TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
FIRSTHAND FUNDS
AND
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
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1. Terms of Appointment and Duties..........................................1
2. Third Party Administrators for Defined Contribution Plans ...............4
3. Fees and Expenses........................................................5
4. Representations and Warranties of the Transfer Agent.....................6
5. Representations and Warranties of the Fund...............................6
6. Wire Transfer Operating Guidelines.......................................7
7. Data Access and Proprietary Information..................................8
8. Indemnification.........................................................10
9. Standard of Care........................................................11
10. Year 2000...............................................................11
11. Confidentiality.........................................................11
12. Covenants of the Fund and the Transfer Agent............................12
13. Termination of Agreement................................................13
14. Assignment and Third Party Beneficiaries................................14
15. Subcontractors..........................................................14
16. Miscellaneous...........................................................14
17. Additional Funds........................................................16
18. Release.................................................................16
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 15th day of March, 2000, by and between FIRSTHAND
FUNDS, a Delaware business trust, having its principal office and place of
business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company
having its principal office and place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Transfer Agent").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Fund intends to initially offer shares in five (5) series, such
series shall be named in the attached SCHEDULE A which may be amended by the
parties from time to time (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with SECTION 17, being herein referred to as a "Portfolio", and
collectively as the "Portfolios"); and
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Transfer
Agent as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities, and the
Transfer Agent desires to accept such appointment for the compensation and on
the terms herein provided.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. TERMS OF APPOINTMENT AND DUTIES
1.1 TRANSFER AGENCY SERVICES. Subject to the terms and conditions set forth
in this Agreement, the Fund, on behalf of the Portfolios, hereby employs
and appoints the Transfer Agent to act as, and the Transfer Agent agrees
to act as its transfer agent for the Fund's authorized and issued shares
of its beneficial interest, no par value, ("Shares"), dividend disbursing
agent, custodian of certain retirement plans and agent in connection with
any accumulation, open-account or similar plan provided to the
shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective prospectus and
statement of additional information ("Prospectus") of the Fund on behalf
of the applicable Portfolio, including without limitation any periodic
investment plan or periodic withdrawal program. The conversion of the
Fund's Shareholder records to the Transfer Agent, is scheduled for April
8, 2000 (the "Conversion Date"). In accordance with procedures
established from time to time by agreement between the Fund on behalf of
each of the Portfolios, as applicable and the Transfer Agent, the
Transfer Agent agrees that it will perform the following services:
(a) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to the
Custodian of the Fund authorized pursuant to the Declaration of Trust and
the Bylaws of the Fund (the "Custodian");
(b) Pursuant to purchase orders, issue the appropriate number of Shares
and hold such Shares in the appropriate Shareholder account;
(c) Receive for acceptance redemption requests and redemption directions
and deliver the appropriate documentation thereof to the Custodian;
(d) In respect to the transactions in items (a), (b) and (c) above, the
Transfer Agent shall execute transactions directly with broker-dealers
authorized by the Fund;
(e) At the appropriate time as and when it receives monies paid to it by
the Custodian with respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as instructed by the
redeeming Shareholders;
(f) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(g) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(h) Issue replacement certificates for those certificates alleged to have
been lost, stolen or destroyed upon receipt by the Transfer Agent of
indemnification satisfactory to the Transfer Agent and protecting the
Transfer Agent and the Fund, and the Transfer Agent at its option, may
issue replacement certificates in place of mutilated stock certificates
upon presentation thereof and without such indemnity;
(i) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(j) Record the issuance of Shares of the Fund and maintain pursuant to
SEC Rule 17Ad-10(e) a record of the total number of Shares of the Fund
which are authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Transfer Agent shall also provide the Fund on
a regular basis with the total number of Shares which are authorized and
issued and outstanding and 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.
1.2 ADDITIONAL SERVICES. In addition to, and neither in lieu nor in
contravention of, the services set forth in the above paragraph, the
Transfer Agent shall perform the following services:
(a) OTHER CUSTOMARY SERVICES. Perform the customary services of a
transfer agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with accumulation,
open-account or similar plan (including without
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limitation any periodic investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing Shareholder proxies,
Shareholder reports and prospectuses to current Shareholders, withholding
taxes on U.S. resident and non-resident alien accounts, 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 Shareholders, 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, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information;
(b) CONTROL BOOK (ALSO KNOWN AS "SUPER SHEET"). Maintain a daily record
and produce a daily report for the Fund of all transactions and receipts
and disbursements of money and securities and deliver a copy of such
report for the Fund for each business day to the Fund no later than 9:00
AM Eastern Time, or such earlier time as the Fund may reasonably require,
on the next business day;
(c) "BLUE SKY" REPORTING. The Fund shall (i) identify to the Transfer
Agent in writing those transactions and assets to be treated as exempt
from blue sky reporting for each State and (ii) verify the establishment
of transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The responsibility
of the Transfer Agent for the Fund's blue sky State registration status
is solely limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and providing a system which will enable
the Fund to monitor the total number of Shares sold in each State;
(d) NATIONAL SECURITIES CLEARING CORPORATION (THE "NSCC"). (i) accept and
effectuate the registration and maintenance of accounts through
Networking and the purchase, redemption, transfer and exchange of shares
in such accounts through Fund/SERV (networking and Fund/SERV being
programs operated by the NSCC on behalf of NSCC's participants, including
the Fund), in accordance with, instructions transmitted to and received
by the Transfer Agent by transmission from NSCC on behalf of
broker-dealers and banks which have been established by, or in accordance
with the instructions of authorized persons, as hereinafter defined on
the dealer file maintained by the Transfer Agent; (ii) issue instructions
to Fund's banks for the settlement of transactions between the Fund and
NSCC (acting on behalf of its broker-dealer and bank participants); (iii)
provide account and transaction information from the affected Fund's
records on DST Systems, Inc. computer system TA2000 ("TA2000 System") in
accordance with NSCC's Networking and Fund/SERV rules for those
broker-dealers; and (iv) maintain Shareholder accounts on TA2000 System
through Networking;
(e) NEW PROCEDURES. New procedures as to who shall provide certain of
these services in SECTION 1 may be established in writing from time to
time by agreement between the Fund and the Transfer Agent.;
(f) ADDITIONAL TELEPHONE SUPPORT SERVICES. If the parties elect to have
the Transfer Agent provide ADDITIONAL telephone support services under
this Agreement, the parties will agree to such services, fees and
sub-contracting as stated in SCHEDULE 1.2(f) entitled "Telephone Support
Services" attached hereto;
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(g) RETIREMENT ACCOUNTS. Establish, maintain, transfer to successor
retirement plan custodians and distribute Shares or monies as the case
may be, for Individual Retirement Accounts, SIMPLE Individual Retirement
Accounts and non Title 1 403(b) Plans where the Transfer Agent is the
named retirement plan custodian for retirement plans using retirement
plan documents or prototypes provided by the Transfer Agent;
(h) TRAINING. Within six (6) months of assignment to the Fund's dedicated
service group: (i) all managers and communication specialists comprising
an elite team shall be Series 6 licensed; (ii) all customer service
representatives shall be Series 6 trained; and (iii) all customer service
representatives shall have completed the M.A.G.I.C. Training Program; and
(i) REMOTE MONITORING BY FUND OF IN-BOUND. AND OUT-BOUND SHAREHOLDER
TELEPHONE CALLS. (i) Within forty-eight (48) hours of the Fund's request
provide cassette recorded in-bound and out-bound Shareholder telephone
calls; and (ii) provide remote Shareholder telephone monitoring service
which includes: (X) direct dial by assigned telephone number to Transfer
Agent's call center; and (Y) silent service observe mode for telephone
call monitoring with cost of telephone call monitoring payable by the
direct dialer the Fund.
2. THIRD PARTY ADMINISTRATORS FOR DEFINED CONTRIBUTION PLANS
2.1 The Fund may decide to make available to certain of its customers, a
qualified plan program (the "Program") pursuant to which the customers
("Employers") may adopt certain plans of deferred compensation ("Plan or
Plans") for the benefit of the individual Plan participant (the "Plan
Participant"), such Plan(s) being qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended ("Code") and administered by
third party administrators which may be plan administrators as defined in
the Employee Retirement Income Security Act of 1974, as amended (the
"TPA(s)").
2.2 In accordance with the procedures established in the initial SCHEDULE 2.1
entitled "Third Party Administrator Procedures", as may be amended by the
Transfer Agent and the Fund from time to time, the Transfer Agent shall:
(a) Treat Shareholder accounts established by the Plans in the name of
the Trustees, Plans or TPAs as the case may be as omnibus accounts;
(b) Maintain omnibus accounts on its records in the name of the TPA or
its designee as the Trustee for the benefit of the Plan; and
(c) Perform all services under SECTION 1 as transfer agent of the Funds
and not as a record-keeper for the Plans.
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2.3 Transactions identified under SECTION 2 of this Agreement shall be deemed
exception services ("Exception Services") when such transactions:
(a) Require the Transfer Agent to use methods and procedures other than
those usually employed by the Transfer Agent to perform services under
SECTION 1 of this Agreement;
(b) Involve the provision of information to the Transfer Agent after the
commencement of the nightly processing cycle of the TA2000 System; or
(c) Require more manual intervention by the Transfer Agent, either in the
entry of data or in the modification or amendment of reports generated by
the TA2000 System than is usually required by non-retirement plan and
pre-nightly transactions.
3. FEES AND EXPENSES
3.1 FEE SCHEDULE. For the performance by the Transfer Agent pursuant to this
Agreement, the Fund agrees to pay the Transfer Agent as set forth in the
attached fee schedule SCHEDULE 3.1. Such fees and reasonable
out-of-pocket expenses and advances identified under SECTION 3.2 below
may be changed from time to time subject to mutual written agreement
between the Fund and the Transfer Agent.
3.2 OUT-OF-POCKET EXPENSES. In addition to the fee paid under SECTION 3.1
above, the Fund agrees to reimburse the Transfer Agent for reasonable
out-of-pocket expenses, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche, mailing and
tabulating proxies, records storage, or advances incurred by the Transfer
Agent for the items set out in SCHEDULE 3.1 attached hereto. In addition,
any other expenses incurred by the Transfer Agent at the request or with
the consent of the Fund, will be reimbursed by the Fund.
3.3 POSTAGE. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all shareholder accounts shall be advanced to the
Transfer Agent by the Fund at least seven (7) days prior to the mailing
date of such materials.
3.4 INVOICES. The Fund agrees to pay all fees and reimbursable expenses
within thirty (30) days following the receipt of the respective billing
notice, except for any fees or expenses that are subject to good faith
dispute. In the event of such a dispute, the Fund may only withhold that
portion of the fee or expense subject to the good faith dispute. The Fund
shall notify the Transfer Agent in writing within twenty-one (21)
calendar days following the receipt of each billing notice if the Fund is
disputing any amounts in good faith. If the Fund does not provide such
notice of dispute within the required time, the billing notice will be
deemed accepted by the Fund. The Fund shall settle such disputed amounts
within five (5) days of the day on which the parties agree on the amount
to be paid by payment of the agreed amount. If no agreement is reached,
then such disputed amounts shall be settled as may be required by law or
legal process.
3.5 LATE PAYMENTS. The Fund shall pay undisputed amounts on Transfer Agent's
invoices (for fees and reimbursable expenses) within thirty (30) days of
the date such invoice was sent. If any undisputed amount in an invoice of
the Transfer Agent (for fees or
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reimbursable expenses) is not paid when due, the Fund shall pay the
Transfer Agent interest thereon (from the due date to the date of
payment) at a per annum rate equal to one percent (1.0%) plus the Prime
Rate (that is, the base rate on corporate loans posted by large domestic
banks) published by THE WALL STREET JOURNAL (or, in the event such rate
is not so published, a reasonably equivalent published rate selected by
the Fund) on the first day of publication during the month when such
amount was due. Notwithstanding any other provision hereof, such interest
rate shall be no greater than permitted under applicable provisions of
Delaware law.
3.6 SERVICE STANDARDS. Excluding the first ninety (90) days after the
Conversion Date, the Transfer Agent agrees to (a) perform services to the
standards; (b) be subject to the penalties; and (c) provide daily
reporting on the service standards all detailed in SCHEDULE 3.6 unless
otherwise agreed.
4. REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT
The Transfer Agent represents and warrants to the Fund that:
4.1 It is a trust company duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
4.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
4.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
4.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
4.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Transfer Agent that:
5.1 It is a business trust duly organized and existing and in good standing
under the laws of the State of Delaware.
5.2 It is empowered under applicable laws and by its Declaration of Trust and
By-Laws to enter into and perform this Agreement.
5.3 All trust proceedings required by said Declaration of Trust and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
5.4 It is an open-end management investment company registered under the
Investment Company Act of 1940, as amended.
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5.5 A registration statement under the Securities Act of 1933, as amended 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.
6. WIRE TRANSFER OPERATING GUIDELINES/ARTICLES 4A OF THE UNIFORM COMMERCIAL
CODE
6.1 OBLIGATION OF SENDER. The Transfer Agent is authorized to promptly debit
the appropriate Fund account(s) upon the receipt of a payment order in
compliance with the selected security procedure (the "Security
Procedure") chosen for funds transfer and in the amount of money that the
Transfer Agent has been instructed to transfer. The Transfer Agent shall
execute payment orders in compliance with the Security Procedure and with
the Fund instructions on the execution date provided that such payment
order is received by the customary deadline for processing such a
request, unless the payment order specifies a later time. All payment
orders and communications received after this the customary deadline will
be deemed to have been received the next business day.
6.2 SECURITY PROCEDURE. The Fund acknowledges that the Security Procedure it
has designated on the Fund Selection Form was selected by the Fund from
security procedures offered by the Transfer Agent. The Fund shall
restrict access to confidential information relating to the Security
Procedure to authorized persons as communicated to the Transfer Agent in
writing. The Fund must notify the Transfer Agent immediately if it has
reason to believe unauthorized persons may have obtained access to such
information or of any change in the Fund's authorized personnel. The
Transfer Agent shall verify the authenticity of all Fund instructions
according to the Security Procedure.
6.3 ACCOUNT NUMBERS. The Transfer Agent shall process all payment orders on
the basis of the account number contained in the payment order. In the
event of a discrepancy between any name indicated on the payment order
and the account number, the account number shall take precedence and
govern.
6.4 REJECTION. The Transfer Agent reserves the right to decline to process or
delay the processing of a payment order which (a) is in excess of the
collected balance in the account to be charged at the time of the
Transfer Agent's receipt of such payment order; (b) if initiating such
payment order would cause the Transfer Agent, in the Transfer Agent's
sole judgement, to exceed any volume, aggregate dollar, network, time,
credit or similar limits which are applicable to the Transfer Agent; or
(c) if the Transfer Agent, in good faith, is unable to satisfy itself
that the transaction has been properly authorized.
6.5 CANCELLATION AMENDMENT. The Transfer Agent shall use reasonable efforts
to act on all authorized requests to cancel or amend payment orders
received in compliance with the Security Procedure provided that such
requests are received in a timely manner affording the Transfer Agent
reasonable opportunity to act. However, the Transfer Agent assumes no
liability if the request for amendment or cancellation cannot be
satisfied.
6.6 ERRORS. The Transfer Agent shall assume no responsibility for failure to
detect any erroneous payment order provided that the Transfer Agent
complies with the payment order instructions as received and the Transfer
Agent complies with the Security
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Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
6.7 INTEREST. The Transfer Agent shall assume no responsibility for lost
interest with respect to the refundable amount of any unauthorized
payment order, unless the Transfer Agent is notified of the unauthorized
payment order within thirty (30) days of notification by the Transfer
Agent of the acceptance of such payment order.
6.8 ACH CREDIT ENTRIES/PROVISIONAL PAYMENTS. When the Fund initiates or
receives Automated Clearing House credit and debit entries pursuant to
these guidelines and the rules of the National Automated Clearing House
Association and the New England Clearing House Association, the Transfer
Agent will act as an Originating Depository Financial Institution and/or
receiving depository Financial Institution, as the case may be, with
respect to such entries. Credits given by the Transfer Agent with respect
to an ACH credit entry are provisional until the Transfer Agent receives
final settlement for such entry from the Federal Reserve Bank. If the
Transfer Agent does not receive such final settlement, the Fund agrees
that the Transfer Agent shall receive a refund of the amount credited to
the Fund in connection with such entry, and the party making payment to
the Fund via such entry shall not be deemed to have paid the amount of
the entry.
6.9 CONFIRMATION. Confirmation of Transfer Agent's execution of payment
orders shall ordinarily be provided within twenty four (24) hours notice
of which may be delivered through the Transfer Agent's proprietary
information systems, or by facsimile or call-back. Fund must report any
objections to the execution of an order within thirty (30) days.
7. DATA ACCESS AND PROPRIETARY INFORMATION
7.1 The Fund acknowledges that the databases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Transfer Agent as part of the Fund's
ability to access certain Fund-related data ("Customer Data") maintained
by the Transfer Agent on databases under the control and ownership of the
Transfer Agent or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to the
Transfer Agent or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all
Proprietary Information as proprietary to the Transfer Agent and further
agrees that it shall not divulge any Proprietary Information to any
person or organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its employees and
agents to:
(a) Use such programs and databases (i) solely on the Fund's computers,
or (ii) solely from equipment at the location agreed to between the Fund
and the Transfer Agent and (iii) solely in accordance with the Transfer
Agent's applicable user documentation;
(b) Refrain from copying or duplicating in any way (other than in the
normal course of performing processing on the Fund's computer(s)), the
Proprietary Information;
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(c) Refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained, to
inform in a timely manner of such fact and dispose of such information in
accordance with the Transfer Agent's instructions;
(d) Refrain from causing or allowing information transmitted from the
Transfer Agent's computer to the Fund's terminal to be retransmitted to
any other computer terminal or other device except as expressly permitted
by the Transfer Agent (such permission not to be unreasonably withheld);
(e) Allow the Fund to have access only to those authorized transactions
as agreed to between the Fund and the Transfer Agent; and
(f) Honor all reasonable written requests made by the Transfer Agent to
protect at the Transfer Agent's expense the rights of the Transfer Agent
in Proprietary Information at common law, under federal copyright law and
under other federal or state law.
7.2 Proprietary Information shall not include all or any portion of any of
the foregoing items that: (i) are or become publicly available without
breach of this Agreement; (ii) are released for general disclosure by a
written release by the Transfer Agent; or (iii) are already in the
possession of the receiving party at the time or receipt without
obligation of confidentiality or breach of this Agreement.
7.3 The Fund acknowledges that its obligation to protect the Transfer Agent's
Proprietary Information is essential to the business interest of the
Transfer Agent and that the disclosure of such Proprietary Information in
breach of this Agreement would cause the Transfer Agent immediate,
substantial and irreparable harm, the value of which would be extremely
difficult to determine. Accordingly, the parties agree that, in addition
to any other remedies that may be available in law, equity, or otherwise
for the disclosure or use of the Proprietary Information in breach of
this Agreement, the Transfer Agent shall be entitled to seek and obtain a
temporary restraining order, injunctive relief, or other equitable relief
against the continuance of such breach.
7.4 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most recently
issued user documentation for such services, the Transfer Agent shall
endeavor in a timely manner to correct such failure. Organizations from
which the Transfer Agent may obtain certain data included in the Data
Access Services are solely responsible for the contents of such data and
the Fund agrees to make no claim against the Transfer Agent arising out
of the contents of such third-party data, including, but not limited to,
the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND
SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN
AS IS, AS AVAILABLE BASIS. THE TRANSFER AGENT EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
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7.5 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to (i)
effect the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information, then in such event the
Transfer Agent shall be entitled to rely on the validity and authenticity
of such instruction without undertaking any further inquiry as long as
such instruction is undertaken in conformity with security procedures
established by the Transfer Agent from time to time.
7.6 Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this SECTION 7. The obligations of this Section
shall survive any earlier termination of this Agreement.
8. INDEMNIFICATION
8.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent harmless from and against, any and
all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to:
(a) All actions of the Transfer Agent or its agents or subcontractors
required to be taken pursuant to this Agreement (including the defense of
any law suit in which the Transfer Agent or affiliate is a named party),
provided that such actions are taken in good faith and without negligence
bad faith or willful misfeasance;
(b) The Fund's lack of good faith, negligence or willful misfeasance;
(c) The reliance upon, and any subsequent use of or action taken or
omitted, by the Transfer Agent, or its agents or subcontractors on: (i)
any information, records, documents, data, stock certificates or
services, which are received by the Transfer Agent or its agents or
subcontractors by machine readable input, facsimile, CRT data entry,
electronic instructions or other similar means authorized by the Fund,
and which have been prepared, maintained or performed by the Fund or any
other authorized person or firm on behalf of the Fund including but not
limited to any broker-dealer, TPA or previous transfer agent; (ii) any
instructions or requests of the Fund or any of its authorized officers;
(iii) any instructions or opinions of legal counsel with respect to any
matter arising in connection with the services to be performed by the
Transfer Agent under this Agreement which are provided to the Transfer
Agent after consultation with such legal counsel; or (iv) any paper or
document, reasonably believed to be genuine, authentic, or signed by the
proper person or persons;
(d) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be registered
or in violation of any stop order or other determination or ruling by any
federal or any state agency with respect to the offer or sale of such
Shares;
(e) The negotiation and processing of any checks including without
limitation for deposit into the Fund's demand deposit account maintained
by the Transfer Agent; or
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(f) Upon the Fund's request entering into any agreements required by the
National Securities Clearing Corporation (the "NSCC") for the
transmission of Fund or Shareholder data through the NSCC clearing
systems.
8.2 In order that the indemnification provisions contained in this SECTION 8
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Transfer Agent, the Transfer Agent shall
promptly notify the Fund of such assertion, and shall keep the Fund
advised with respect to all developments concerning such claim. The Fund
shall have the option to participate with the Transfer Agent in the
defense of such claim or to defend against said claim in its own name or
in the name of the Transfer Agent. The Transfer Agent shall in no case
confess any claim or make any compromise in any case in which the Fund
may be required to indemnify the Transfer Agent except with the Fund's
prior written consent.
9. STANDARD OF CARE
The Transfer Agent shall at all times act in good faith and agrees to use
its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility
and shall not be liable for loss or damage due to errors, including
encoding and payment processing errors, unless said errors are caused by
its negligence, bad faith, or willful misfeasance or that of its
officers, employees or agents. The Transfer Agent shall implement quality
assurance procedures reasonably designed to prevent errors in processing
Shareholder transactions. The parties agree that any encoding or payment
processing errors shall be governed by this standard of care and Section
4-209 of the Uniform Commercial Code is superseded by SECTION 9 of this
Agreement. This standard of care also shall apply to Exception Services,
as defined in SECTION 2.3 herein, but such application shall take into
consideration the manual processing involved in, and time sensitive
nature of, Exception Services.
10. YEAR 2000
The Transfer Agent will take reasonable steps to ensure that its products
(and those of its third-party suppliers) reflect the available technology
to offer products that are Year 2000 ready, including, but not limited
to, century recognition of dates, calculations that correctly compute
same century and multi century formulas and date values, and interface
values that reflect the date issues arising between now and the next
one-hundred years, and if any changes are required, the Transfer Agent
will make the changes to its products at a price to be agreed upon by the
parties and in a commercially reasonable time frame and will require
third-party suppliers to do likewise.
11. CONFIDENTIALITY
11.1 The Transfer Agent and the Fund agree that they will not, at any time
during the term of this Agreement or after its termination, reveal,
divulge, or make known to any person, firm, corporation or other business
organization, any customers' lists, trade secrets, cost figures and
projections, profit figures and projections, or any other secret or
confidential information whatsoever, whether of the Transfer Agent or of
the Fund, used or gained by the Transfer Agent or the Fund during
performance under this Agreement. The Fund
11
and the Transfer Agent further covenant and agree to retain all such
knowledge and information acquired during and after the term of this
Agreement respecting such lists, trade secrets, or any secret or
confidential information whatsoever in trust for the sole benefit of the
Transfer Agent or the Fund and their successors and assigns. In the event
of breach of the foregoing by either party, the remedies provided by
SECTION 7.3 shall be available to the party whose confidential
information is disclosed. The above prohibition of disclosure shall not
apply to the extent that the Transfer Agent must disclose such data to
its sub-contractor or Fund agent for purposes of providing services under
this Agreement.
11.2 In the event that any requests or demands are made for the inspection of
the Shareholder records of the Fund, other than request for records of
Shareholders pursuant to standard subpoenas from state or federal
government authorities (i.e., divorce and criminal actions), the Transfer
Agent will endeavor to notify the Fund and to secure instructions from an
authorized officer of the Fund as to such inspection. The Transfer Agent
expressly reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person
or if required by law or court order.
12. COVENANTS OF THE FUND AND THE TRANSFER AGENT
12.1 The Fund shall promptly furnish to the Transfer Agent the following:
(a) A certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Transfer Agent and the execution
and delivery of this Agreement; and
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
12.2 The Transfer Agent hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
12.3 The Transfer 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 Investment Company Act of 1940,
as amended, and the Rules thereunder, the Transfer Agent agrees that all
such records prepared or maintained by the Transfer Agent relating to the
services to be performed by the Transfer 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 promptly
to the Fund on and in accordance with its request.
12
13. TERMINATION OF AGREEMENT
13.1 TERMINATION. For the Fund to terminate this Agreement, the Fund must give
at least ninety (90) days prior written notice to the Transfer Agent. For
the Transfer Agent to terminate this Agreement, the Transfer Agent must
give at least one hundred and twenty (120) days prior written notice to
the Fund.
13.2 RECOVERY OF CONVERSION COSTS. Should the Fund desire to move any of its
services provided by the Transfer Agent hereunder to a successor service
provider prior to the expiration of one year from the Conversion Date, or
without the required notice, the Transfer Agent shall make a good faith
effort to facilitate the conversion on such prior date; however, there
can be no guarantee or assurance that the Transfer Agent will be able to
facilitate a conversion of services on such prior date. In connection
with the foregoing, should services be converted to a successor service
provider, or if the Fund is liquidated or its assets merged or purchased
or the like with or by another entity which does not utilize the services
of the Transfer Agent, the fees payable to the Transfer Agent shall be
two-hundred and fifty-thousand dollars ($250,000). The payment of all
fees to the Transfer Agent as set forth herein shall be accelerated to
the business day immediately prior to the conversion or termination of
services.
13.3 MOVEMENT OF RECORDS AND DE-CONVERSION COSTS. Should either party
exercise its right to terminate (a) all reasonable out-of-pocket expenses
or costs associated with the movement of records and material and (b)
compensation and benefits paid to Fund dedicated customer service
representatives for the lesser of (i) a period of thirty (30) days after
termination or (ii) until re-deployment of the Fund dedicated customer
service representatives within the Transfer Agent shall borne by the
Fund. Additionally, the Transfer Agent reserves the right to charge for
other reasonable expenses associated with such termination. In the event
that the termination is due to a material breach of the Agreement by the
Transfer Agent, there shall be no fees payable under SECTIONS 13.2 AND
13.3 of this Agreement by the Fund.
13.4 CONFIDENTIAL INFORMATION. Upon termination of this Agreement, each
party shall return to the other party all copies of confidential or
proprietary materials or information received from such other party
hereunder, other than materials or information required to be retained by
such party under applicable laws or regulations.
13.5 UNPAID INVOICES. The Transfer Agent may terminate this Agreement
immediately upon an unpaid invoice payable by the Fund to the Transfer
Agent being outstanding for more than ninety (90) days, except with
respect to any amount subject to a good faith dispute within the meaning
of SECTION 3.4 of this Agreement.
13.6 BANKRUPTCY. Either party hereto may terminate this Agreement by notice
to the other party, effective at any time specified therein, in the event
that (a) the other party ceases to carry on its business or (b) an action
is commenced by or against the other party under Title 11 of the United
States Code or a receiver, conservator or similar officer is appointed
for the other party and such suit, conservatorship or receivership is not
discharged within thirty (30) days.
13
14. ASSIGNMENT AND THIRD PARTY BENEFICIARIES
14.1 Except as provided in SECTION 15.1 below neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party. Any attempt to do so in violation
of this Section shall be void. Unless specifically stated to the contrary
in any written consent to an assignment, no assignment will release or
discharge the assignor from any duty or responsibility under this
Agreement.
14.2 Except as explicitly stated elsewhere in this Agreement, nothing under
this Agreement shall be construed to give any rights or benefits in this
Agreement to anyone other than the Transfer Agent and the Fund, and the
duties and responsibilities undertaken pursuant to this Agreement shall
be for the sole and exclusive benefit of the Transfer Agent and the Fund.
This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
14.3 This Agreement does not constitute an agreement for a partnership or
joint venture between the Transfer Agent and the Fund. Other than as
provided in SECTION 15.1 and SCHEDULE 1.2(f), neither party shall make
any commitments with third parties that are binding on the other party
without the other party's prior written consent.
15. SUBCONTRACTORS
15.1 The Transfer Agent may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended, (ii) a BFDS subsidiary duly
registered as a transfer agent or (iii) a BFDS affiliate duly registered
as a transfer agent; provided, however, that the Transfer Agent shall be
fully responsible to the Fund for the acts and omissions of BFDS or its
subsidiary or affiliate as it is for its own acts and omissions.
15.2 Nothing herein shall impose any duty upon the Transfer Agent in
connection with or make the Transfer Agent liable for the actions or
omissions to act of unaffiliated third parties such as by way of example
and not limitation, Airborne Services, Federal Express, United Parcel
Service, the U.S. Mails, the NSCC and telecommunication companies,
provided, if the Transfer Agent selected such company, the Transfer Agent
shall have exercised due care in selecting the same.
16. MISCELLANEOUS
16.1 AMENDMENT. This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a
resolution of the Board of Trustees of the Fund.
16.2 DELAWARE LAW TO APPLY. This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of
the state of Delaware.
14
16.3 FORCE MAJEURE. In the event either party is unable to perform its
obligations under the terms of 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 for damages to the other for any damages resulting
from such failure to perform or otherwise from such causes.
16.4 CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be liable to
the other party for special, indirect or consequential damages under any
provision of this Agreement or for any special, indirect or consequential
damages arising out of any act or failure to act hereunder.
16.5 SURVIVAL. All provisions regarding indemnification, warranty, liability,
and limits thereon, and confidentiality and/or protections of proprietary
rights and trade secrets shall survive the termination of this Agreement.
16.6 SEVERABILITY. If any provision or provisions of this Agreement shall be
held invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be
affected or impaired.
16.7 PRIORITIES CLAUSE. In the event of any conflict, discrepancy or ambiguity
between the terms and conditions contained in this Agreement and any
Schedules or attachments hereto, the terms and conditions contained in
this Agreement shall take precedence.
16.8 WAIVER. No waiver by either party or any breach or default of any of the
covenants or conditions herein contained and performed by the other party
shall be construed as a waiver of any succeeding breach of the same or of
any other covenant or condition.
16.9 MERGER OF AGREEMENT. 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.
16.10 COUNTERPARTS. 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.
16.11.REPRODUCTION OF DOCUMENTS. This Agreement and all schedules, exhibits,
attachments and amendments hereto may be reproduced by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other
similar process. The parties hereto each agree that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding, whether or not the original is in existence
and whether or not such reproduction was made by a party in the regular
course of business, and that any enlargement, facsimile or further
reproduction shall likewise be admissible in evidence.
15
16.12 NOTICES. All notices and other communications as required or permitted
hereunder shall be in writing and sent by first class mail, postage
prepaid, addressed as follows or to such other address or addresses of
which the respective party shall have notified the other.
(a) If to State Street Bank and Trust Company, to:
State Street Bank and Trust Company
c/o Boston Financial Data Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Fund, to both:
Firsthand Funds
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Firsthand Funds
Attention: General Counsel
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
17. ADDITIONAL FUNDS
Absent written notification to the contrary by Fund or Transfer Agent,
each new investment portfolio established in the future by Fund shall
automatically become a "Portfolio" for all purposes hereunder as if
listed on SCHEDULE A.
18. RELEASE
The names "Firsthand Funds" and "Trustees of Firsthand Funds" refer
respectively to the Trust created by the Declaration of Trust and the
Trustees as Trustees but not individually or personally. All parties
hereto acknowledge and agree that any and all liabilities of the Trust
arising, directly or indirectly, under this Agreement will be satisfied
solely out of the assets of the Trust and that not Trustee, officer or
shareholder shall be personally liable for any such liabilities. All
persons dealing with any investment Fund of the Trust must look solely to
the property belonging to such Investment Fund for the enforcement of any
claims against the Trust.
16
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.
FIRSTHAND FUNDS
BY:
----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY:
----------------------------------
Vice Chairman
17
SCHEDULE A
Dated: March 15, 2000
Technology Innovators Fund
Technology Leaders Fund
Technology Value Fund
The Communications Fund-TM-
The e-Commerce Fund-TM-
FIRSTHAND FUNDS STATE STREET BANK AND TRUST
COMPANY
BY: BY:
------------------------------- -------------------------------
SCHEDULE 1.2(f)
ADDITIONAL TELEPHONE SUPPORT FEES AND SERVICES
Dated: March 15, 2000
THIS PAGE LEFT INTENTIONALLY BLANK
BY: BY:
------------------------------- -------------------------------
SCHEDULE 2.1
THIRD PARTY ADMINISTRATOR(S) PROCEDURES
Dated: March 15, 2000
1. On each Business Day, the TPA(s) shall receive, on behalf of and as agent
of the Fund(s), Instructions (as hereinafter defined) from the Plan.
Instructions shall mean as to each Fund (i) orders by the Plan for the
purchases of Shares, and (ii) requests by the Plan for the redemption of
Shares; in each case based on the Plan's receipt of purchase orders and
redemption requests by Participants in proper form by the time required
by the term of the Plan, but not later than the time of day at which the
net asset value of a Fund is calculated, as described from time to time
in that Fund's prospectus. Each Business Day on which the TPA receives
Instructions shall be a "Trade Date".
2. The TPA(s) shall communicate the TPA(s)'s acceptance of such
Instructions, to the applicable Plan.
3. On the next succeeding Business Day following the Trade Date on which it
accepted Instructions for the purchase and redemption of Shares, (TD+1),
the TPA(s) shall notify the Transfer Agent of the net amount of such
purchases or redemptions, as the case may be, for each of the Plans. In
the case of net purchases by any Plan, the TPA(s) shall instruct the
Trustees of such Plan to transmit the aggregate purchase price for Shares
by wire transfer to the Transfer Agent on (TD+1). In the case of net
redemptions by any Plan, the TPA(s) shall instruct the Fund's custodian
to transmit the aggregate redemption proceeds for Shares by wire transfer
to the Trustees of such Plan on (TD+1). The times at which such
notification and transmission shall occur on (TD+1) shall be as mutually
agreed upon by each Fund, the TPA(s), and the Transfer Agent.
4. The TPA(s) shall maintain separate records for each Plan, which record
shall reflect Shares purchased and redeemed, including the date and price
for all transactions, and Share balances. The TPA(s) shall maintain on
behalf of each of the Plans a single master account with the Transfer
Agent and such account shall be in the name of that Plan, the TPA(s), or
the nominee of either thereof as the record owner of Shares owned by such
Plan.
5. The TPA(s) shall maintain records of all proceeds of redemptions of
Shares and all other distributions not reinvested in Shares.
6. The TPA(s) shall prepare, and transmit to each of the Plans, periodic
account statements showing the total number of Shares owned by that Plan
as of the statement closing date, purchases and redemptions of Shares by
the Plan during the period covered by the statement, and the dividends
and other distributions paid to the Plan on Shares during the statement
period (whether paid in cash or reinvested in Shares).
7. The TPA(s) shall, at the request and expense of each Fund, transmit to
the Plans prospectuses, proxy materials, reports, and other information
provided by each Fund for delivery to its shareholders.
8. The TPA(s) shall, at the request of each Fund, prepare and transmit to
each Fund or any agent designated by it such periodic reports covering
Shares of each Plan as each Fund shall reasonably conclude are necessary
to enable the Fund to comply with state Blue Sky requirements.
9. The TPA(s) shall transmit to the Plans confirmation of purchase orders
and redemption requests placed by the Plans; and
10. The TPA(s) shall, with respect to Shares, maintain account balance
information for the Plan(s) and daily and monthly purchase summaries
expressed in Shares and dollar amounts.
11. Plan sponsors may request, or the law may require, that prospectuses,
proxy materials, periodic reports and other materials relating to each
Fund be furnished to Participants in which event the Transfer Agent or
each Fund shall mail or cause to be mailed such materials to
Participants. With respect to any such mailing, the TPA(s) shall, at the
request of the Transfer Agent or each Fund, provide at the TPA(s)'s
expense complete and accurate set of mailing labels with the name and
address of each Participant having an interest through the Plans in
Shares.
FIRSTHAND FUNDS STATE STREET BANK AND TRUST
COMPANY
BY: BY:
------------------------------- -------------------------------
2
SCHEDULE 3.1
FEES
DATED: MARCH 15, 2000
ANNUAL ACCOUNT SERVICE FEES: Fees are calculated on average daily net assets and
are billed on a monthly basis at the rate of 1/12 of the annual fee. Subject to
a minimum of $500,000 complex fee.
Account Service Fees 2.0 Basis Points
Complex Minimum Base Fee (5 Cusips) $500,000
Additional Fee Per Cusip Over 5 Cusips $100,000
Additionally, for every Cusip over five, the Fund shall pay the greater of
$15,000 per new Cusip or 2.0 basis points for each additional new Cusip, if 2.0
basis points of the annualized average assets are less than $15,000.
This fee includes DST Systems, Inc. FAN Web.
ACTIVITY BASED FEES
-------------------
New Account Set-up $ 5.00/each
Shareholder Service Telephone Calls $ 2.00/per minute
To determine the number of minutes paid, multiply the total number of calls
answered by the average talk time for the month.
▇▇▇ AND 403(B) CUSTODIAL FEES
-----------------------------
Annual Maintenance $ 10.00/account
OUT-OF-POCKET EXPENSES BILLED AS INCURRED
----------------------
Out-of-Pocket expenses include but are not limited to reasonable costs for:
confirmation statements, investor statements, postage, forms, voice response,
telephone line charges, bank services, records retention (physical custody of
records), customized programming conforming to Fund systems enhancements,
federal wire, transcripts, microfilm, microfiche, and expenses incurred at the
specific direction of the Fund.
FIRSTHAND FUNDS STATE STREET BANK AND TRUST
COMPANY
BY: BY:
------------------------------- -------------------------------
SCHEDULE 3.6
CUSTOMER SERVICE STANDARDS
DATED: MARCH 15, 2000
CUSTOMER SERVICE TIMELINESS COMPLIANCE TARGET
STANDARDS
Phones*
-------
Average Speed of Answer 15 seconds 15 seconds
Abandonment Rate 2% Above 2%
Service Level 85% 85%
(# of calls/speed of answer)
MAGIC SCORE > 25 26
Correspondence
--------------
Financial 3 days 98%
Non-Financial 6 days 98%
▇▇▇/Account Transfer 3 days 98%
Request Notices
---------------
▇▇▇/Account Transfer 15, 30, 45 days 98%
Reminder Notices
Administration
--------------
Replacement Checks Mailed within 2 business 98%
days of request for
replacement check.
Daily Confirmation Mailed within 2 business days 98%
Statements after trade date.
Quarterly Statements Mailed within 5 98%
business days after end of
quarter.
Redemption Checks Mailed within 2 business 98%
days after redemption date.
Dividend Checks Mailed within 2 business 98%
days after dividend
payment.
*The Transfer Agent shall answer Shareholder telephone calls Monday through
Friday from 8:00 a.m.-8:00 p.m. ET.
SCHEDULE 3.6
CUSTOMER SERVICE STANDARDS
(CONTINUED)
Fee Credits
-----------
If for two consecutive months the monthly average compliance target for any of
the services listed above is below the standard for that customer service, the
Transfer Agent shall credit ten percent (10%) against the Shareholder Telephones
Service charge on the Fund's next month's invoice for each customer service out
of compliance for the two consecutive months. The Transfer Agent shall provide
the ten percent (10%) credit each month until such customer service is meeting
the compliance target for that customer service. Such credits for any calendar
month will be limited to 100% the Shareholder Service Telephone Call charge.
FIRSTHAND FUNDS STATE STREET BANK AND TRUST
COMPANY
By: By:
------------------------------- -------------------------------
2
WIRE TRANSFER SECURITY PROCEDURES
FUND SELECTION FORM
SECTION I
Details the types of funds transfers processed on behalf of ___________________.
SECTION II
Lists the types of security procedures offered.
Please select the appropriate security procedures from Section II for each
type of funds transfer listed in Section I.
I. TYPES OF FUNDS TRANSFERS
______ Expedited Redemptions
______ Same Day Wires
______ Manual Wires
______ Wire Transfers Initiated by FAX
______ Group Dividend Wire
______ Remote Batch Transmissions
______ ACH Transactions
1
WIRE TRANSFER SECURITY PROCEDURES
II. SECURITY PROCEDURES
A. REPETITIVE WIRES/ACH TRANSACTIONS
B. TELEPHONE CONFIRMATION
C. ENCRYPTION
AUTHORIZATION
Boston Financial Data Services, Inc. ("Boston Financial") is hereby
instructed to implement the above checked security procedure(s) in regard to
payment orders initiated by or on behalf of our organization or its
shareholders.
------------------------------------------- -------------------------------
Authorized Signature Date
-------------------------------------------
Title
2
WIRE TRANSFER SECURITY PROCEDURES
FUNDS TRANSFER SECURITY PROCEDURES DEFINITIONS
REPETITIVE WIRES
1. Shareholder Generated
Wires initiated from existing authorized shareholder accounts. Each wire is
sent to the same pre-established destination bank and beneficiary account
number. Only the date of the wire and dollar amount may vary from instruction
to instruction. Changes to that file can only be performed based on written
instructions coupled with a signature guarantee. The establishment of the
repetitive wire is confirmed via a written notice to the shareholder's
address of record.
2. Client Generated
Manual Wires processed on behalf of the client. Wires are initiated from the
same authorized debit account and sent to the same destination bank and
beneficiary account number each time. Only the date and the dollar amount may
vary from instruction to instruction.
TELEPHONE CONFIRMATION
Telephone confirmation will be used to verify funds transfer instructions
received via telephone, untested facsimile or mail. This security procedure
can be used to authenticate non repetitive and repetitive wire transfers
instructions. Repetitive wires may be subject to a specific threshold at the
client's discretion.
As part of the confirmation process customers must designate individuals as
authorized initiators and authorized confirmers. Within 24 hours of receipt
of the wire instruction and prior to execution, a Boston Financial Data
Services associate will contact someone other than the originator at the
customer's location to authenticate the instructions. Additionally, a
confirmation log will be maintained to provide an evidentiary control as well
as providing an invaluable operational tool for resolving any disputes.
ENCRYPTION
Delivery of wire transfer is completed via computer to computer data
communications between the client and State Street Bank and Trust Company.
Recommended security procedures include encryption, the process by which data
traveling over communication lines is cryptographically transformed
(encrypted). This control is appropriate not only for terminal based
initiation, but is also being used by some institutions in the form of both
encrypted facsimile and encrypted voice communication. This delivery
mechanism is typically used for high volume business such as shareholder
redemptions and dividends.
3
WIRE TRANSFER SECURITY PROCEDURES
ADDITIONAL INFORMATION
----------------------
Telephone Communications
- All telephone communication between BFDS and the client will be
handled on recorded telephone lines.
Transfers Initiated Via Facsimile Transmission
- Transfers initiated via fax may use either repetitive wire
security procedures, telephone confirmation or a combination of both.
Optional Security Procedure
- Client may establish telephone confirmation procedures to
authenticate repetitive manual wires initiated via telephone,
untested facsimile or mail in excess of certain dollar amounts using
the attached forms.
4
WIRE TRANSFER SECURITY PROCEDURES
--------------------------------------------------------------------------------
SECTIONS I AND II SHOULD BE COMPLETED BY ALL CLIENTS
--------------------------------------------------------------------------------
PLEASE TYPE ALL DOCUMENTATION.
SECTION I
Client/Fund
--------------------------------------------------------------------------------
Street: Apt:
-----------------------------------------------------
City: State: Zip:
------------------------------------ ------------
Phone Number: ( )
---------------------
Fax Number: ( )
---------------------
SECTION II
Please list the number of all demand deposit accounts (DDAs) from which you
intend to initiate wire transfers.
Maximum $ Limit Maximum $ Limit
DDA Number Per Transaction DDA Number Per Transaction
---------- --------------- ---------- ---------------
(8 Digits) (if any) (8 Digits) (if any)
1. 7.
---------- ---------- ---------- ----------
2. 8.
---------- ---------- ---------- ----------
3. 9.
---------- ---------- ---------- ----------
4. 10.
---------- ---------- --------- ----------
5. 11.
---------- ---------- --------- ----------
6. 12.
---------- ---------- --------- ----------
5
WIRE TRANSFER SECURITY PROCEDURES
SECTION - III CALLBACK VERIFICATION FORM
COMPLETE THIS SECTION FOR ALL TRANSFERS BY TELEPHONE ONLY.
NOTE: INDIVIDUAL AUTHORIZED FOR CALLBACK IS RESTRICTED TO VERIFICATION
ONLY. INDIVIDUAL INITIATING TRANSFERS CANNOT PERFORM CALLBACK
VERIFICATION.
-------------------------------------------------------------------------------------------------------------------
ACCOUNT NUMBER A) INDIVIDUAL AUTHORIZED TO CALLBACK PHONE # B) AUTHORIZED INDIVIDUAL FOR
INITIATE TRANSFER INSTRUCTIONS CALLBACK VERIFICATION (LAST
(LAST NAME, FIRST NAME) NAME, FIRST NAME)
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
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------------------------------------------------------------------------
(OPTIONAL) DOLLAR AUTHORIZED FOR LIMITED TO REPETITIVE
LIMITATION ALL TRANSFERS TRANSFERS
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
$
------------------------------------------------------------------------
______________________ Check ( ) here if you would like to request callbacks on
all repetitive transfers over a specified dollar amount.
Please provide the information below.
Please Callback on Please callback on
Account Number all transfers over this amount: Account Number all transfers over this amount:
-------------- ------------------------------- -------------- -------------------------------
1. $ 3. $
--------------- ------------------------------ ------------ ------------------------------
2. $ 4. $
--------------- ------------------------------ ------------ ------------------------------