1
EXHIBIT (9)
2
TRANSFER AGENCY AND FUND ACCOUNTING AGREEMENT
---------------------------------------------
This Agreement is made as of June 18, 1993, between The Cardinal Group
(the "Group"), an Ohio business trust having its principal place of business at
000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000, and Cardinal Management Corp.
("Cardinal"), an Ohio corporation having its principal place of business at 000
Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Group desires that Cardinal perform certain services for
the Group, and for each of its series denominated as funds identified in
Schedule A hereto, as such Schedule shall be amended from time to time
(individually referred to herein as a "Fund" and collectively as the "Funds");
and
WHEREAS, Cardinal is willing to perform such services on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
Section 1. TRANSFER AGENT SERVICES. Cardinal shall perform for
the Group the transfer agent services set forth in Schedule B hereto, including
services as transfer agent.
Cardinal also agrees to perform for the Group such special
services incidental to the performance of the services enumerated in this
Section 1 as agreed to by the parties from time to time. Cardinal shall
perform such additional services as are provided on an amendment to Schedule B
hereof, in consideration of such fees as the parties hereto may agree.
Cardinal may, in its discretion, appoint in writing other
parties qualified to perform transfer agency and shareholder services
reasonably acceptable to the Group (individually, a "Sub-transfer Agent") to
carry out some or all of its responsibilities under this Agreement with respect
to a Fund; provided, however, that the Sub-transfer Agent shall be the agent of
Cardinal and not the agent of the Group or such Fund, and that Cardinal shall
be fully responsible for the acts of such Sub-transfer Agent and shall not be
relieved of any of its responsibilities hereunder by the appointment of such
Sub-transfer Agent.
Section 2. FUND ACCOUNTING SERVICES. Cardinal will keep and
maintain the following books and records of each Fund pursuant to Rule 31a-1
(the "Rule") under the Investment Company Act of 1940, as amended (the "1940
Act"):
(a) Journals containing an itemized daily record
in detail of all purchases and sales of securities, all
receipts and disbursements of cash and all other debits and
credits, as required by subsection (b)(1) of the Rule;
3
(b) General and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income and expense
accounts, including interest accrued and interest received, as
required by subsection (b)(2)(i) of the Rule;
(c) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule; and
(d) A monthly trial balance of all ledger
accounts (except shareholder accounts) as required by
subsection (b)(8) of the Rule.
In addition to the maintenance of the books and records
specified above, Cardinal shall perform the following accounting services daily
for each Fund:
(a) Calculate the net asset value per share;
(b) Calculate the dividend and capital gain
distribution, if any;
(c) Calculate the yield;
(d) Reconcile cash movements with the Fund's
custodian;
(e) Affirm to the Fund's custodian all portfolio
trades and cash settlements;
(f) Verify and reconcile with the Fund's
custodian all daily trade activity;
(g) Provide the following reports:
(i) A current security position report;
(ii) A summary report of transactions and
pending maturities (including the principal, cost,
and accrued interest on each portfolio security in
maturity date order); and
(iii) A current cash position report
(including cash available from portfolio sales and
maturities and sales of a Fund's shares less cash
needed for redemptions and settlement of portfolio
purchases); and
(h) Such other similar services with respect to
a Fund as may be reasonably requested by the Group.
- 2 -
4
Cardinal shall perform the following accounting services for
each Fund at least monthly:
(a) Obtain actual dealer quotations, prices from
a pricing service, or matrix prices on all portfolio
securities (including those with less than 60 days to
maturity) in order to xxxx the entire portfolio to the market;
and
(b) Prepare an interim balance sheet, statement
of income and expense, and statement of changes in net assets
for the Fund.
Section 3. FEES. The Group shall pay Cardinal for the services
to be provided by Cardinal under this Agreement in accordance with, and in the
manner set forth, in Schedule C hereto. Fees for any additional services to be
provided by Cardinal pursuant to an amendment to Schedule C hereto shall be
subject to mutual agreement at the time such amendment to Schedule C is
proposed.
Section 4. REIMBURSEMENT OF EXPENSES. In addition to paying
Cardinal the fees described in Section 3 hereof, the Group agrees to reimburse
Cardinal for Cardinal's out-of-pocket expenses in providing services hereunder,
including without limitation the following:
(a) All freight and other delivery and bonding charges incurred by
Cardinal in delivering materials to and from the Group and in
delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by Cardinal in
communication with the Group, a Fund's investment adviser or
custodian, dealers, shareholders or others as required for
Cardinal to perform the services to be provided hereunder;
(c) Costs of postage, couriers, stock computer paper, statements,
labels, envelopes, checks, reports, letters, tax forms,
proxies, notices or other form of printed material which shall
be required by Cardinal for the performance of the services to
be provided hereunder;
(d) The cost of microfilm or microfiche of records or other
materials;
(e) Costs of pricing the portfolio securities of each Fund; and
(f) Any expenses Cardinal shall incur at the written direction of
a duly authorized officer of the Group.
- 3 -
5
Section 5. EFFECTIVE DATE. This Agreement shall become
effective with respect to a Fund as of the date first written above (or, if a
particular Fund is not in existence on that date, on the date an amendment to
Schedule A to this Agreement relating to that Fund is executed) (the "Effective
Date").
Section 6. TERM. This Agreement shall continue in effect,
unless earlier terminated by either party hereto as provided hereunder, until
June 18, 1993, and thereafter shall be renewed automatically for successive
one-year terms unless written notice not to renew is given by the non-renewing
party to the other party at least 60 days prior to the expiration of the
then-current term; provided, however, that after such termination, for so long
as Cardinal, with the written consent of the Group, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
Schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Fees and out-of-pocket expenses incurred by Cardinal but
unpaid by the Group upon such termination shall be immediately due and payable
upon and notwithstanding such termination. Subsequent to such termination,
Cardinal shall return to Group documents or records remaining in its
possession. Further, this Agreement is terminable with respect to a particular
Fund only upon mutual agreement of the parties hereto or for "cause" (as
defined below) by the party alleging "cause," in either case on not less than
60 days' notice by the Group's Board of Trustees or by Cardinal.
For purposes of this Agreement, "cause" shall mean (a) willful
misfeasance, bad faith, gross negligence, or reckless disregard on the part of
the party to be terminated with respect to its obligations and duties set forth
herein; (b) a final, unappealable judicial, regulatory or administrative ruling
or order in which the party to be terminated has been found guilty of criminal
or unethical behavior in the conduct of its business; (c) financial
difficulties on the part of the party to be terminated which are evidenced by
the authorization or commencement of, or involvement by way of pleading,
answer, consent, or acquiescence in, a voluntary or involuntary case under
Title 11 of the United States Code, as from time to time is in effect, or any
applicable law, other than said Title 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or alteration
of the rights of creditors; or (d) any circumstance which substantially impairs
the performance of the obligations and duties as contemplated herein of the
party to be terminated.
Section 7. UNCONTROLLABLE EVENTS. Cardinal assumes no
responsibility hereunder, and shall not be liable, for any damage, loss of
data, delay or any other loss whatsoever caused by events beyond its reasonable
control.
- 4 -
6
Section 8. LEGAL ADVICE. Cardinal shall notify the Group at any
time Cardinal believes that it is in need of the advice of counsel (other than
counsel in the regular employ of Cardinal or any affiliated companies) with
regard to Cardinal's responsibilities and duties pursuant to this Agreement;
and after so notifying the Group, Cardinal, at its discretion, shall be
entitled to seek, receive and act upon advice of legal counsel of its choosing,
and shall in no event be liable to the Group or any Fund or any shareholder or
beneficial owner of the Group for any action reasonably taken pursuant to such
advice.
Section 9. INSTRUCTIONS. Whenever Cardinal is requested or
authorized to take action hereunder pursuant to instructions from a shareholder
or a properly authorized agent of a shareholder ("shareholder's agent")
concerning an account in a Fund, Cardinal shall be entitled to rely upon any
certificate, letter or other instrument or communication, whether in writing,
by electronic or telephone transmission, believed by Cardinal to be genuine and
to have been properly made, signed or authorized by an officer or other
authorized agent of the Group or by the shareholder or shareholder's agent, as
the case may be, and shall be entitled to receive as conclusive proof of any
fact or matter required to be ascertained by it hereunder a certificate signed
by an officer of the Group or any other person authorized by the Group's Board
of Trustees or by the shareholder or shareholder's agent, as the case may be.
As to the services to be provided hereunder, Cardinal may rely
conclusively upon the terms of the most recent Prospectuses and Statements of
Additional Information of the Group relating to the Funds to the extent that
such services are described therein unless Cardinal receives written
instructions to the contrary in a timely manner from the Group.
Section 10. STANDARD OF CARE; INDEMNIFICATION. Cardinal shall
use its best efforts to ensure the accuracy of all services performed under
this Agreement, but shall not be liable to the Group for any action taken or
omitted by Cardinal in the absence of bad faith, willful misfeasance or
negligence. The Group agrees to indemnify and hold harmless Cardinal, its
employees, agents, directors, officers and nominees from and against any and
all claims, demands, actions and suits, whether groundless or otherwise, and
from and against any and all judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses of every nature and character arising
out of or in any way relating to Cardinal's actions taken or nonactions with
respect to the performance of services under this Agreement or based, if
applicable, upon reasonable reliance on information, records, instructions or
requests given or made to Cardinal by the Group, the investment adviser and on
any records provided by any custodian thereof; provided that this
indemnification shall not apply to actions or omissions of Cardinal in cases of
its own willful misfeasance or
- 5 -
7
negligence, and further provided that prior to confessing any claim against it
which may be the subject of this indemnification, Cardinal shall give the Group
written notice of and reasonable opportunity to defend against such claim in
its own name or in the name of Cardinal.
Section 11. RECORD RETENTION AND CONFIDENTIALITY. Cardinal shall
keep and maintain on behalf of the Group all books and records which the Group
or Cardinal is, or may be, required to keep and maintain pursuant to any
applicable statutes, rules and regulations, including without limitation Rules
31a-1 and 31a-2 under the 1940 Act relating to the maintenance of books and
records in connection with the services to be provided hereunder. Cardinal
further agrees that all such books and records shall be the property of the
Group and to make such records available for inspection by the Group or by the
Securities and Exchange Commission at reasonable times and otherwise to keep
confidential all books and records and other information relative to the Group
and its shareholders, except when requested to divulge such information by
duly-constituted authorities or court process, or requested by a shareholder
with respect to information concerning an account as to which such shareholder
has either a legal or beneficial interest or when requested by the Group, the
shareholder, or the dealer of record as to such account.
Section 12. REPORTS. Cardinal will furnish to the Group and to
its properly authorized auditors, investment advisers, examiners, distributors,
dealers, underwriters, salesmen, insurance companies and others designated by
the Group in writing, such reports at such times as are prescribed in Schedule
D attached hereto, or as subsequently agreed upon by the parties pursuant to an
amendment to Schedule D. The Group agrees to examine each such report or copy
promptly and will report or cause to be reported any errors or discrepancies
therein no later than three business days from the receipt thereof. In the
event that errors or discrepancies, except such errors and discrepancies as may
not reasonably be expected to be discovered by the recipient within three days
after conducting a diligent examination, are not so reported within the
aforesaid period of time, a report will for all purposes be accepted by and
binding upon the Group and any other recipient, and Cardinal shall have no
liability for errors or discrepancies therein and shall have no further
responsibility with respect to such report except to perform reasonable
corrections of such errors and discrepancies within a reasonable time after
requested to do so by the Group.
Section 13. RETURN OF RECORDS. Cardinal may at its option at any
time, and shall promptly upon the Group's demand, turn over to the Group and
cease to retain Cardinal's files, records and documents created and maintained
by Cardinal pursuant to this Agreement which are no longer needed by Cardinal
in the performance of its services or for its legal protection. If not so
turned over to the Group, such documents and records will be retained by
Cardinal for six
- 6 -
8
years from the year of creation. At the end of such six-year period, such
records and documents will be turned over to the Group unless the Group
authorizes in writing the destruction of such records and documents.
Section 14. BANK ACCOUNTS. The Group and the Funds shall
establish and maintain such bank accounts with such bank or banks as are
selected by the Group and as are necessary in order that Cardinal may perform
the services required to be performed hereunder. To the extent that the
performance of such services shall require Cardinal directly to disburse
amounts for payment of dividends, redemption proceeds or other purposes, the
Group and Funds shall provide such bank or banks with all instructions and
authorizations necessary for Cardinal to effect such disbursements.
Section 15. REPRESENTATIONS OF CARDINAL. Cardinal represents and
warrants that: (a) Cardinal has been in, and shall continue to be in,
substantial compliance with all provisions of law, including Section 17A(c) of
the Securities Exchange Act of 1934, as amended, required in connection with
the performance of its duties under this Agreement; and (b) the various
procedures and systems which Cardinal has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other
cause of the blank checks, records, and other data of the Group and Cardinal's
records, data, equipment facilities and other property used in the performance
of its obligations hereunder are adequate and that it will make such changes
therein from time to time as are required for the secure performance of its
obligations hereunder.
Section 16. INSURANCE. Cardinal shall notify the Group should
its insurance coverage with respect to professional liability or errors and
omissions coverage be changed for any reason. Such notification shall include
the date of change and the reasons therefor. Cardinal shall notify the Group
of any material claims against it with respect to services performed under this
Agreement, whether or not they may be covered by insurance, and shall notify
the Group from time to time as may be appropriate of the total outstanding
claims made by Cardinal under its insurance coverage.
Section 17. INFORMATION FURNISHED BY CARDINAL. Cardinal has
furnished to the Group the following:
(a) Cardinal's Articles of Incorporation.
(b) Cardinal's Code of Regulations and any amendments thereto.
(c) Certified copies of actions of Cardinal covering the following
matters:
- 7 -
9
1. Approval of this Agreement, and authorization of a
specified officer of Cardinal to execute and deliver
this Agreement;
2. Authorization of Cardinal to act as transfer agent
and fund accountant for the Funds.
(d) A copy of the most recent independent accountants' report
relating to internal accounting control systems as filed with
the Securities and Exchange Commission pursuant to Rule
17Ad-13 of the Securities Exchange Act of 1934, as amended.
Section 18. COMPLIANCE WITH LAW. Except for the obligations of
Cardinal set forth in Section 11 hereof, the Group assumes full responsibility
for the preparation, contents and distribution of each prospectus of the Group
as to compliance with all applicable requirements of the Securities Act of
1933, as amended, the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction.
Section 19. NOTICES. Any notice provided hereunder shall be
sufficiently given when sent by registered or certified mail to the party
required to be served with such notice, at that party's address set forth at
the beginning of this Agreement, or at such other address as such party may
from time to time specify in writing to the other party pursuant to this
Section.
Section 20. HEADINGS. Paragraph headings in this Agreement are
included for convenience only and are not to be used to construe or interpret
this Agreement.
Section 21. ASSIGNMENT. This Agreement and the rights and duties
hereunder shall not be assignable by either of the parties hereto except by the
specific written consent of the other party. This Section 21 shall not limit
or in any way affect Cardinal's right to appoint a Sub-transfer Agent pursuant
to Section 1 hereof.
Section 22. GOVERNING LAW. This Agreement shall be governed by
and provisions shall be construed in accordance with the laws of the State of
Ohio.
Section 23. LIMITATION OF LIABILITY OF THE TRUSTEES AND
SHAREHOLDERS. The Cardinal Group is a business trust organized under Chapter
1746, Ohio Revised Code and under a Declaration of Trust, to which reference is
hereby made and a copy of which is on file at the Office of the Secretary of
State of Ohio as required by law, and to any and all amendments thereto so
filed or hereafter filed. The obligations of "The Cardinal Group" entered into
in the name or on behalf thereof by any of the Trustees, officers, employees or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, officers, employees, agents
- 8 -
10
or shareholders of the Group personally, but bind only the assets of the Group,
as set forth in Section 1746.13(A), Ohio Revised Code, and all persons dealing
with any of the Funds of the Group must look solely to the assets of the Group
belonging to such Fund for the enforcement of any claims against the Group.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
THE CARDINAL GROUP
By /s/ Xxxx X. Xxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxx, President
CARDINAL MANAGEMENT CORP.
By /s/ H. Xxxxx Xxxxx
-------------------------------
H. Xxxxx Xxxxx, Treasurer
- 9 -
11
January __, 1996
SCHEDULE A
----------
to the Transfer Agency and
Fund Accounting Agreement
between The Cardinal Group
and Cardinal Management Corp.
Name of Fund Date
------------ ----
Cardinal Balanced Fund June 18, 1993
Cardinal Aggressive Growth Fund June 18, 1993
The Cardinal Fund January __, 1996
Cardinal Government Obligations Fund January __, 1996
Cardinal Government Securities Money January __, 1996
Market Fund
Cardinal Tax Exempt Money Market Fund January __, 1996
THE CARDINAL GROUP
By ______________________________
Xxxxx X. Xxxxxx
CARDINAL MANAGEMENT CORP.
By ______________________________
H. Xxxxx Xxxxx, ______________
- 10 -
12
SCHEDULE B
----------
TRANSFER AGENCY SERVICES
------------------------
1. Shareholder Transactions
------------------------
a. Process shareholder purchase and redemption orders.
b. Set up account information, including address, dividend
option, taxpayer identifications number and wire instructions.
c. Issue confirmation for every transaction.
d. Issue periodic statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchasing of new
shares through dividend reinvestment.
2. Shareholder Information Services
--------------------------------
a. Make information available to shareholder servicing unit and
other remote access units regarding trade date, share price,
current holdings, yields, and dividend information.
b. Produce detail history of transactions through duplicate or
special order statements upon request.
c. Provide mailing labels for distribution of financial reports,
prospectuses, proxy statements, or marketing material to
current shareholders.
3. Compliance Reporting
--------------------
a. Provide reports to the Securities and Exchange Commission, the
NASD and the States in which the Fund is registered.
b. Prepare and distribute appropriate Internal Revenue Service
forms for corresponding Fund and shareholder income and
capital gains.
c. Issue tax withholding reports to the Internal Revenue Service.
- 11 -
13
4. Dealer/Load Processing (if applicable)
--------------------------------------
a. Provide reports for tracking rights of accumulation and
purchases made under a Letter of Intent.
b. Account for separation of shareholder investments from
transaction sale charges for purchases of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and
marketing expenses.
d. Track sales and commission statistics by dealer and provide
for payment of commissions on direct shareholder purchases in
a load Fund.
5. Shareholder Account Maintenance
-------------------------------
a. Maintain all shareholder records for each account in the Group.
b. Issue customer statements on scheduled cycle, providing
duplicate second and third party copies if required.
c. Record shareholder account information changes.
d. Maintain account documentation files for each shareholder.
- 12 -
14
Date: January __, 1996
SCHEDULE C
----------
Fees
----
Transfer Agent and Dividend
---------------------------
Disbursing Agent
----------------
Annual fees per Fund:
---------------------
$18.00 per account annually (payable monthly) for Cardinal Balanced Fund and
Cardinal Aggressive Growth Fund
$21.00 per account annually (payable monthly) for The Cardinal Fund, Cardinal
Government Obligations Fund, Cardinal Government Securities Money Market Fund
and Cardinal Tax Exempt Money Market Fund
Fund Accountant
---------------
Annual fees per Fund:
---------------------
A fee per Fund calculated at the annual rate of .03% of such Fund's average
daily net assets.
THE CARDINAL GROUP
By _________________________________________
Xxxxx X. Xxxxxx, President
CARDINAL MANAGEMENT CORP.
By _________________________________________
H. Xxxxx Xxxxx, _________________________
- 13 -
15
Date: January __, 1996
SCHEDULE D
----------
REPORTS
-------
I. Daily Shareholder Activity Journal
II. Daily Fund Activity Summary Report
A. Beginning Balance
B. Dealer Transactions
C. Shareholder Transactions
D. Reinvested Dividends
E. Exchanges
F. Adjustments
G. Ending Balance
III. Daily Wire and Check Registers
IV. Monthly Dealer Processing Reports
V. Monthly Dividend Reports
VI. Sales Data Reports for Blue Sky Registration
VII. Annual report by independent public accountants concerning Cardinal's
shareholder system and internal accounting control systems to be filed
with the Securities and Exchange Commission pursuant to Rule 17Ad-13
of the Securities Exchange Act of 1934, as amended.
- 14 -
