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EXHIBIT (h)(3)
FORM OF
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT made the ___th day of ____, 2001, by and between PILGRIM
________________________, a ________________________, currently consisting of
______ series styled ____________________, a registered investment company, and
any other registered investment companies established in the future as a series
of the aforementioned investment company and set forth on Exhibit A, attached
hereto, as amended from time to time (each such registered investment company
hereinafter jointly and severally referred to as "Fund") having its principal
place of business at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇-▇▇▇▇ and DST SYSTEMS, INC., a corporation organized and existing under the
laws of the State of Delaware, having its principal place of business at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("DST"):
WITNESSETH:
WHEREAS, Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Documents to be Filed with Appointment.
In connection with the appointment of DST as Transfer Agent and
Dividend Disbursing Agent for Fund, there will be filed with DST the
following documents:
A. A certified copy of the resolutions of the Board of Directors
or Trustees of Fund appointing DST as Transfer Agent and
Dividend Disbursing Agent, approving the
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form of this Agreement, and designating certain persons to
sign stock certificates, if any, and give written instructions
and requests on behalf of Fund;
B. A certified copy of the Articles of Incorporation or
Declaration of Trust of Fund and all amendments thereto;
C. A certified copy of the Bylaws of Fund;
D. Copies of Registration Statements and amendments thereto,
filed with the Securities and Exchange Commission.
E. Specimens of all forms of outstanding stock certificates, in
the forms approved by the Board of Directors or Trustees of
Fund, with a certificate of the Secretary of Fund, as to such
approval;
F. Specimens of the signatures of the officers of Fund authorized
to sign stock certificates and individuals authorized to sign
written instructions and requests;
G. An opinion of counsel for Fund with respect to:
(1) Fund's organization and existence under the laws of
its state of organization,
(2) The status of all shares of stock of Fund covered by
the appointment under the Securities Act of 1933, as
amended, and any other applicable federal or state
statute, and
(3) That all issued shares are, and all unissued shares
will be, when issued, validly issued, fully paid and
nonassessable by Fund.
2. Certain Representations and Warranties of DST.
DST represents and warrants to Fund that:
A. It is a corporation duly organized and existing and in good
standing under the laws of Delaware.
B. It is duly qualified to carry on its business in the State of
Missouri.
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C. It is empowered under applicable laws and by its Articles of
Incorporation and bylaws to enter into and perform the
services contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required
under the Securities Exchange Act of 1934.
E. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
3. Certain Representations and Warranties of Fund.
Fund represents and warrants to DST that:
A. It is duly organized as heretofore described and existing and
in good standing under the laws of the State/Commonwealth of
organization.
B. It is an open-end or closed-end management investment company
registered under the Investment Company Act of 1940, as
amended.
C. A registration statement under the Securities Act of 1933 has
been filed and will be effective with respect to all shares of
Fund being offered for sale.
D. All requisite steps have been and will continue to be taken to
register Fund's shares for sale in all applicable states and
such registration will be effective at all times shares are
offered for sale in such state.
E. Fund is empowered under applicable laws and by its charter or
declaration and bylaws to enter into and perform this
Agreement.
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4. Scope of Appointment.
A. Subject to the conditions set forth in this Agreement, Fund
hereby appoints DST as Transfer Agent and Dividend Disbursing
Agent.
B. DST hereby accepts such appointment and agrees that it will
act as Fund's Transfer Agent and Dividend Disbursing Agent.
DST agrees that it will also act as agent in connection with
Fund's periodic withdrawal payment accounts and other open
accounts or similar plans for shareholders, if any.
C. Fund agrees to use its best efforts to deliver to DST in
Kansas City, Missouri, as soon as they are available, all of
its shareholder account records.
D. DST, utilizing DST's computerized data processing systems for
securityholder accounting (the "TA2000 System" for open-end
funds and "STS System" for closed-end funds and the "Systems"
for both the TA2000(R) and STS Systems, jointly and
severally), and subject to the provisions of Sections 19, 20
and 21 of this Agreement, will perform the following services
as transfer, dividend disbursing and shareholders' servicing
agent for Fund, and as agent of Fund for shareholder accounts
thereof, in a timely manner: issuing (including
countersigning), transferring and canceling share
certificates; maintaining all shareholder accounts; providing
transaction journals; preparing shareholder meeting lists (one
annually at no charge, lists for additional meetings will be
charged for), mailing proxies and proxy materials, receiving
and tabulating proxies, certifying the shareholder votes in
Fund (all proxy activities are subject to proxy fees and
reimbursable fees); mailing shareholder reports and
prospectuses supplied to DST by Fund or its agents;
withholding, as required by Federal law and as directed by
Fund, taxes on nonresident alien and foreign corporation
accounts, for pension and deferred
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income, backup withholding or other instances agreed upon by
Fund and DST; disbursing income dividends and capital gains
distributions to shareholders, preparing, filing and mailing
U.S. Treasury Department Forms 1099, 1042, 1042S and backup
withholding as required for all shareholders and as directed
by Fund; preparing and mailing confirmation forms to
shareholders and dealers, as instructed, for all purchases and
liquidations (not applicable to closed-end funds except for
transfers into or out of a shareholders' account) of shares of
Fund and other confirmable transactions in shareholders'
accounts; recording reinvestment of dividends and
distributions in shares of Fund; providing or making available
on-line daily and monthly reports as provided by either of the
Systems and as requested by Fund or its management company;
maintaining those records necessary to carry out DST's duties
hereunder, including all information reasonably required by
Fund to account for all transactions (non-valued in closed-end
funds) in Fund shares, calculating the appropriate sales
charge with respect to each purchase of Fund shares as set
forth in the prospectus for Fund (not applicable to closed-end
funds); solely for open-end funds: determining the portion of
each sales charge payable to the dealer participating in a
sale in accordance with schedules delivered to DST by Fund's
principal underwriter or distributor (hereinafter "principal
underwriter") from time to time, disbursing dealer commissions
collected to such dealers, determining the portion of each
sales charge payable to such principal underwriter and
disbursing such commissions to the principal underwriter;
receiving correspondence pertaining to any former, existing or
new shareholder account, processing such correspondence for
proper recordkeeping, and responding promptly to shareholder
correspondence; mailing to dealers confirmations of wire order
trades
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(not applicable to closed-end funds); mailing copies of
shareholder statements to shareholders and registered
representatives of dealers in accordance with Fund's
instructions; and, solely in the case of open-end funds,
processing, generally on the date of receipt, purchases or
redemptions or instructions to settle any mail or wire order
purchase or redemption (or in the case of closed-end funds,
effecting transfer of certificates) received in proper order
as set forth in the prospectus and DST's Procedures, as
hereinafter defined, rejecting promptly any requests not
received in proper order (as defined by Fund or its agents or
DST's Procedures), and, solely in the case of open-end funds,
causing exchanges of shares to be executed in accordance with
Fund's instructions, the applicable prospectus, DST's
Procedures and the general exchange privilege application.
E. At the request of an Authorized Person, DST shall use
reasonable efforts to provide the services set forth in this
Agreement in connection with transactions (i) on behalf of
retirement plans and participants in retirement plans and
transactions ordered by brokers as part of a "no transaction
fee" program ("NTF"), the processing of which transactions
require DST to use methods and procedures other than those
usually employed by DST to perform shareholder servicing agent
services, (ii) involving the provision of information to DST
after the commencement of the nightly processing cycle of
whichever of the Systems is applicable or (iii) which require
more manual intervention by DST, either in the entry of data
or in the modification or amendment of reports generated by
the Systems than is usually required by non-retirement plan,
non-NTF and pre-nightly transactions (the "Exception
Services").
F. Fund shall have the right to add new series to the TA2000
System upon at least thirty (30) days' prior written notice to
DST provided that the requirements of the
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new series are generally consistent with services then being
provided by DST under this Agreement and any new series shall
be provided services in accordance with the Fee Schedules then
attached to the existing Agency Agreements between DST and the
various Funds of Pilgrim Capital Corporation, which agreements
pre-date this Agency Agreement. Rates or charges for
additional series shall be as set forth in Exhibit B, as
hereinafter defined, for the remainder of the contract term
except as such series use functions, features or
characteristics for which DST has imposed an additional charge
as part of its standard pricing schedule. In the latter event,
rates and charges shall be in accordance with DST's
then-standard pricing schedule.
G. DST shall use reasonable efforts to provide, reasonably
promptly under the circumstances, the same services with
respect to any new, additional functions or features or any
changes or improvements to existing functions or features as
provided for in Fund's instructions, prospectus or application
as amended from time to time, for Fund provided (i) DST is
advised in advance by Fund of any changes therein, (ii) the
Systems and the mode of operations utilized by DST as then
constituted support such additional functions and features,
and (iii) any new or increased services to be provided by DST
or commenced to be used by Fund in addition to those currently
used at execution hereof or any new products or functionality
added to the TA2000 System shall be provided in accordance
with the Fee Schedules then attached to the existing Agency
Agreements between DST and the various Funds of Pilgrim
Capital Corporation, which agreements pre-date this Agency
Agreement, or, if not referenced in such fee schedules, at
mutually agreed to fees and charges. If any addition to,
improvement of or change in the features and functions
currently provided by either of the Systems or the operations
as
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requested by Fund requires an enhancement or modification to
either of the Systems or to operations as presently conducted
by DST, DST shall not be liable therefor until such
modification or enhancement is, if DST agrees to develop or
institute it, developed (at Fund's expense) and installed on
the Systems or a new mode of operation is instituted. If any
new, additional function or feature or change or improvement
to existing functions or features or new service or mode of
operation measurably increases DST's cost of performing the
services required hereunder at the current level of service,
DST shall advise Fund of the amount of such increase and if
Fund elects to utilize such function, feature or service, DST
shall be entitled to increase its fees by the amount of the
increase in costs. In no event shall DST be responsible for or
liable to provide any additional function, feature,
improvement or change in method of operation until it has
consented thereto in writing.
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5. Limit of Authority.
Unless otherwise expressly limited by the resolution of appointment or
by subsequent action by Fund, the appointment of DST as Transfer Agent
will be construed to cover the full amount of authorized stock of the
class or classes for which DST is appointed as the same will, from time
to time, be constituted, and any subsequent increases in such
authorized amount.
In case of such increase Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited, a
certified copy of a resolution of Fund's Board of Directors or
Trustees, as applicable, increasing the authority of DST;
B. A certified copy of the amendment to Fund's Articles of
Incorporation or Declaration of Trust, as applicable,
authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental
or regulatory authority required by law to consent to the
issuance of the increased stock, and an opinion of counsel
that the order or consent of no other governmental or
regulatory authority is required;
D. Opinion of counsel for Fund stating:
(1) The status of the additional shares of stock of Fund
under the Securities Act of 1933, as amended, and any
other applicable federal or state statute and that
said shares may be legally issued; and
(2) That the additional shares are, or when issued will
be, validly issued, fully paid and nonassessable by
Fund.
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6. Compensation and Expenses.
A. In consideration for its services hereunder as Transfer Agent
and Dividend Disbursing Agent, Fund will pay to DST from time
to time a reasonable compensation for all services rendered as
Agent, and also all its reasonable out-of-pocket expenses,
charges, counsel fees, and other disbursements (Compensation
and Expenses) incurred in connection with the agency. Such
compensation is set forth in a separate schedule to be agreed
to by Fund and DST, a copy of which is attached hereto and
incorporated herein by reference. If Fund has not paid such
Compensation and Expenses to DST within a reasonable time, DST
may, after written notice to Fund, charge against any monies
held under this Agreement, the amount of any Compensation
and/or Expenses for which it shall be entitled to
reimbursement under this Agreement.
B. Fund also agrees promptly to reimburse DST for all reasonable
reimbursable expenses or disbursements incurred by DST in
connection with the performance of services under this
Agreement including, but not limited to, expenses for postage,
express delivery services, freight charges, envelopes, checks,
drafts, forms (continuous or otherwise), specially requested
reports and statements, telephone calls, telegrams, stationery
supplies, counsel fees, outside printing and mailing firms
(including Output Technologies SRI Group, Inc.), magnetic
tapes, reels or cartridges (if sent to a Fund or to third
party at Fund's request) and magnetic tape handling charges,
off-site record storage, media for storage of records (e.g.,
microfilm, microfiche, optical platters, computer tapes),
computer equipment installed at Fund's request at Fund's or a
third party's premises, telecommunications equipment,
telephone/ telecommunication lines between Fund and its
agents, on one hand, and
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DST on the other, proxy mailing, soliciting, processing and/or
tabulating costs, second-site backup computer facility,
transmission of statement data for remote printing or
processing, and NSCC transaction fees (as well as any other
expenses set forth on Exhibit C, as amended from time to time)
to the extent any of the foregoing are paid or incurred by
DST. Fund agrees to pay postage expenses at least one day in
advance if so requested. In addition, any other expenses
incurred by DST at the request or with the consent of Fund
will be promptly reimbursed by Fund.
C. Amounts due hereunder shall be due and paid on or before the
thirtieth (30th) calendar day after receipt of the statement
therefor by Fund (the "Due Date"). Fund is aware that its
failure to pay all amounts in a timely fashion so that they
will be received by DST on or before the Due Date will give
rise to costs to DST not contemplated by this Agreement,
including but not limited to carrying, processing and
accounting charges. Accordingly, subject to Section 6.D.
hereof, in the event that any amounts due hereunder are not
received by DST by the Due Date, Fund shall pay a late charge
equal to the rate set forth in the fee schedule times the
amount overdue, times the number of days from the Due Date up
to and including the day on which payment is received by DST
divided by 365. The parties hereby agree that such late charge
represents a fair and reasonable computation of the costs
incurred by reason of late payment or payment of amounts not
properly due. Acceptance of such late charge shall in no event
constitute a waiver of Fund's or DST's default or prevent the
non-defaulting party from exercising any other rights and
remedies available to it.
D. In the event that any charges are disputed, Fund shall, on or
before the Due Date, pay all undisputed amounts due hereunder
and notify DST in writing of any
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disputed charges for out-of-pocket expenses which it is
disputing in good faith. Payment for such disputed charges
shall be due on or before the close of the fifth (5th)
business day after the day on which DST provides to Fund
documentation which an objective observer would agree
reasonably supports the disputed charges (the "Revised Due
Date"). Late charges shall not begin to accrue as to charges
disputed in good faith until the first day after the Revised
Due Date.
7. Operation of DST Systems.
In connection with the performance of its services under this
Agreement, DST is responsible for such items as:
A. That entries in DST's records and in Fund's records on the
Systems created by DST accurately reflect the orders,
instructions, and other information received by DST from Fund,
Fund's principal manager, underwriter or distributor or Fund's
investment adviser, sponsor, custodian or administrator (each
an "Authorized Person"), broker-dealers and shareholders;
B. That shareholder lists, shareholder account verifications,
confirmations and other shareholder account information to be
produced from its records or data be available and accurately
reflect the data in Fund's records on the Systems;
C. The accurate and timely issuance of dividend and distribution
checks in accordance with instructions received from Fund and
the data in Fund's records on the Systems;
D. That redemption transactions and payments with respect to
shares of open-end funds and transfers with respect to
closed-end funds be effected timely, under normal
circumstances on the day of receipt, and accurately in
accordance with instructions received by DST from dealers,
shareholders, or an Authorized Person of Fund
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provided such instructions are in proper order as set forth
elsewhere in this Agreement and are consistent with the data
in Fund's records on the Systems;
E. The deposit daily in Fund's appropriate special bank account
of all checks and payments received by DST from NSCC,
broker-dealers or shareholders for investment in shares of
open-end funds;
F. Notwithstanding anything herein to the contrary, with respect
to "as of" adjustments, DST will not necessarily assume one
hundred percent (100%) responsibility for losses resulting
from "as of's" due to clerical errors or misinterpretations of
shareholder instructions. DST shall not be liable for any
action taken, suffered, or omitted by it or for any error of
judgment made by it with respect to "as of" adjustments in the
absence of bad faith, willful misconduct, knowing violations
of applicable law pertaining to the manner in which transfer
agency services are to be performed by DST, reckless disregard
of the performance of its duties, or negligence on its part.
DST's liability hereunder shall extend only to losses that are
"material", that is, that, on a given, day arise from dilution
or a pricing error that is (i) greater than a negligible
amount per shareholder, (ii) equals or exceeds one ($.01) full
cent per share times the number of shares outstanding with
respect to whether recompense of Fund is required, or (iii)
equals or exceeds the product of one-half of one percent
(1/2%) times Fund's Net Asset Value per share times the number
of shares outstanding with respect to whether recompense at
the shareholder level is required (or such other amounts as
may be adopted by applicable accounting or regulatory
authorities from time to time);
G. Notwithstanding anything in this Agreement to the contrary,
DST shall perform the services set forth in Section 4.D. of,
and elsewhere in, this Agreement, including but
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not limited to the requiring of proper forms of instructions,
signatures and signature guarantees and any necessary
documents supporting the opening of shareholder accounts
(where required), transfers, redemptions and other shareholder
account transactions, in conformance with DST's present
procedures as set forth in its Legal Manual, Third Party Check
Procedures, Checkwriting Draft Procedures, and Signature
Guarantee Procedures with such changes or deviations therefrom
as may be from time to time required or approved by Fund, its
investment adviser or principal underwriter, or their or DST's
counsel (the "Procedures") and the rejection of orders or
instructions not in good order in accordance with the
applicable prospectus or the Procedures;
H. The maintenance of customary records in connection with its
agency, and particularly those records required to be
maintained pursuant to subparagraph (2) (iv) of paragraph (b)
of Rule 31a-1 under the Investment Company Act of 1940, if
any; and
I. The maintenance of a current, duplicate set of Fund's
essential records as of the close of business on the prior
business day at a secure separate location, in a form
available and usable forthwith in the event of any breakdown
or disaster disrupting its main operation.
8. Indemnification.
A. DST shall at all times use reasonable care, due diligence and
act in good faith in performing its duties under this
Agreement. DST shall provide its services as transfer agent in
accordance with Section 17A of the Exchange Act, and the rules
and regulations thereunder. In the absence of bad faith,
willful misconduct, knowing violations of applicable law
pertaining to the manner in which transfer
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agency services are to be performed by DST (excluding any
violations arising directly or indirectly out of the actions
of DST-unaffiliated third parties), reckless disregard of the
performance of its duties, or negligence on its part, DST
shall not be liable for any action taken, suffered, or omitted
by it or for any error of judgment made by it in the
performance of its duties under this Agreement. For those
activities or actions delineated in the Procedures, DST shall
be presumed to have used reasonable care, due diligence and
acted in good faith if it has acted in accordance with the
Procedures, copies of which have been provided to Fund, as
amended from time to time with approval of counsel, or for any
deviation therefrom approved by an Authorized Person, Fund or
Fund's or DST's counsel.
B. DST shall not be responsible for, and Fund shall indemnify and
hold DST harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and
liability which may be asserted against DST or for which DST
may be held to be liable, arising out of or attributable to:
(1) All actions of DST required to be taken by DST
pursuant to this Agreement, provided that DST has
acted in accordance with the standards specified in
Paragraph A;
(2) Fund's refusal or failure to comply with the terms of
this Agreement, Fund's negligence or willful
misconduct, or the breach of any representation or
warranty of Fund hereunder;
(3) The good faith reliance on or the carrying out of any
written or recorded oral instructions or requests of
persons designated by Fund in writing from time to
time as authorized to give instructions on its behalf
or of representatives of an Authorized Person or
DST's good faith reliance on or use of
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information, data, records and documents received
from, or which have been prepared and/or maintained
by or on behalf of, an Authorized Person;
(4) Defaults by dealers or shareowners with respect to
payment for share orders previously entered;
(5) The offer or sale of Fund's shares in violation of
any requirement under federal securities laws or
regulations or the securities laws or regulations of
any state or in violation of any stop order or other
determination or ruling by any federal agency or
state with respect to the offer or sale of such
shares in such state (unless such violation results
from DST's failure to comply with written
instructions of Fund or of any officer of Fund that
no offers or sales be input into Fund's
securityholder records in or to residents of such
state);
(6) Fund's or its agents' and Authorized Persons'
omissions, errors and mistakes: (a) in the use of (i)
the Systems, (ii) the data center, computer and
related equipment used to access the Systems (the
"DST Facilities"), and (iii) control procedures in
the Systems, and (b) in the verification of output
and (c) in the remote input of data;
(7) Errors, inaccuracies and omissions in, or errors,
inaccuracies or omissions of DST arising out of or
resulting from such errors, inaccuracies and
omissions in, Fund's records, shareholder records and
other records, delivered to DST hereunder by Fund or
its prior agent(s) (but not including errors,
inaccuracies or omissions resulting from the
negligence or willful misconduct of DST while DST was
acting as sub-agent on behalf of Investors Fiduciary
Trust Company, Fund's prior transfer agent);
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(8) Actions or omissions to act by Fund or agents
designated by Fund with respect to duties assumed
thereby as provided for in Section 21 hereof; and
(9) DST's performance of AGREED UPON Exception Services
except where DST acted or omitted to act in bad
faith, with reckless disregard of its obligations or
with gross negligence.
C. Except where DST is entitled to indemnification under Section
8.B. hereof, and subject to the provisions Section 7.F.
hereof, DST shall indemnify and hold Fund harmless from and
against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of DST's
failure to comply with the terms of this Agreement or arising
out of or attributable to DST's negligence or willful
misconduct or material breach of any representation or
warranty of DST hereunder.
D. EXCEPT FOR VIOLATIONS OF SECTIONS 23, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE
TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY,
FOR CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER
ANY PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THE
POSSIBILITY THEREOF.
E. Promptly after receipt by an indemnified person of notice of
the commencement of any action, such indemnified person will,
if a claim in respect thereto is to be made against an
indemnifying party hereunder, notify the indemnifying party in
writing of the commencement thereof; but the failure so to
notify the indemnifying party will
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not relieve an indemnifying party from any liability that it
may have to any indemnified person for contribution or
otherwise under the indemnity agreement contained herein
except to the extent it is prejudiced as a proximate result of
such failure to timely notify. In case any such action is
brought against any indemnified person and such indemnified
person seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, assume the defense
thereof (in its own name or in the name and on behalf of any
indemnified party or both with counsel reasonably satisfactory
to such indemnified person); provided, however, if the
defendants in any such action include both the indemnified
person and an indemnifying party and the indemnified person
shall have reasonably concluded that there may be a conflict
between the positions of the indemnified person and an
indemnifying party in conducting the defense of any such
action or that there may be legal defenses available to it
and/or other indemnified persons which are inconsistent with
those available to an indemnifying party, the indemnified
person or indemnified persons shall have the right to select
one separate counsel (in addition to counsel provided by the
indemnifying party) to assume such legal defense and to
otherwise participate in the defense of such action on behalf
of such indemnified person or indemnified persons at such
indemnified party's sole expense. Upon receipt of notice from
an indemnifying party to such indemnified person of its
election so to assume the defense of such action and approval
by the indemnified person of counsel, which approval shall not
be unreasonably withheld (and any disapproval shall be
accompanied by a written statement of the reasons therefor),
the indemnifying party will not be liable to such indemnified
person hereunder for any legal or other
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expenses subsequently incurred by such indemnified person in
connection with the defense thereof. An indemnifying party
will not settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the
indemnified persons are actual or potential parties to such
claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of
each indemnified person from all liability arising out of such
claim, action, suit or proceeding. An indemnified party will
not, without the prior written consent of the indemnifying
party, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder. If it does so, it
waives its right to indemnification therefor.
9. Certain Covenants of DST and Fund.
A. All requisite steps will be taken by Fund from time to time
when and as necessary to register Fund's shares for sale in
all states in which Fund's shares shall at the time be offered
for sale and require registration. If at any time Fund
receives notice of any stop order or other proceeding in any
such state affecting such registration or the sale of Fund's
shares, or of any stop order or other proceeding under the
federal securities laws affecting the sale of Fund's shares,
Fund will give prompt notice thereof to DST.
B. DST hereby agrees to perform such transfer agency functions as
are set forth in section 4.D. above and establish and maintain
facilities and procedures reasonably acceptable to Fund for
safekeeping of stock certificates, check forms, and facsimile
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signature imprinting devices, if any; and for the preparation
or use, and for keeping account of, such certificates, forms
and devices, and to carry such insurance as it considers
adequate and reasonably available.
C. To the extent required by Section 31 of the Investment Company
Act of 1940 as amended and Rules thereunder, DST agrees that
all shareholder- or Fund-related records maintained by DST
relating to the services performed by DST under this Agreement
are the property of Fund and will be preserved, and will, upon
receipt of payment of all sums due to DST in connection with
DST's performance under this Agreement, be surrendered
promptly to Fund on request.
D. DST agrees to furnish Fund semiannual reports of its financial
condition, consisting of a balance sheet, earnings statement
and any other readily and publicly available financial
information reasonably requested by Fund. The annual financial
statements will be certified by DST's certified public
accountants. DST agrees to provide such reports as are
produced by the TA2000 System respecting its services under
this Agreement to Fund's Board as the Fund Board may
reasonably request.
E. DST represents and agrees that it will use its reasonable
efforts to keep current on the trends of the investment
company industry relating to shareholder services and will use
its reasonable efforts to continue to modernize and improve.
F. DST will permit Fund and its authorized representatives to
make periodic inspections of its operations as such would
involve Fund upon reasonable prior notice and at reasonable
times during business hours.
G. DST agrees to use its reasonable efforts to provide in Kansas
City at Fund's expense two (2) man weeks of training for
Fund's personnel in connection with use and operation of the
Systems. All travel and reimbursable expenses incurred by
Fund's
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personnel in connection with and during training at DST's
Facility shall be borne by Fund. At Fund's option and expense,
DST also agrees to use its best efforts to provide an
additional two (2) man weeks of training at Fund's facility
for Fund's personnel in connection with the Systems.
Reasonable travel, per diem and reimbursable expenses incurred
by DST personnel in connection with and during training at
Fund's facility or in connection with the conversion shall be
borne by Fund.
H. Notwithstanding anything in this Agreement to the contrary,
DST's only warranty or covenant with respect to year 2000
compliance is that the TA2000 System will be year 2000
compliant during the term set forth in Section 22 of this
Agreement. As used in this Agreement "year 2000 compliant"
shall mean that the TA2000 System will perform in accordance
with the terms of this Agreement regardless of the century
with respect to which date data is encountered by the TA2000
System; provided, that (i) all date data received by DST for
use by the TA2000 System is accurate and in formats specified
by DST from time to time, (ii) all date data generated by the
TA2000 System is accepted by the recipient in formats provided
by DST from time to time, and (iii) DST shall not be obligated
to provide date data for interface functions such as screens,
reports or data transmission files in any format other than
that specified by DST from time to time. Notwithstanding the
foregoing, DST makes no representation or warranty as to the
ability of any hardware, firmware, software, products or
services provided to DST by any other party to manipulate or
to process date data, or as to the functionality of any DST
software (including without limitation the TA2000 System) in
circumstances where data received from any third party system
(including without limitation that
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of Fund and its Authorized Persons, agents or customers) is
invalid, incorrect or otherwise corrupt.
10. Recapitalization or Readjustment.
In case of any recapitalization, readjustment or other change in the
capital structure of Fund requiring a change in the form of stock
certificates, DST will, upon agreement with Fund as to the charges to
apply thereto, issue or register certificates in the new form in
exchange for, or in transfer of, the outstanding certificates in the
old form, upon receiving:
A. Written instructions from an officer of Fund;
B. Certified copy of the amendment to the Articles of
Incorporation or other document effecting the change;
C. Certified copy of the order or consent of each governmental or
regulatory authority required by law to the issuance of the
stock in the new form, and an opinion of counsel that the
order or consent of no other government or regulatory
authority is required;
D. Specimens of the new certificates in the form approved by the
Board of Directors or Trustees of Fund, with a certificate of
the Secretary of Fund as to such approval;
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E. Opinion of counsel for Fund stating:
(1) The status of the shares of stock of Fund in the new
form under the Securities Act of 1933, as amended and
any other applicable federal or state statute; and
(2) That the issued shares in the new form are, and all
unissued shares will be, when issued, validly issued,
fully paid and nonassessable by the Fund.
11. Stock Certificates.
Fund will furnish DST with a sufficient supply of blank stock
certificates and from time to time will renew such supply upon the
request of DST. Such certificates will be signed manually or by
facsimile signatures of the officers of Fund authorized by law and by
bylaws to sign stock certificates and, if required, will bear the
corporate seal or facsimile thereof.
12. Death, Resignation or Removal of Signing Officer.
Fund will file promptly with DST written notice of any change in the
officers authorized to sign stock certificates, written instructions or
requests, together with two certificates of the Secretary or Clerk
bearing the specimen signature of each newly authorized officer. In
case any officer of Fund who has signed manually or whose facsimile
signature has been affixed to blank stock certificates dies, resigns,
or is removed prior to the issuance of such certificates, DST may issue
or register such stock certificates as the stock certificates of Fund
notwithstanding such death, resignation, or removal, until specifically
directed to the contrary by Fund in writing. In the absence of such
direction, Fund will file promptly with DST such approval, adoption, or
ratification as may be required by law.
13. Future Amendments of Charter and Bylaws.
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Fund will promptly file with DST copies of all material amendments to
its Articles of Incorporation or Declaration of Trust, as applicable,
or bylaws made after the date of this Agreement.
14. Instructions, Opinion of Counsel and Signatures.
At any time DST may apply to any person authorized by Fund, including
without limitation the duly authorized representative of any Authorized
Person and any Authorized Personnel set forth on Exhibit D to this
Agreement, to give instructions to DST, and may with the approval of a
Fund officer consult with legal counsel for Fund or its own legal
counsel at the expense of Fund, with respect to any matter arising in
connection with the agency and it will not be liable for any action
taken or omitted by it in good faith in reliance upon such instructions
or upon the opinion of such counsel. DST will be protected in acting
upon any paper or document reasonably believed by it to be genuine and
to have been signed by the proper person or persons and will not be
held to have notice of any change of authority of any person, until
receipt of written notice thereof from Fund. It will also be protected
in recognizing stock certificates which it reasonably believes to bear
the proper manual or facsimile signatures of the officers of Fund, and
the proper countersignature of any former Transfer Agent or Registrar,
or of a present or former co-Transfer Agent or co-Registrar.
15. Force Majeure and Disaster Recovery Plans.
A. DST SHALL NOT BE RESPONSIBLE OR LIABLE FOR ITS FAILURE OR
DELAY IN PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT
ARISING OUT OF OR CAUSED, DIRECTLY OR INDIRECTLY, BY
CIRCUMSTANCES BEYOND ITS REASONABLE CONTROL, INCLUDING,
WITHOUT LIMITATION: ANY
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INTERRUPTION, LOSS OR MALFUNCTION OR ANY UTILITY,
TRANSPORTATION, COMPUTER (HARDWARE OR SOFTWARE) OR
COMMUNICATION SERVICE; INABILITY TO OBTAIN LABOR, MATERIAL,
EQUIPMENT OR TRANSPORTATION, OR A DELAY IN MAILS; GOVERNMENTAL
OR EXCHANGE ACTION, STATUTE, ORDINANCE, RULINGS, REGULATIONS
OR DIRECTION; WAR, STRIKE, RIOT, EMERGENCY, CIVIL DISTURBANCE,
TERRORISM, VANDALISM, EXPLOSIONS, LABOR DISPUTES, FREEZES,
FLOODS, FIRES, TORNADOS, ACTS OF GOD OR PUBLIC ENEMY,
REVOLUTIONS, OR INSURRECTION; OR ANY OTHER CAUSE, CONTINGENCY,
CIRCUMSTANCE OR DELAY NOT SUBJECT TO DST'S CONTROL WHICH
PREVENTS OR HINDERS DST'S PERFORMANCE HEREUNDER.
B. DST currently maintains an agreement with a third party
whereby DST is to be permitted to use on a "shared use" basis
a "hot site" (the "Recovery Facility") maintained by such
party in event of a disaster rendering the DST Facilities
inoperable. DST has developed and is continually revising a
business contingency plan (the "Business Contingency Plan")
detailing which, how, when, and by whom data maintained by DST
at the DST Facilities will be installed and operated at the
Recovery Facility. Provided Fund is paying its pro rata
portion of the charge therefor, DST would, in event of a
disaster rendering the DST Facilities inoperable, use
reasonable efforts to convert the Systems containing the
designated Fund data to
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the computers at the Recovery Facility in accordance with the
then current Business Contingency Plan.
C. DST also currently maintains, separate from the area in which
the operations which provide the services to Fund hereunder
are located, a Crisis Management Center consisting of phones,
computers and the other equipment necessary to operate a full
service transfer agency business in the event one of its
operations areas is rendered inoperable. The transfer of
operations to other operating areas or to the Crisis
Management Center is also covered in DST's Business
Contingency Plan.
16. Certification of Documents.
The required copy of the Articles of Incorporation or Declaration of
Trust of Fund and copies of all amendments thereto will be certified by
the Secretary of State (or other appropriate official) of the State of
Incorporation, and if such Articles of Incorporation or Declaration of
Trust and amendments are required by law to be also filed with a
county, city or other officer of an official body, a certificate of
such filing will appear on the certified copy submitted to DST. A copy
of the order or consent of each governmental or regulatory authority
required by law to the issuance of the stock will be certified by the
Secretary or Clerk of such governmental or regulatory authority, under
proper seal of such authority. The copy of the Bylaws and copies of all
amendments thereto, and copies of resolutions of the Board of Directors
or Trustees of Fund, as applicable, will be certified by the Secretary
or Clerk or an Assistant Secretary or Clerk of Fund under Fund's seal.
17. Records.
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained
pursuant to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under
the Investment Company Act of 1940, if any.
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18. Disposition of Books, Records and Canceled Certificates.
DST may send periodically to Fund, or to where designated by the
Secretary or an Assistant Secretary of Fund, all books, documents, and
records no longer deemed needed for current purposes and all stock
certificates which have been canceled in transfer or in exchange, upon
the understanding that such books, documents, records, and stock
certificates will be maintained by Fund under and in accordance with
the requirements of Section 17Ad-7 adopted under the Securities
Exchange Act of 1934. Such materials will not be destroyed by Fund
without the consent of DST (which consent will not be unreasonably
withheld), but will be safely stored for possible future reference and
maintained, preserved and made available to DST and the U.S. Securities
and Exchange Commission in accordance with the requirement of Sections
17Ad-7 and 17 C.F.R. Section 240.17Ad-7.
19. Provisions Relating to DST as Transfer Agent.
A. DST will make original issues of stock certificates upon written
request of an officer of Fund, and upon mutual agreement as to the
charges to apply thereto and being furnished with a certified copy
of a resolution of the Board of Directors or Trustees authorizing
such original issue, an opinion of counsel as outlined in Section
1.G. of this Agreement, any documents required by Sections 5. or 10.
of this Agreement, and necessary funds for the payment of any
original issue tax.
B. Before making any original issue of certificates, Fund will furnish
DST with sufficient funds to pay all required taxes on the original
issue of the stock, if any. Fund will furnish DST such evidence as
may be required by DST to show the actual value of the stock. If no
taxes are payable, DST will be furnished with an opinion of outside
counsel to that effect.
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C. Shares of stock will be transferred and new certificates issued in
transfer, or, except in the case of closed-end funds, shares of
stock will be accepted for redemption and funds remitted therefor,
or book entry transfer will be effected, upon surrender of the old
certificates in form or receipt by DST of instructions deemed by DST
properly endorsed for transfer or, except in the case of closed-end
funds, redemption accompanied by such documents as DST may deem
necessary to evidence the authority of the person making the
transfer or redemption. DST reserves the right to refuse to transfer
or redeem shares until it is satisfied that the endorsement or
signature on the certificate or any other document is valid and
genuine, and for that purpose, unless Fund has instructed DST not to
require a signature guarantee, DST may require a guaranty of
signature in accordance with the Procedures. DST shall have the
right to refuse to transfer or redeem shares until it is satisfied
that the requested transfer or redemption is legally authorized, and
it will incur no liability for the refusal in good faith to make
transfers or redemptions which, in its judgment, are improper or
unauthorized. DST may, in effecting transfers or redemptions, rely
upon Simplification Acts, Uniform Commercial Code, or other statutes
which protect it and Fund in not requiring complete fiduciary
documentation. In cases in which DST is not directed or otherwise
required to maintain the consolidated records of shareholder's
accounts, DST will not be liable for any loss which may arise by
reason of not having such records.
D. When mail is used for delivery of stock certificates, DST will
forward stock certificates in "nonnegotiable" form by first class or
registered mail and stock certificates in "negotiable" form by
registered mail, all such mail deliveries to be covered while in
transit to the addressee by insurance arranged for by DST.
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E. DST will issue and mail subscription warrants, certificates
representing stock dividends, exchanges or split ups, or act as
Conversion Agent upon receiving written instructions from any
officer of Fund and such other documents as DST deems necessary upon
agreement between DST and Fund as to the charges to apply thereto.
F. DST will issue, transfer, and split up certificates and will issue
certificates of stock representing full shares upon surrender of
scrip certificates aggregating one full share or more when presented
to DST for that purpose upon receiving written instructions from an
officer of Fund and such other documents as DST may deem necessary.
G. DST may issue new certificates in place of certificates represented
to have been lost, destroyed, stolen or otherwise wrongfully taken
upon receiving instructions from Fund and indemnity satisfactory to
DST and Fund, and may issue new certificates in exchange for, and
upon surrender of, mutilated certificates. Such instructions from
Fund will be in such form as will be approved by the Board of
Directors or Trustees of Fund and will be in accordance with the
provisions of law and the bylaws of Fund governing such matter.
H. DST will supply a shareholder's list to Fund for its annual meeting
upon receiving a request from an officer of Fund. It will also
supply lists at such other times as may be requested by an officer
of Fund, subject to payment of applicable charges therefor.
I. Upon receipt of written instructions of an officer of Fund, DST will
address and mail notices to shareholders.
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J. In case of any request or demand for the inspection of the stock
books of Fund or any other books in the possession of DST, DST will
endeavor to notify Fund and to secure instructions as to permitting
or refusing such inspection. DST reserves the right, however, to
exhibit the stock books or other books to any person in case it is
advised by its counsel that it may be held responsible for the
failure to exhibit the stock books or other books to such person.
20. Provisions Relating to Dividend Disbursing Agency.
A. DST will, at the expense of Fund, provide a special form of check
containing the imprint of any device or other matter desired by
Fund. Said checks must, however, be of a form and size convenient
for use by DST.
B. If Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be
furnished to DST within a reasonable time prior to the date of
mailing of the dividend checks, at the expense of Fund.
C. If Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to DST,
but the size and form of said envelopes will be subject to the
approval of DST. If stamped envelopes are used, they must be
furnished by Fund; or if postage stamps are to be affixed to the
envelopes, the stamps or the cash necessary for such stamps must be
furnished by Fund in advance of such mailing.
D. DST is hereby authorized to open and to maintain at a Bank
acceptable to Fund one or more non-interest bearing deposit accounts
as Agent for Fund, into which the funds for payment of dividends,
distributions, redemptions or other disbursements provided for
hereunder will be deposited, and against which checks will be drawn.
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E. DST is authorized and directed to stop payment of checks theretofore
issued hereunder, but not presented for payment, when the payees
thereof allege either that they have not received the checks or that
such checks have been mislaid, lost, stolen, destroyed or through no
fault of theirs, are otherwise beyond their control, and cannot be
produced by them for presentation and collection, and, to issue and
deliver duplicate checks in replacement thereof.
21. Assumption of Duties By Fund or Agents Designated By Fund.
A. Fund or its designated agents other than DST may assume certain
duties and responsibilities of DST or those services of Transfer
Agent and Dividend Disbursement Agent as those terms are referred to
in Section 4.D. of this Agreement including but not limited to
answering and responding to telephone inquiries from shareholders
and brokers, accepting shareholder and broker instructions (either
or both oral and written) and transmitting orders based on such
instructions to DST, preparing and mailing confirmations, obtaining
certified TIN numbers, classifying the status of shareholders and
shareholder accounts under applicable tax law, establishing
shareholder accounts on the Systems and assigning social codes and
Taxpayer Identification Number codes thereof, and disbursing monies
of Fund, said assumption to be embodied in writing to be signed by
both parties.
B. To the extent Fund or its agent or affiliate assumes such duties and
responsibilities, DST shall be relieved from all responsibility and
liability therefor and is hereby indemnified and held harmless
against any liability therefrom and in the same manner and degree as
provided for in Section 8 hereof.
C. DST MAY, SUBJECT TO THE WRITTEN CONSENT OF THE FUND, APPOINT OTHER
PARTIES QUALIFIED TO PERFORM TRANSFER AGENCY SERVICES ("SUB-TRANSFER
AGENTS") TO CARRY OUT
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SOME OR ALL OF ITS RESPONSIBILITIES UNDER THIS AGREEMENT; PROVIDED,
HOWEVER, THAT A SUB-TRANSFER AGENT SHALL BE THE AGENT OF DST AND NOT
THE AGENT OF THE FUND, AND THAT UNLESS THE SUB-TRANSFER AGENT IS
APPOINTED AT THE DIRECTION OF THE FUND, DST SHALL BE FULLY
RESPONSIBLE FOR THE ACTS OF A SUB-TRANSFER AGENT AND SHALL NOT BE
RELIEVED OF ANY OF ITS RESPONSIBILITIES HEREUNDER BY THE APPOINTMENT
OF A SUB-TRANSFER AGENT.
D. Initially Fund shall be responsible for the following: (i) answering
and responding to phone calls from shareholders and broker-dealers,
and (ii) scanning items into the AWD(TM) System as such calls or
items are received by Fund, and (iii) entering and confirming wire
order trades.
22. Termination of Agreement.
A. This Agreement shall be in effect from the date set forth on the
first page (the "Effective Date") through May 31, 2002 and
thereafter may be terminated by either party upon receipt of six (6)
months written notice from the other party, provided, however, that
the effective date of any termination shall not occur during the
period from December 15 through March 30 of any year to avoid
adversely impacting year end.
B. Each party, in addition to any other rights and remedies, shall have
the right to terminate this Agreement forthwith upon the occurrence
at any time of any of the following events with respect to the other
party:
(1) Any interruption or cessation of operations by the other party
or its assigns which materially interferes with the business
operation of the first party;
(2) The bankruptcy of the other party or its assigns or the
appointment of a receiver for the other party or its assigns;
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(3) Failure by the other party or its assigns to perform its
duties in accordance with the Agreement, which failure
materially adversely affects the business operations of the
first party and which failure continues for thirty (30) days
after receipt of written notice from the first party; and
(4) The acquisition of a controlling interest in DST Systems,
Inc. or its assigns, by any broker, dealer, investment
adviser or investment company except as may presently exist.
C. In the event of any termination, Fund will promptly pay DST all
amounts due to DST hereunder. In addition, if this Agreement is
terminated by Fund for any reason other than those set forth in
Section 22.B. hereof, then Fund shall pay to DST on the last
business day of each of the next three (3) whole or partial calendar
months (commencing with the last day of the month in which
termination actually occurs if termination does not occur on the
last business day of the month, and with the last business day of
the immediately following month if termination actually occurs on
the last business day of a month) an amount equal to the average
monthly fees, exclusive of the out-of-pocket expenses, paid by or on
behalf of each terminating party under the affected Agreement during
the six (6) calendar months preceding the month during which the
termination notice was received by DST.
D. If the termination date set forth in the original termination notice
is extended by any terminating party (which extension shall require
the agreement of DST), then the fees and charges payable by the
terminating party under this Agreement shall increase by twenty
percent (20%) during the period commencing with the original
termination date set forth in the initial termination notice and
concluding with the day upon which termination actually occurs.
These provisions are in addition to any
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other contractual provision or compensation agreements that may be
in existence at the time of an actual transfer.
E. DST shall, upon termination of this Agreement and receipt of payment
of all outstanding bills and invoices, deliver to the successor so
specified or appointed, or to Fund, at DST's office, all records
then held by DST hereunder, all funds and other properties of Fund
deposited with or held by DST hereunder. In the event no written
order designating a successor (which may be Fund) shall have been
delivered to DST on or before the date when such termination shall
become effective, then DST shall deliver the records, funds and
properties of Fund to a bank or trust company at the selection of
DST or if a satisfactory successor cannot be obtained, DST may
deliver the assets to Fund, at DST's offices or as otherwise agreed
to between the parties in any event upon written notice to Fund.
Thereafter Fund or such bank or trust company shall be the successor
under this Agreement and shall be entitled to reasonable
compensation for its services. Notwithstanding the foregoing
requirement as to delivery upon termination of this Agreement, DST
may make any other delivery of the funds and property of Fund which
shall be permitted by the Investment Company Act of 1940 and Fund's
Articles of Incorporation, Declaration of Trust, and/or Bylaws then
in effect. Except as otherwise provided herein, neither this
Agreement nor any portion thereof may be assigned by DST without the
consent of Fund.
F. In the event of termination, DST shall provide reasonable assistance
to Fund and its designated successor transfer agent and other
information relating to its services provided hereunder (subject to
the recompense of DST for such assistance at its standard rates and
fees for personnel then in effect at that time); provided, however,
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as used herein "reasonable assistance" and "other information" shall
not include assisting any new service or system provider to modify,
alter, enhance, or improve its system or to improve, enhance, or
alter its current, or to provide any new, functionality or to
require DST to disclose any DST Protected Information, as defined in
Section 23 of this Agreement, or any information which is otherwise
confidential to DST. DST's assistance shall be billed at its then
current rates. DST's present rates, which are subject to annual
increase as DST's labor costs for such personnel increase, are as is
set forth in Exhibit B to this Agreement.
G. Nothing in this Agreement is intended to, nor does it, compel DST to
disclose non-public information concerning its operations or
operating systems or to provide programming assistance or
information which might tend to improve, enhance, or add
functionality to anyone else's operating systems.
23. Confidentiality.
A. DST agrees that, except as provided in the last sentence of Section
19.J hereof, or as otherwise required by law, DST will keep
confidential all records of and information in its possession
relating to Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or
with the consent of Fund.
B. Fund agrees to keep confidential all provisions, terms and
conditions of this Agreement, all financial statements and other
financial records (other than statements and records relating solely
to Fund's business dealings with DST) and all manuals, systems and
other technical information and data, not publicly disclosed,
relating to DST's operations and programs furnished to it by DST
pursuant to this
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Agreement and will not disclose the same to any person except at the
request or with the consent of DST.
C. Fund acknowledges that DST has proprietary rights in and to the
computerized data processing recordkeeping system used by DST to
perform services hereunder including but not limited to the
maintenance of shareholder accounts and records, processing of
related information and generation of output, the Systems, including
without limitation any changes or modifications of the Systems and
any other DST programs, data bases, supporting documentation, or
procedures (collectively "DST Protected Information") which Fund's
access to the Systems or software or DST Facilities may permit Fund
or its employees or agents to become aware of or to access and that
the DST Protected Information constitutes confidential material and
trade secrets of DST. Fund agrees to maintain the confidentiality of
the DST Protected Information.
D. Fund acknowledges that any unauthorized use, misuse, disclosure or
taking of DST Protected Information which is confidential as
provided by law, or which is a trade secret, residing or existing
internal or external to a computer, computer system, or computer
network, or the knowing and unauthorized accessing or causing to be
accessed of any computer, computer system, or computer network, may
be subject to civil liabilities and criminal penalties under
applicable state law. Fund will advise all of its employees and
agents who have access to any DST Protected Information or to any
computer equipment capable of accessing DST hardware or software of
the foregoing.
E. Fund acknowledges that disclosure of the DST Confidential
Information may give rise to an irreparable injury to DST
inadequately compensable in damages.
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Accordingly, DST may seek (without the posting of any bond or other
security) injunctive relief against the breach of the foregoing
undertaking of confidentiality and nondisclosure, in addition to any
other legal remedies which may be available, and Fund consents to
the obtaining of such injunctive relief. All of the undertakings and
obligations relating to confidentiality and nondisclosure, whether
contained in this Section or elsewhere in this Agreement shall
survive the termination or expiration of this Agreement for a period
of ten (10) years.
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24. Changes and Modifications.
A. During the term of this Agreement DST will use on behalf of Fund
without additional cost all modifications, enhancements, or changes
which DST may make to the Systems in the normal course of its
business and which are applicable to functions and features offered
by Fund, unless substantially all DST clients are charged separately
for such modifications, enhancements or changes, including, without
limitation, substantial system revisions or modifications
necessitated by changes in existing laws, rules or regulations. Fund
agrees to pay DST promptly for modifications and improvements which
are charged for separately at the rate provided for in DST's
standard pricing schedule which shall be identical for substantially
all clients, if a standard pricing schedule shall exist. If there is
no standard pricing schedule, the parties shall mutually agree upon
the rates to be charged.
B. DST shall have the right, at any time and from time to time, to
alter and modify any systems, programs, procedures or facilities
used or employed in performing its duties and obligations hereunder;
provided that Fund will be notified as promptly as possible prior to
implementation of such alterations and modifications and that no
such alteration or modification or deletion shall materially
adversely change or affect the operations and procedures of Fund in
using or employing the Systems or DST Facilities hereunder or the
reports to be generated by such system and facilities hereunder,
unless Fund is given thirty (30) days prior notice to allow Fund to
change its procedures and DST provides Fund with revised operating
procedures and controls.
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C. All enhancements, improvements, changes, modifications or new
features added to the Systems however developed or paid for shall
be, and shall remain, the confidential and exclusive property of,
and proprietary to, DST.
25. Subcontractors.
Nothing herein shall impose any duty upon DST in connection with or
make DST liable for the actions or omissions to act of unaffiliated
third parties such as, by way of example and not limitation, the
banks at which the deposit accounts are maintained, The National
Securities Clearing Corporation, airborne services, the U.S. mails
and telecommunication companies, provided, if DST selected such
company, DST shall have exercised due care in selecting the same.
26. Limitations on Liability.
A. If Fund is comprised of more than one Portfolio, each Portfolio
shall be regarded for all purposes hereunder as a separate party
apart from each other Portfolio. Unless the context otherwise
requires, with respect to every transaction covered by this
Agreement, every reference herein to Fund shall be deemed to relate
solely to the particular Portfolio to which such transaction
relates. Under no circumstances shall the rights, obligations or
remedies with respect to a particular Portfolio constitute a right,
obligation or remedy applicable to any other Portfolio. The use of
this single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical convenience only and
shall not constitute any basis for joining the Portfolios for any
reason.
B. Notice is hereby given that a copy of Fund's Articles of
Incorporation or Trust Agreement (as applicable) and all amendments
thereto is on file with the Secretary of State of the state of its
organization; that this Agreement has been executed on
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behalf of Fund by the undersigned duly authorized representative of
Fund in his/her capacity as such and not individually; and that the
obligations of this Agreement shall only be binding upon the assets
and property of Fund and shall not be binding upon any director,
trustee, officer or shareholder of Fund individually.
27. Notices.
All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be validly given, made or served
if in writing and delivered personally, sent by mail, registered or
certified, return receipt requested, postage prepaid, by telegram or by
facsimile transmission:
If to Fund:
The ING Pilgrim Family of Funds
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Rob Naka, Senior Vice President
And if to DST:
DST Systems, Inc.
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▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Group Vice President
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With a copy of non-operational notices to:
DST Systems, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Legal Department
or to such other address as DST or Fund may from time to time designate in
writing delivered as provided above.
28. Miscellaneous.
A. This Agreement is executed and delivered in the State of Missouri
and shall be construed according to, and the rights and liabilities
of the parties hereto shall be governed by, the laws of the State of
Missouri, excluding that body of law applicable to choice of law.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, all indemnifications and any
limitations on liability set forth in this Agreement are intended to
and shall continue after and survive the expiration, termination or
cancellation of this Agreement until any statute of limitations
applicable to the matter at issues shall have expired.
D. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and
executed each party hereto.
E. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
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F. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and
not be affected, and the rights and obligations of the parties shall
be construed and enforced as if this Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
H. This Agreement may not be assigned any party hereto without prior
written consent of the other parties.
I. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between Fund
and DST. It is understood and agreed that all services performed
hereunder by DST shall be as an independent contractor and not as an
employee of Fund. This Agreement is between DST and Fund and neither
this Agreement nor the performance of services under it shall create
any rights in any third parties. There are no third party
beneficiaries hereto.
J. Except as specifically provided herein, this Agreement does not in
any way affect any other agreements entered into among the parties
hereto and any actions taken or omitted by any party hereunder shall
not affect any rights or obligations of any other party hereunder.
K. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed
as a continuing or permanent waiver of any such terms, conditions,
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rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred.
L. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or agreement or
proposal with respect to the subject matter hereof, whether oral or
written.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers, to be effective as of the day and
year first above written.
DST SYSTEMS, INC.
By:______________________________________
Title:___________________________________
ING PILGRIM
By:______________________________________
Title:___________________________________
Title:___________________________________
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EXHIBIT A
Open/ State of Taxpayer
Taxpayer/Fund Name Type of Organization Closed Organization I.D. No.
------------------ -------------------- ------ ------------ --------
ING Pilgrim business trust
____________
ING Pilgrim a series of ING Pilgrim
____________ Fund _________
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EXHIBIT B,p.1
DST SYSTEMS, INC.
PILGRIM TRANSFER AGENCY FEE SCHEDULE
EFFECTIVE AUGUST 1, 2000 - MAY 31, 2002
ASSET BASED FEES:
NET ASSETS PER PORTFOLIO:
$0 - $100,000,000 9.0 basis pts per year
$100,000,001- $300,000,000 8.5 basis pts per year
$300,000,001 - $500,000,000 7.5 basis pts per year
Greater than $500,000,000 7.25 basis pts per year
(Applies to all Lexington and Pilgrim Cusips, including new Q share
portfolio classes established as a result of the Northstar conversion)
EXCEPTIONS:
Prime Rate Trust 2.4 basis pts per year
Bank & Thrift 24.2 basis pts per year
Pilgrim Investment Plan $7,200 per year
Northstar Funds Covered under separate agreement
BUNDLED PRODUCTS AND SERVICES:
The above asset fees cover a comprehensive bundle of products and
services. The following products and services are not covered by the
asset fees and will continue to be billed separately using the
current rates, subject to current allowable periodic increases:
* AWD License Fees
* Escheatment
* Programming
* FANMail
* Vision
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EXHIBIT B,p.2
Additional products and services not currently utilized would be
priced separately and would be billed in addition to the asset fees.
*Computer/Technical Personnel (2000 Rates):
Business Analyst/Tester:
Dedicated - $79,040 per year
On Request - $72.80 per hour
COBOL Programmer:
Dedicated - $129,480 per year
On Request - $100.88 per hour
Workstation Programmer:
Dedicated - $157,040 per year
On Request - $128.96 per hour
*Full Service Support (2000 Rates):
Senior Staff Support - $70.00 per hour
Staff Support - $50.00 per hour
Clerical Support - $40.00 per hour
RATE ADJUSTMENT TRIGGERS:
The above asset fees would be adjusted monthly based on the
following triggers:
Should either "Average Assets per Account" or "Average Assets per
CUSIP" decrease 10% in a given month from their baseline March
through May 2000 averages, the basis point fee rates would be
adjusted up using the formula: Previous Rate divided by .9. When/if
a rate adjustment is made, both trigger ratios would be reset at new
levels equal to 10% below their previous level. Subsequent
adjustments to the rates would be triggered should these ratios
decrease in additional 10% increments. Downward adjustments would be
made to the rates using the same formula should the trigger ratios
increase in 10% increments, but only to the extent that previous
upward rate adjustments have been made. The basis point fee rates
could not be adjusted below the original rates listed above.
Average Assets per Account and Average Assets per CUSIP will be
provided at a later date.
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EXHIBIT B,p.3
NOTES TO THE ABOVE FEE SCHEDULE
A. The above schedule does not include reimbursable expenses that are
incurred on the Fund's behalf. Examples of reimbursable expenses include
but are not limited to those set forth on Exhibit C to this Agreement.
Reimbursable expenses are billed separately from service fees on a monthly
basis.
B. Any fees or reimbursable expenses not paid within 30 days of the date of
the original invoice will be charged a late payment fee of 1.5% per month
until payment is received.
C. The above fees, except for those indicated by an "*", are guaranteed
through May 31, 2002. All items marked by an "*" are subject to change
with 60 day notice.
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EXHIBIT B.1,p.1
TA2000 VOICE SYSTEM
FEE SCHEDULE
PER CALL SERVICE FEE
Utilization of DST's TA2000 Voice System is based on a service fee of $.20 per
call. Each call has a maximum duration of seven (7) minutes. This charge is a
flat rate regardless of the number or type of transactions that a shareholder
processes during the call. A given call could result in inquiries and/or
transactions being processed for various funds in the complex. Therefore, on a
monthly basis, DST will report the number of inquiries and/or transactions
processed by fund. A percentage of the total will be derived and reported for
each fund. As a result of this process, DST will allocate the charges among the
individual funds.
MULTIPLE CALL FLOWS
An additional fee of $500 per month will be charged for each additional call
flow that requires different flows, functions, vocabulary, processing, rules or
access method. An additional fee of $200 per month will be charged for each
additional call flow that is identical in flows, functions, vocabulary,
processing rules or access method.
MINIMUM MONTHLY CHARGE
DST's commitment to the reliability and continued enhancement of the TA2000
Voice System necessitates a minimum monthly charge for the service. The minimum
monthly charge will only be assessed when it is greater than the monthly service
fees. The minimum monthly charge will be implemented on a graduated basis based
on the number of cusips and shareholders in a fund complex and is the sum of the
cusip and account charges. The schedule for this charge is as follows:
YEARS CHARGE PER CHARGE PER
OF CUSIP AUTHORIZED SHAREHOLDER
SERVICE FOR SERVICE* ACCOUNT**
1 $ 50 $.002
2 $ 75 $.003
3 $100 $.004
* CUSIPS ADDED TO THE SERVICE will be subject to the same minimums
being charged to the other cusips in the complex at the time the
cusips are added.
** THE PER ACCOUNT CHARGE is based on the total number of shareholder
accounts in authorized cusips at the end of each month.
OUT OF POCKET COSTS
Each fund complex will require a unique WATS number for their shareholders to
call. Each WATS number will require a specific number of trunks to service a
given volume of shareholder calls. All installation and monthly usage charges
associated with these will be billed through monthly out-of-pocket invoices.
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EXHIBIT B.2,p.1
NSCC FEES AND OUT-OF-POCKET EXPENSES
DST Fees
DST charges $1,500 per cusip per year for the NSCC platform
Settling Bank Fees
Fund may be charged fees by the Settling Bank at which the net settlement
account resides for monthly maintenance of this account. These are
negotiated directly between Fund and the Settling Bank.
NSCC Participant Fees
The NSCC charges $40 per month per management company for CPU
access/shared line costs.
A combined participant base fee of $200 per month is charged for the
following services:
Fund/SERV:
The NSCC charges an activity charge of $.30 per inputted transaction.
Transactions include purchases, redemptions and exchanges.
Networking: The NSCC charges the following activity fee:
- $.02 per account for funds paying dividends on a monthly basis
- $.01 per account for funds paying dividends other than monthly
Commission Settlement: The NSCC charges the following processing fee:
- $.30 per hundred records, per month, for one to 500,000
records; there is a $50 per month minimum processing charge
- $.20 per hundred records, per month, for 500,001 to 1,000,000
records
- $.10 per hundred records, per month, for 1,000,001 records and
above
Note: Participant fees are cumulative when Fund/SERV, Networking and/or
Commission Settlement are used in conjunction with each other.
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EXHIBIT C
REIMBURSABLE EXPENSES
Forms
Postage (to be paid in advance if so requested)
Mailing Services
Computer Hardware and Software - specific to Fund or installed at remote
site at Fund's direction
Telecommunications Equipment and Lines/Long Distance Charges
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm/CD ROM
Freight Charges
Printing
Bank Wire and ACH Charges
Proxy Processing - per proxy mailed not including postage
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation and Certification
Tax Certification Mailings (e.g., W-8 & W-9)
(Postage associated with the return envelope is included)
N.S.C.C. Communications Charge (Fund/Serv and Networking)
Record Storage (hardcopy/microfiche/on-call)
Second Site Disaster Currently $.10
Backup Fee (per account) (guaranteed not to
exceed $.11 through
12/31/2000 provided
the 48 hour recovery
standard is not
shortened)
Transmission of Statement Data for Currently $.035/per
Remote Processing record
Travel, Per Diem and other Billables Incurred by DST personnel traveling
to, at and from Fund at the request of Fund
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EXHIBIT D
AUTHORIZED PERSONNEL
Pursuant to Section 8.A. of the Agency Agreement between Fund and DST (the
"Agreement"), Fund authorizes the following Fund personnel to provide
instructions to DST, and receive inquiries from DST in connection with the
Agreement:
Name Title
_____________________________ ________________________________
_____________________________ ________________________________
_____________________________ ________________________________
_____________________________ ________________________________
_____________________________ ________________________________
_____________________________ ________________________________
_____________________________ ________________________________
_____________________________ ________________________________
This Exhibit may be revised by Fund by providing DST with a substitute Exhibit
B. Any such substitute Exhibit B shall become effective twenty-four (24) hours
after DST's receipt of the document and shall be incorporated into the
Agreement.
ACKNOWLEDGMENT OF RECEIPT:
PILGRIM ________________________
DST SYSTEMS, INC. Pilgrim __________________ Fund
By:______________________________ By:______________________________________
Title:___________________________ Title:___________________________________
Date:____________________________ Date:____________________________________
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