DIVIDEND DISBURSING AND TRANSFER AGENT AGREEMENT
THIS DIVIDEND DISBURSING AND TRANSFER AGENT AGREEMENT ("Agreement") is hereby
made and entered into as of the 13th day of May 2004, by and between the MERIT
ADVISORS INVESTMENT TRUST II, a Delaware statutory trust ("Trust"), and NORTH
CAROLINA SHAREHOLDER SERVICES, LLC, a North Carolina limited liability company
d/b/a NC Shareholder Services ("Transfer Agent").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Transfer Agent is in the business of providing dividend disbursing,
transfer agent, and shareholder services to investment companies.
NOW THEREFORE, the Trust and the Transfer Agent do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Transfer Agent to act as dividend
disbursing and transfer agent for each series of shares of the Trust listed
on Schedule 1 (each a "Fund"). Transfer Agent, at its own expense, shall
render the services and assume the obligations herein set forth subject to
being compensated therefore as herein provided.
2. Delivery of Documents. The Trust has furnished the Transfer Agent with
copies properly certified or authenticated of each of the following:
a) The Trust's Agreement and Declaration of Trust ("Trust Instrument")
and Certificate of Trust, as filed with the State of Delaware (such
Trust Instrument, as presently in effect and as it shall from time to
time be amended);
b) The Trust's By-Laws (such By-Laws, as presently in effect and as they
shall from time to time be amended, are herein called the "By-Laws");
c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Transfer Agent and approving this Agreement; and
d) The Trust's registration statement ("Registration Statement") on Form
N-1A under the 1940 Act and under the Securities Act of 1933 as
amended, (the "1933 Act"), including all exhibits, relating to shares
of beneficial interest of, and containing the prospectus
("Prospectus") of, each Fund of the Trust (herein called the "Shares")
as filed with the Securities and Exchange Commission and all
amendments thereto.
The Trust will also furnish the Transfer Agent with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Transfer Agent. Subject to the policies and direction of the
Trust's board of trustees ("Board of Trustees"), the Transfer Agent will
provide day-to-day supervision for the dividend disbursing, transfer agent,
and shareholder servicing operations of each of the Trust's Funds. Services
to be provided shall be in accordance with the Trust's organizational and
registration documents as listed in paragraph 2 hereof and with the
Prospectus of each Fund of the Trust. The Transfer Agent further agrees
that it:
a) Will conform with all applicable rules and regulations of the
Securities and Exchange Commission and will, in addition, conduct its
activities under this Agreement in accordance with regulations of any
other federal and state agency which may now or in the future have
jurisdiction over its activities;
b) Will provide, at its expense, the non-executive personnel and data
processing equipment and software necessary to perform the Shareholder
Servicing functions shown on Exhibit A hereof; and
c) Will provide all office space and general office equipment necessary
for the dividend disbursing, transfer agent, and shareholder servicing
activities of the Trust except as may be provided by third parties
pursuant to separate agreements with the Trust.
Notwithstanding anything contained in this Agreement to the contrary,
the Transfer Agent (including its directors, officers, employees and
agents) shall not be required to perform any of the duties of, assume
any of the obligations or expenses of, or be liable for any of the
acts or omissions of, any investment advisor of a Fund of the Trust or
other third party subject to separate agreements with the Trust. The
Transfer Agent shall not be responsible hereunder for the
administration of the code of ethics of the Trust ("Code of Ethics")
which shall be under the responsibility of the investment advisors,
except insofar as the Code of Ethics applies to the personnel of the
Transfer Agent. It is the express intent of the parties hereto that
the Transfer Agent shall not have control over or be responsible for
the placement (except as specifically directed by a shareholder of the
Trust), investment or reinvestment of the assets of any Fund of the
Trust. The Transfer Agent may from time to time, subject to the
approval of the Trustees, obtain at its own expense the services of
consultants or other third parties to perform part or all of its
duties hereunder, and such parties may be affiliates of the Transfer
Agent.
4. Services Not Exclusive. The services furnished by the Transfer Agent
hereunder are not to be deemed exclusive, and the Transfer Agent shall
be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Transfer Agent hereby agrees that all records
which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records
upon the Trust's request.
6. Expenses. During the term of this Agreement, the Transfer Agent will
furnish at its own expense its office space and the executive,
supervisory and clerical personnel reasonably necessary to perform of
its obligations under this Agreement. The Trust assumes and shall be
responsible for all other expenses of the Trust and/or Fund(s) not
otherwise allocated in this Agreement.
7. Compensation. For the services provided and the expenses assumed by
the Transfer Agent pursuant to this Agreement, the Trust will pay the
Transfer Agent and the Transfer Agent will accept as full compensation
the fees and expenses as set forth on Exhibit B attached hereto.
Special projects, not included herein and requested in writing by the
Trustees, shall be completed by the Transfer Agent and invoiced to the
Trust on terms mutually agreed upon.
8.(a)Limitation of Liability. The Transfer Agent shall not be liable for
any loss, damage or liability related to or resulting from the
placement (except as specifically directed by a Shareholder of the
Trust), investment or reinvestment of assets in any Fund of the Trust
or the acts or omissions of any Fund's investment advisor or any other
third party subject to separate agreements with the Trust. Further,
the Transfer Agent shall not be liable for any error of judgment or
mistake of law or for any loss or damage suffered by the Trust in
connection with the performance of this Agreement or any agreement
with a third party, except a loss resulting directly from (i) a breach
of fiduciary duty on the part of the Transfer Agent with respect to
the receipt of compensation for services; or (ii) willful misfeasance,
bad faith or gross negligence on the part of the Transfer Agent in the
performance of its duties or from reckless disregard by it of its
duties under this Agreement.
8.(b)Indemnification of Transfer Agent. Subject to the limitations set
forth in this Subsection 8(b), and provided the Transfer Agent has
exercised reasonable customary care in the performance of its duties
under this Agreement, the Trust shall indemnify, defend and hold
harmless (from the assets of the Fund or Funds to which the conduct in
question relates) the Transfer Agent against all loss, damage and
liability, including but not limited to amounts paid in satisfaction
of judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Transfer Agent in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before
any court or administrative or legislative body, related to or
resulting from this Agreement or the performance of services
hereunder, except with respect to any matter as to which it has been
determined that the loss, damage or liability is a direct result of
(i) a breach of fiduciary duty on the part of the Transfer Agent with
respect to the receipt of compensation for services; or (ii) willful
misfeasance, bad faith or gross negligence on the part of the Transfer
Agent in the performance of its duties or from reckless disregard by
it of its duties under this Agreement (either and both of the conduct
2
described in clauses (i) and (ii) above being referred to hereinafter
as "Disabling Conduct"). A determination that the Transfer Agent is
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought
that the Transfer Agent was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding
against the Transfer Agent for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of
the facts, that the Transfer Agent was not liable by reason of
Disabling Conduct by (a) vote of a majority of a quorum of Trustees
who are neither "interested persons" of the Trust as the quoted phrase
is defined in Section 2(a)(19) of the 1940 Act nor parties to the
action, suit or other proceeding on the same or similar grounds that
is then or has been pending or threatened (such quorum of such
Trustees being referred to hereinafter as the "Independent Trustees")
or (b) an independent legal counsel approved by the Trustees,
including a majority of Independent Trustees, (hereinafter referred to
as an "independent legal counsel") in a written opinion. Expenses,
including accountants' and counsel fees so incurred by the Transfer
Agent (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time to time
by the Fund or Funds to which the conduct in question related in
advance of the final disposition of any such action, suit or
proceeding; provided, that -------- the Transfer Agent shall have
undertaken to repay the amounts so paid unless it is ultimately
determined that it is entitled to indemnification of such expenses
under this Subsection 8(b) and if (i) the Transfer Agent shall have
provided security for such undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or
(iii) a majority of the Independent Trustees, or an independent legal
counsel in a written opinion, shall have determined, based on a review
of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Transfer Agent ultimately
will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Transfer
Agent referred to in this Subsection 8(b), pursuant to a consent
decree or otherwise, no such indemnification either for said payment
or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of the Independent
Trustees or (ii) by an independent legal counsel in a written opinion.
Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Transfer Agent of any amount paid to the
Transfer Agent in accordance with either of such clauses as
indemnification of the Transfer Agent is subsequently adjudicated by a
court of competent jurisdiction not to have acted in good faith in the
reasonable belief that the Transfer Agent's action was in or not
opposed to the best interests of the Trust or to have been liable to
the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall
not be exclusive of or affect any of the rights to which the Transfer
Agent may be entitled. Nothing contained in this Subsection 8(b) shall
affect any rights to indemnification to which Trustees, officers or
other personnel of the Trust, and other persons may be entitled by
contract or otherwise under law, nor the power of the Trust to
purchase and maintain liability insurance on behalf of any such
person.
The Board of Trustees of the Trust shall take all such action as may
be necessary and appropriate to authorize the Trust hereunder to pay
the indemnification required by this Subsection 8(b) including,
without limitation, to the extent needed, to determine whether the
Transfer Agent is entitled to indemnification hereunder and the
reasonable amount of any indemnity due it hereunder, or employ
independent legal counsel for that purpose.
The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and
protect the Transfer Agent and its directors, officers, employees and
agents and shall inure to the benefit of its/their respective
successors, assigns and personal representatives.
9. Duration and Termination. This Agreement shall become effective as of
the date hereof and shall thereafter continue in effect unless
terminated as herein provided. This Agreement may be terminated by
either party hereto (without penalty) at any time by giving not less
than 60 days' prior written notice to the other party hereto. Upon
termination of this Agreement, the Trust shall pay to the Transfer
Agent such compensation as may be due as of the date of such
termination, and shall likewise reimburse the Transfer Agent for any
out-of-pocket expenses and disbursements reasonably incurred by the
Transfer Agent to such date.
3
10. Amendment. This Agreement may be amended by mutual written consent of
the parties. If, at any time during the existence of this Agreement,
the Trust deems it necessary or advisable in the best interests of the
Trust that any amendment of this Agreement be made in order to comply
with the recommendations or requirements of the Securities and
Exchange Commission or state regulatory agencies or other governmental
authority, or to obtain any advantage under state or federal laws, and
shall notify the Transfer Agent of the form of Amendment which it
deems necessary or advisable and the reasons therefore, and if the
Transfer Agent declines to assent to such amendment, the Trust may
terminate this Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing and will
be deemed sufficient if personally delivered or sent by registered or
certified mailed, postage prepaid, address to the other party at the
principal place of business of such party. Notices shall be effective
upon delivery.
12. Construction. This Agreement shall be governed and enforced in
accordance with the laws of the State of North Carolina without regard
to the principles of the conflict of laws or the choice of laws. If
any provision of this Agreement, or portion thereof, shall be
determined to be void or unenforceable by any court of competent
jurisdiction, then such determination shall not affect any other
provision of this Agreement, or portion thereof, all of which other
provisions and portions thereof shall remain in full force and effect.
If any provision of this Agreement, or portion thereof, is capable of
two interpretations, one of which would render the provision, or
portion thereof, void and the other of which would render the
provision, or portion thereof, valid, then the provision, or portion
thereof, shall have the meaning which renders it valid.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
MERIT ADVISORS INVESTMENT TRUST II
By: /s/ Xxxx X. Xxxxxxx
____________________________
Name: Xxxx X. Xxxxxxx
Title: Chairman
NORTH CAROLINA SHAREHOLDER SERVICES, LLC
D/B/A NC SHAREHOLDER SERVICES
By: /s/ Xxxx X. Marriott, Jr.
_____________________________
Name: Xxxx X. Marriott, Jr.
Title: Managing Director
4
Exhibit A
---------
SHAREHOLDER SERVICING FUNCTIONS
(1) Process new accounts.
(2) Process purchases of Fund shares, both initial and subsequent in accordance
with conditions set forth in the Fund's prospectus.
(3) Transfer shares of capital stock to an existing account or to a new account
upon receipt of required documentation in good order.
(4) Distribute dividends and/or capital gain distributions. This includes
disbursement as cash or reinvestment and to change the disbursement option
at the request of shareholders.
(5) Process exchanges between funds (process and direct purchase/redemption and
initiate new account or process to existing account).
(6) Make miscellaneous changes to records, including, but not necessarily
limited to, address changes and changes in plans (such as systematic
withdrawal, dividend reinvestment, etc.).
(7) Prepare and mail a year-to-date confirmation and statement as each
transaction is recorded in a shareholder account as follows: original to
shareholder. Duplicate confirmations to be available on request within
current year.
(8) Handle telephone calls and correspondence in reply to shareholder requests
except those items otherwise set forth herein.
(9) Daily control and reconciliation of Fund shares.
(10) Prepare address labels or confirmations for four reports to shareholders
per year.
(11) Mail and tabulate proxies for one Meeting of Shareholders annually,
including preparation of certified shareholder list and daily report to
Fund management, if required.
(12) Prepare, with the assistance of the Trust's accountants, and mail annual
Form 1099 and 5498 to shareholders to whom dividends or distributions are
paid, with a copy for the IRS.
(13) Provide readily obtainable data which may from time to time be requested
for audit purposes.
(14) Replace lost or destroyed checks.
(15) Continuously maintain all records for active and closed accounts according
to the Investment Company Act of 1940 and regulations provided thereunder.
5
Exhibit B
---------
TRANSFER AGENT'S COMPENSATION SCHEDULE
For the services delineated in the DIVIDEND DISBURSING AND TRANSFER AGENT
AGREEMENT, the Transfer Agent shall be compensated monthly, according to the
following fee schedule.
Shareholder servicing fee:
--------------------------
$15.00 per shareholder per year per fund
Minimum fee of $1,750 per month per fund, plus $500 per month for each
additional class of shares.
In addition, the Transfer Agent shall be entitled to reimbursement of actual
out-of-pocket expenses incurred by the Transfer Agent on behalf of the Trust or
the Fund.
6
Schedule 1
----------
SERIES OF THE TRUST
Merit High Yield Fund II
7
