6.3 The Fund shall not be responsible for, and the Bank shall liable for direct money damages
arising out of or attributable to:
(a) The Bank’s own negligence or willful misconduct.
(b) The breach of any representation or warranty of the Bank hereunder.
7. Standard of Care
The Bank shall have no responsibility and shall not be liable for any loss or damage unless
such loss or damage is caused by its own negligence or willful misconduct or that of its employees,
or its breach of any of its representations. In no event shall the Bank be liable for special,
indirect or consequential damages regardless of the form of action and even if the same were
foreseeable.
8. Concerning the Bank
8.1 Bank may enter into subcontracts, agreements and understandings with any BNY affiliate,
whenever and on such terms and conditions as it deems necessary or appropriate to perform its
services hereunder. No such subcontract, agreement or understanding shall discharge Bank from its
obligations hereunder.
8.2 Bank shall be entitled to conclusively rely upon any written or oral instruction actually
received by Bank and reasonably believed by Bank to be duly authorized and delivered. Fund agrees
to forward to Bank written instructions confirming oral instructions by the close of business of
the same day that such oral instructions are given to Bank. Fund agrees that the fact that such
confirming written instructions are not received or that contrary written instructions are received
by Bank shall in no way affect the validity or enforceability of transactions authorized by such
oral instructions and effected by Bank. If Fund elects to transmit written instructions through an
on-line communication system offered by Bank, Fund’s use thereof shall be subject to the terms and
conditions attached hereto as Appendix A.
8.3 Bank shall establish and maintain a disaster recovery plan and back-up system at all times
satisfying the requirements of all applicable law, rules, and regulations and which is reasonable
under the circumstances (the “Disaster Recovery Plan and Back-Up System”). Bank shall not be
responsible or liable for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control
which are not a result of its negligence, including without limitation, acts of God; earthquakes;
fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions,
loss or malfunctions of utilities, transportation, computer (hardware or software) or
communications service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or transportation, provided
that the Bank has established and is maintaining the Disaster Recovery Plan and Back-Up System, or
if not, that such delay or failure would have occurred even if Bank had established and was
maintaining the Disaster Recovery Plan and Back-Up System. Upon the occurrence of
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any such delay or failure Bank shall use commercially reasonable best efforts to resume
performance as soon as practicable under the circumstances.
8.4 Bank shall have no duties or responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agreement, and no covenant or obligation
shall be implied against Bank in connection with this Agreement.
8.5 At any time the Bank may apply to an officer of the Fund written instructions with respect
to any matter arising in connection with the Bank’s duties and obligations under this Agreement,
and the Bank shall not be liable for any action taken or omitted to be taken by the Bank in good
faith in accordance with such instructions. Such application by the Bank for instructions from an
officer of the Fund may, at the option of the Bank, set forth in writing any action proposed to be
taken or omitted to be taken by the Bank with respect to its duties or obligations under this
Agreement and the date on and/or after which such action shall be taken, and the Bank shall not be
liable for any action taken or omitted to be taken in accordance with a proposal included in any
such application on or after the date specified therein unless, prior to taking or omitting to take
any such action, the Bank has received written instructions in response to such application
specifying the action to be taken or omitted. The Bank may consult counsel to the Fund, at the
expense of the Fund, and shall be fully protected with respect to anything done or omitted by it in
good faith in accordance with the advice or opinion of such counsel.
8.6 Notwithstanding any provisions of this Agreement to the contrary, the Bank shall be under
no duty or obligation to inquire into, and shall not be liable for:
(a) The legality of the issue, sale or transfer of any Shares, the sufficiency of the amount
to be received in connection therewith, or the authority of the Fund to request such issuance, sale
or transfer;
(b) The legality of the purchase of any Shares, the sufficiency of the amount to be paid in
connection therewith, or the authority of the Fund to request such purchase;
(c) The legality of the declaration of any dividend by the Fund, or the legality of the issue
of any Shares in payment of any stock dividend; or
(d) The legality of any recapitalization or readjustment of the Shares.
9. Covenants of the Fund and the Bank
9.1 The Fund shall promptly furnish to the Bank the following:
(a) A copy of the Articles of Incorporation and Bylaws of the Fund and all amendments thereto.
(b) Shares will be transferred upon presentation to the Bank of Shares to its electronic
account at DTC, accompanied by such documents as the Bank deems necessary to evidence the authority
of the person making such transfer, and bearing satisfactory evidence of the payment of applicable
stock transfer taxes, if any. In the case of small estates where no administration is
contemplated, the Bank may, when furnished with an appropriate surety bond, and without further
approval of the Fund, transfer Shares registered in the name of the decedent
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where the current market value of the Shares being transferred does not exceed such amount as
may from time to time be prescribed by the various states. The Bank reserves the right to refuse
to transfer Shares until it is satisfied that the endorsements on documents submitted to it are
valid and genuine, and for that purpose it may require, unless otherwise instructed by an Officer
of the Fund, a guaranty of signature by an “eligible guarantor institution” meeting the
requirements of the Bank, which requirements include membership or participation in STAMP or such
other “signature guarantee program” as may be determined by the Bank in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.
The Bank also reserves the right to refuse to transfer Shares until it is satisfied that the
requested transfer is legally authorized, and it shall incur no liability for the refusal in good
faith to make transfers which the Bank, in its judgment, deems improper or unauthorized, or until
it is satisfied that there is no basis to any claims adverse to such transfer. The Bank may, in
effecting transfers of Shares, rely upon those provisions of the Uniform Act for the Simplification
of Fiduciary Security Transfers or the Uniform Commercial Code, as the same may be amended from
time to time, applicable to the transfer of securities, and the Fund shall indemnify the Bank for
any act done or omitted by it in good faith in reliance upon such laws.
(c) The Bank assumes no responsibility with respect to the transfer of restricted securities
where counsel for the Fund advises that such transfer may be properly effected.
9.2 [Section Reserved]
9.3 Prior to the issuance of any additional Shares pursuant to stock dividends, stock splits
or otherwise, and prior to any reduction in the number of Shares outstanding, the Fund shall
deliver, if requested by the Bank, the following documents to the Bank:
(a) A certified copy of the resolutions adopted by the Board of Directors of the Fund
authorizing such issuance of additional Shares of the Fund or such reduction, as the case may be;
(b) A certified copy of the order or consent of each governmental or regulatory authority
required by law as a prerequisite to the issuance or reduction of such Shares, as the case may be,
and an opinion of counsel for the Fund that no other order or consent is required; and
(c) An opinion of counsel for the Fund, in a form satisfactory to the Bank, with respect to
(i) the validity of the Shares, the obtaining of all necessary governmental consents, whether such
Shares are fully paid and non-assessable and the status of such Shares under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, and any other applicable federal
law or regulations (i.e., if subject to registration, that they have been registered and
that the Registration Statement has become effective or, if exempt, the specific grounds
therefore), (ii) the status of the Fund with regard to the Investment Company Act of 1940, as
amended, and (iii) the due and proper listing of the Shares on all applicable securities exchanges;
and
9.4 The Bank agrees that all records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the property of the Fund and will be preserved,
maintained and made available upon reasonable request, and will be surrendered promptly to the Fund
on and in accordance with its request.
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9.5 The Bank and the Fund 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, or may become required by law, by administrative or judicial
order or by rule.
9.6 In case of any requests or demands for the inspection of the Shareholder records of the
Fund, the Bank will endeavor to notify the Fund and to secure instructions from an authorized
officer of the Fund as to such inspection. The Bank 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.
9.7 The Fund shall, or shall cause a third party to, prepare and file such appropriate
information returns concerning the payment and composition of dividends and capital gain
distributions and tax withholding with the proper Federal, State and local authorities as are
required by law to be filed by the Fund and shall withhold such sums as are required to be withheld
by applicable law.
10. Termination of Agreement
10.1 The term of this Agreement shall be one year commencing upon the date hereof (the
“Initial Term”) and shall automatically renew for additional one year terms unless either party
provides written notice of termination at least ninety (90) days prior to the end of any one year
term or, unless earlier terminated as provided below:
(a) Either party hereto may terminate this Agreement prior to the expiration of the Initial
Term in the event the other party breaches any material provision of this Agreement, including,
without limitation in the case of the Fund, its obligations under Section 2.1, provided that the
non-breaching party gives written notice of such breach to the breaching party and the breaching
party does not cure such violation within 90 days of receipt of such notice.
(b) The Fund may terminate this Agreement prior to the expiration of the Initial Term upon
ninety (90) days’ prior written notice in the event that the Board of Directors determines to
liquidate the Fund and terminate its registration with the Securities and exchange Commission other
than in connection with a merger or acquisition of the Fund.
10.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated
with the movement of records and material will be borne by the Fund. Additionally, the Bank
reserves the right to charge for any other reasonable expenses associated with such termination.
10.3 The terms of Article 2 and Article 6 shall survive the termination of this Agreement.
11. Additional Series
11.1 In the event that the Fund establishes one or more additional series of Shares with
respect to which it desires to have the Bank render services as transfer agent under the terms
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hereof, it shall so notify the Bank in writing, and if the Bank agrees in writing to provide
such services, such additional issuance shall become Shares hereunder.
12. Assignment
12.1 Neither this Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
12.2 This Agreement shall inure to the benefit of and be binding upon the parties and their
respective permitted successors and assigns.
13. Severability and Beneficiaries
13.1 In case any provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected thereby. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by either party without the written consent of the
other.
14. Amendment
14.1 This Agreement may be amended or modified by a written agreement executed by both
parties.
15. New York Law to Apply
15.1 This Agreement shall be construed in accordance with the substantive laws of the State of
New York, without regard to conflicts of laws principles thereof. Fund and Bank hereby consent to
the jurisdiction of a state or federal court situated in New York City, New York in connection with
any dispute arising hereunder. Fund hereby irrevocably waives, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to the laying of venue of any such
proceeding brought in such a court and any claim that such proceeding brought in such a court has
been brought in an inconvenient forum. Fund and Bank each hereby irrevocably waives any and all
rights to trial by jury in any legal proceeding arising out of or relating to this Agreement.
16. Merger of Agreement
16.1 Except as expressly provided to the contrary from time-to-time in the written fee
schedule approved by the parties and attached hereto, 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.
17. Limitations of Liability of Directors and Shareholders
17.1 It is expressly acknowledged and agreed that the obligations of the Fund hereunder shall
not be binding upon any shareholder, director, officer, employee or agent of the Fund, personally,
but shall bind only the property of the Fund, as provided in its Articles of
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Incorporation and Bylaws. This Agreement has been duly authorized, executed and delivered by
the Fund and neither such authorization nor such execution and delivery shall be deemed to have
been made by any of them individually or to impose any liability on any of them personally, but
shall bind only the Fund, property of the Fund as provided in its Articles of Incorporation and
Bylaws.
18. Counterparts
18.1 This Agreement may be executed by the parties hereto on any number of counterparts, and
all of said counterparts taken together shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their
names and on their behalf by and through their duly authorized officers, as of the day and year
first above written.
| TXF Funds, Inc. |
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| By: | /s/ Xxxxx X. Xxxxx | |||
| Name: | Xxxxx X. Xxxxx | |||
| Title: | Chairman and Chief Executive Officer | |||
| THE BANK OF NEW YORK MELLON (the “Bank”) |
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| By: | /s/ Xxxxx Xxxxxxx | |||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | Managing Director | |||
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SCHEDULE A
BOOKS AND RECORDS TO BE MAINTAINED BY BANK
Source Documents requesting Creations and Redemptions
Correspondence/AP Inquiries
Reconciliations, bank statements, copies of canceled checks, cash proofs
Daily/Monthly reconciliation of outstanding units between the Fund and DTC
Net Asset Computation Documentation
Dividend Records
Keep on file copies of year-end Statements and Tax Forms prepared by the Fund’s accountants
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Exhibit A
Form of Participant Agreement
