TRANSFER AGENCY SERVICES AGREEMENT
THIS AGREEMENT is made as of May 31, 2006 by and between PFPC INC., a
Massachusetts corporation ("PFPC"), and AQUILA THREE PEAKS HIGH INCOME FUND, a
Massachusetts business trust (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to its
investment portfolios, and PFPC wishes to furnish such services, on the terms
and for the considerations set forth in this agreement (the "Agreement").
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
I. Definitions. As used in this Agreement:
A. "1933 Act" means the Securities Act of 1933, as amended.
B. "1934 Act" means the Securities Exchange Act of 1934, as amended.
C. "Authorized Person" means any officer of the Fund and any other person
duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed
on the Authorized Persons Appendix attached hereto and made a part
hereof or any amendment thereto as may be received by PFPC. Fund shall
provide PFPC an updated Authorized Persons Appendix promptly upon the
addition or deletion of an Authorized Person. An Authorized Person's
scope of authority may be limited by setting forth such limitation in
a written document signed by both parties hereto.
D. "Oral Instructions" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be
an Authorized Person. PFPC may, in its sole discretion in each
separate instance, consider and rely upon instructions it receives
from an Authorized Person, including via electronic mail as Oral
Instructions.
E. "SEC" means the Securities and Exchange Commission.
F. "Securities Laws" mean the 1933 Act, the 1934 Act and the 1940 Act.
G. "Shares" mean the shares of beneficial interest of any series or class
of the Fund.
H. "Written Instructions" mean (i) written instructions signed by an
Authorized Person and received by PFPC or (ii) trade instructions
transmitted (and received by PFPC) by means of an electronic
transactions reporting system access to which requires use of a
password or other authorized identifier. The instructions may be
delivered electronically (with respect to sub-item (ii) above) or by
hand, mail, tested telegram, cable, telex or facsimile sending device.
II. Appointment. The Fund hereby appoints PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to the Fund
in accordance with the terms set forth in this Agreement. PFPC accepts such
appointment and agrees to furnish such services.
III. Compliance with Rules and Regulations.
A. PFPC undertakes to comply with all applicable requirements of the
Securities Laws and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be
performed by PFPC hereunder. Except as specifically set forth herein,
PFPC assumes no responsibility for such compliance by the Fund or any
other entity.
B. PFPC will make available, upon request of the Fund, copies of policies
and procedures of PFPC published under PFPC's Rule 38a-1 compliance
program relating to its overall transfer agent operations, as amended
from time to time, which have been prepared in connection with Rule
38a-1 under the 1940 Act ("Rule 38a-1"), in order to enable investment
company clients meet their obligations under Rule 38a-1. In connection
with the review by the Fund's Chief Compliance Officer of PFPC's
transfer agent operations in connection with the presentation of the
yearly report to the Board of Trustees of the Fund contemplated by
Rule 38a-1, PFPC will provide:
1. access to policies and procedures as described in this clause
(b);
2. quarterly and annual Rule 38a-1 certification; and
3. an incident report of any "material compliance matters" in
accordance with PFPC's Rule 38a-1 policies and procedures; and
4. a summary report of PFPC's annual Rule 38a-1 independent review.
IV. Instructions.
A. Unless otherwise provided in this Agreement, PFPC shall act only upon Oral
Instructions or Written Instructions.
B. PFPC shall be entitled to rely upon any Oral Instruction or Written
Instruction it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to this
Agreement. PFPC may assume that any Oral Instruction or Written Instruction
received hereunder is not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote, resolution or
proceeding of the Fund's Board of Trustees or of the Fund's shareholders,
unless and until PFPC receives Written Instructions to the contrary.
C. The Fund agrees to forward to PFPC Written Instructions confirming Oral
Instructions, with the exception of Oral Instructions that are e-mails, so
that PFPC receives the Written Instructions by the close of the next
business day. The fact that such confirming Written Instructions are not
received by PFPC or differ from the Oral Instructions shall in no way
invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions or PFPC's ability to rely upon such
Oral Instructions.
V. Right to Receive Advice.
A. Advice of the Fund. If PFPC is in doubt as to any action it should or
should not take, PFPC may request directions or advice, including Oral
Instructions or Written Instructions, from the Fund.
B. Advice of Counsel. If PFPC shall be in doubt as to any question of law
pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be
counsel for the Fund, the Fund's investment adviser or PFPC, at the option
of PFPC).
C. Conflicting Advice. In the event of a conflict between directions, advice
or Oral Instructions or Written Instructions PFPC receives from the Fund,
and the advice it receives from counsel, PFPC may rely upon and follow the
advice of counsel. In any such case, PFPC will use its reasonable efforts
to contact the Fund prior to or promptly after taking any actions
inconsistent with Oral or Written Instructions previously received from the
Fund. In the event PFPC so relies on the advice of counsel, PFPC remains
liable for any action or omission on the part of PFPC which constitutes
willful misfeasance, bad faith, negligence or reckless disregard by PFPC of
any duties, obligations or responsibilities set forth in this Agreement.
D. Protection of PFPC. PFPC shall be indemnified by the Fund and without
liability for any action PFPC takes or does not take in reliance upon
directions or advice or Oral Instructions or Written Instructions PFPC
receives from or on behalf of the Fund or from counsel and which PFPC
believes, in good faith, to be consistent with those directions or advice
or Oral Instructions or Written Instructions. Nothing in this section shall
be construed so as to impose an obligation upon PFPC
1. to seek such directions or advice or Oral Instructions or Written
Instructions, or
2. to act in accordance with such directions or advice or Oral
Instructions or Written Instructions unless, under the terms of other
provisions of this Agreement, the same is a condition of PFPC's
properly taking or not taking such action. Nothing in this subsection
shall excuse PFPC when an action or omission on the part of PFPC
constitutes willful misfeasance, bad faith, negligence or reckless
disregard by PFPC of any duties, obligations or responsibilities set
forth in this Agreement.
VI. Records; Visits. The books and records pertaining to the Fund which are in
the possession or under the control of PFPC shall be the property of the Fund.
Such books and records shall be prepared and maintained as required by the 1940
Act and other applicable securities laws, rules and regulations. The Fund and
Authorized Persons shall have access to such books and records at all times
during PFPC's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by PFPC to the Fund or to
an Authorized Person at the Fund's expense. Prior to any destruction of any
books or records prepared and maintained by PFPC as required by applicable laws,
rules and regulations, PFPC will advise the Fund of the proposed destruction.
VII. Confidentiality.
A. Each party shall keep confidential any information relating to the other
party's business ("Confidential Information"). Confidential Information
shall include:
1. any data or information that is competitively sensitive material, and
not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finances,
operations, customer relationships, customer profiles, customer lists,
sales estimates, business plans, and internal performance results
relating to the past, present or future business activities of the
Fund or PFPC, their respective subsidiaries and affiliated companies
and the customers, clients and suppliers of any of them;
2. any scientific or technical information, design, process, procedure,
formula, or improvement that is commercially valuable and secret in
the sense that its confidentiality affords the Fund or PFPC a
competitive advantage over its competitors;
3. all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code,
flow charts, databases, inventions, know-how, and trade secrets,
whether or not patentable or copyrightable; and
4. anything designated as confidential.
B. Notwithstanding the foregoing, information shall not be Confidential
Information and shall not be subject to such confidentiality obligations if
it:
1. is already known to the receiving party at the time it is obtained;
2. is or becomes publicly known or available through no wrongful act of
the receiving party;
3. is rightfully received from a third party who, to the best of the
receiving party's knowledge, is not under a duty of confidentiality;
4. is released by the protected party to a third party without
restriction;
5. is requested or required to be disclosed by the receiving party
pursuant to a court order, subpoena, governmental or regulatory agency
request or law (provided the receiving party will provide the other
party written notice of the same, to the extent such notice is
permitted);
6. is relevant to the defense of any claim or cause of action asserted
against the receiving party;
7. is provided by either party with the consent of the other party in
connection with an independent third party compliance or other review;
8. is necessary for PFPC to release such information in connection with
the provision of services under this Agreement; or
9. has been or is independently developed or obtained by the receiving
party.
C. The provisions of this Section 7 shall survive termination of this
Agreement for a period of three (3) years after such termination.
VIII. Cooperation with Accountants. PFPC shall cooperate with the Fund's
independent public accountants and shall take all reasonable actions in the
performance of its obligations under this Agreement to ensure that the necessary
information is made available on a timely basis to such accountants for the
expression of their opinion, as required by the Fund.
IX. PFPC System. PFPC shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by PFPC in connection with the services
provided by PFPC to the Fund. Notwithstanding the foregoing, the parties
acknowledge that the Fund shall retain all ownership rights in Fund trademarks,
logos, and data which reside on the PFPC system.
X. Adequate Facilities; Disaster Recovery. PFPC shall maintain adequate
personnel and facilities, as well as adequate and reliable computer and other
equipment, necessary and appropriate to carry out its obligations under this
Agreement, including appropriate duplicate files (which shall be readable by
computer or otherwise or maintained in hard copy form, and shall be maintained
at a frequency and in a detail reasonably designed pursuant to industry
standards to provide for protection of such files in the event of a disaster to
PFPC's facilities). PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making adequate and reliable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PFPC shall periodically back up data (including
all predecessor transfer agent data delivered to PFPC by the Fund's prior
transfer agent in a machine readable format and converted by PFPC) on
appropriate media to be stored at an offsite facility of PFPC's choosing. PFPC
shall have no liability with respect to the loss of data or service
interruptions caused by equipment failure or otherwise, provided such loss or
interruption is not caused by PFPC's own willful misfeasance, bad faith,
negligence or reckless disregard of its duties or obligations under this
Agreement.
XI. Compensation.
A. As compensation for services rendered by PFPC during the term of this
Agreement, for the period commencing on the date upon which the Fund
commences operations, the Fund will pay to PFPC a fee or fees, as may be
agreed to from time to time in writing by the Fund and PFPC. In addition,
the Fund agrees to pay, and will be billed separately in arrears for,
reasonable expenses incurred by PFPC in the performance of its duties
hereunder. All services detailed in this Agreement and expenses incurred in
the performance of these services will be provided by PFPC without cost to
the Fund except as otherwise stated in this Agreement or otherwise agreed
to in writing.
B. PFPC shall establish certain cash management accounts ("Service Accounts")
required to provide services under this Agreement. The Fund acknowledges
(i) PFPC may receive investment earnings from sweeping the funds in such
Service Accounts into investment accounts including, but not limited to,
investment accounts maintained at an affiliate or client of PFPC; (ii)
balance credits earned with respect to the amounts in such Service Accounts
("Balance Credits") will be used to offset the banking service fees imposed
by the cash management service provider (the "Banking Service Fees"); (iii)
PFPC shall retain any excess Balance Credits for its own use; (iv) Balance
Credits will be calculated and applied toward the Fund's Banking Service
Fees regardless of the Service Account balance sweep described in
Sub-Section (i); and (v) PFPC may use the services of third-party vendors
in connection with the issuance of redemption and distribution checks and
shall retain any benefits obtained from any arrangements with such vendors,
including any commission or return on float paid to it by any such vendors.
C. The undersigned hereby represents and warrants to PFPC that
1. the terms of this Agreement,
2. the fees and expenses associated with this Agreement, and
3. any benefits known to the Fund accruing to PFPC or to the adviser
or sponsor to the Fund in connection with this Agreement,
including but not limited to any fee waivers, conversion cost
reimbursements, up front payments, signing payments or periodic
payments made or to be made by PFPC to such adviser or sponsor or
any affiliate of the Fund relating to the Agreement have been or
will be fully disclosed to the Board of Trustees of the Fund and
that, if required by applicable law, such Board of Trustees has
approved or will approve the terms of this Agreement, any such
fees and expenses, and any such benefits.
XII. Indemnification. The Fund agrees to indemnify and hold harmless PFPC and
its affiliates from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the
Securities Laws and any state and foreign securities and blue sky laws, and
amendments thereto), and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from
A. any action or omission to act which PFPC takes
1. at the request or on the direction of or in reliance on the advice of
the Fund or
2. upon Oral Instructions or Written Instructions or
3. the acceptance, processing and/or negotiation of checks or other
methods utilized for the purchase of Shares. Neither PFPC nor any of
its affiliates shall be indemnified against any liability (or any
expenses incident to such liability) arising out of PFPC's or its
affiliates' own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement. The
provisions of this Section 12 shall survive termination of this
Agreement for a period of five (5) years.
XIII. Release. PFPC understands that the obligations of this Agreement are not
binding upon any shareholder of the Fund personally, but bind only the Fund's
property; PFPC represents that it has notice of the provision in the Fund's
Declaration of Trust disclaiming shareholder liability for acts or obligations
of the Fund.
XIV. Responsibility of PFPC.
A. PFPC shall be under no duty to take any action hereunder on behalf of the
Fund except as specifically set forth herein or as may be specifically
agreed to by PFPC and the Fund in a written amendment hereto. PFPC shall be
obligated to exercise care and diligence in the performance of its duties
hereunder and to act in good faith in performing services provided for
under this Agreement. PFPC shall be liable only for any damages arising out
of PFPC's failure to perform its duties under this Agreement to the extent
such damages arise out of PFPC's willful misfeasance, bad faith, negligence
or reckless disregard of such duties.
B. Notwithstanding anything in this Agreement to the contrary,
1. PFPC shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control (provided that
PFPC has acted in accordance with the standard of care set forth in
paragraph (a)), including without limitation acts of God; action or
inaction of civil or military authority; public enemy; war; terrorism;
riot; fire; flood; sabotage; epidemics; labor disputes; civil
commotion; interruption, loss or malfunction of utilities,
transportation, computer or communications capabilities; insurrection;
elements of nature; or non-performance by a third party; and
2. PFPC shall not be under any duty or obligation to inquire into and
shall not be liable for the validity or invalidity, authority or lack
thereof, or truthfulness or accuracy or lack thereof, of any
instruction, direction, notice, instrument or other information
received from the Fund which PFPC reasonably believes to be genuine.
C. Notwithstanding anything in this Agreement to the contrary, neither the
Fund or PFPC nor any of their affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or not the
likelihood of such losses or damages was known by PFPC, the Fund or any of
their affiliates.
D. Each party shall have a duty to mitigate damages for which the other party
may become responsible.
E. The provisions of this Section 14 shall survive termination of this
Agreement.
XV. Description of Services.
A. Itemized Services. PFPC shall:
1. Calculate 12b-1 payments and payments under any Shareholder Services
Plan of the Fund, produce and mail statements and checks where
applicable or generate payments through the National Securities
Clearing Corp. (the "NSCC") to all eligible dealers, and forward
ineligible checks and statements to Aquila Distributors, Inc. (the
"Distributor");
2. Make weekly payment of direct commissions, including settlement
through NSCC;
3. Establish and maintain proper shareholder registrations;
4. Review applications for required information and correspond with
shareholders to complete or correct information;
5. Provide payment processing of checks or wires;
6. Prepare and certify stockholder lists in conjunction with proxy
solicitations;
7. Issue and countersign share certificates (when requested in writing by
a shareholder) and cancel share certificates;
8. Prepare and mail to shareholders confirmation of activity;
9. Provide toll-free lines and voice response unit for direct shareholder
use, plus customer liaison staff for on-line inquiry response
(generally from 8 a.m. until 6 p.m., New York time, on days on which
the New York Stock Exchange is open), including the ability to receive
redirected toll-free calls from the Distributor on an as-needed basis;
10. On a monthly basis, mail duplicate statements to:
a. broker-dealers of their clients' activity, whether executed
through the broker-dealer or directly with PFPC, and
b. other parties (e.g., lawyers and accountants) as requested by the
shareholders;
11. Provide periodic shareholder lists and statistics to the Fund;
12. Provide detailed data for underwriter/broker confirmations, including
daily outstanding confirmed purchases, redemptions, and paid not
issued shares;
13. Prepare periodic mailing of year-end tax and statement information;
14. Provide reports, notification, and where applicable reconciliation on
a timely basis to the investment adviser, sub-adviser, administrator,
accounting agent, and custodian of fund activity;
15. Perform other participating broker-dealer shareholder services,
including Fund/Serv, Automated Customer Account Transfer System
("ACATS"), Networking and terminal access for selected dealers, and
such other services as may be agreed upon from time to time;
16. Promptly transmit to the Fund all reports, documents and information
as are requested by the Fund and agreed to by PFPC, which agreement
shall not be unreasonably withheld, that are necessary to enable the
Fund and its service providers to comply with the requirements of the
Internal Revenue Service, the SEC, the National Association of
Securities Dealers, Inc, the National Securities Clearing Corp., the
state blue sky authorities and any other regulatory bodies having
jurisdiction over the Fund, it being understood and agreed that such
reports shall include those on the list contained in Exhibit A hereto,
as such list may be amended from time to time by agreement between the
parties;
17. Process all clerical transactions;
18. Screen and maintain Transfer on Death registrations according to Fund
guidelines (except those guidelines hereafter adopted by the Fund
which are considered in PFPC's sole good-faith discretion to be more
burdensome than the guidelines in effect on the date of this
Agreement);
19. Provide electronic imaging and time-stamping of all incoming mail;
20. Compute and track all front-end and contingent deferred sales charges
imposed upon the purchase and redemption of Shares;
21. Track and convert Shares in accordance with the share conversion
features described in the prospectus of the Fund;
22. Answer written or telephonic correspondence relating to its duties
hereunder (including providing written acknowledgement of address
changes to previous addresses of record) and such other correspondence
as may from time to time be mutually agreed upon between PFPC and the
Fund; inquiries of a non-routine nature shall be referred to the Fund;
23. Remit supporting detail of underwriter fees to the Distributor on a
semi-monthly basis;
24. Until such time as Fund management and legal counsel to the Fund
determine otherwise and so inform PFPC in Written Instructions,
establish, maintain for the benefit of the Fund and control the flow
of funds through separate subscription, redemption and dividend
disbursement accounts (each an "Operational Account") provided by PNC
Bank, N.A. or by such other financial institution as may be agreed
upon by the Fund and PFPC;
25. To the extent reasonably feasible, reverse trades (including backing
out dividends) due to nonreceipt of funds, improper registration, or
other sufficient reason;
26. Compute and track all letters of intent;
27. Screen all transactions with respect to the Fund's Blue Sky
requirements of which PFPC is informed by the Fund by Written
Instructions, and comply with the Written Instructions of the Fund in
effect from time to time limiting issuance of Shares to specified
states (based on address of registration), including screening for
Shares sold in states other than those so specified (but relating only
to those Shares sold after PFPC commences its duties as transfer agent
hereunder);
28. Provide abandoned property reporting and filing to meet the escheat
requirements of each of the states named by the Fund in Written
Instructions, and Fund, in connection with such filings, shall use all
reasonable efforts to complete a prompt review of escheatment
materials provided by PFPC to approve escheatment filings five (5)
business days in advance of any escheatment filing deadlines;
29. Maintain a record of all incoming checks, new account applications and
documentation set forth in Section 16(g), on filmstrips, another
microfilm retrieval method or otherwise so as to be retrievable and
reproducible, upon reasonable request, within time frames that meet
reasonable industry standards;
30. Process W-9 or similar forms received by PFPC and review taxpayer
identification numbers for all same number (e.g., 000 00 0000),
sequential numbering (e.g., 000 00 0000) and non-numeric numbers
(e.g., 128 4A 3927) and other conditions of obvious irregularity in
accordance with PFPC's normal operating procedures;
31. On a semi-monthly or other basis acceptable to PFPC and the Fund (but
in no event more frequently than once per month per shareholder
account) initiate, accept and process pre-authorized checks or, when
available, electronic funds transfers drawn against shareholders'
checking accounts;
32. In accordance with policies and procedures established by the Fund and
PFPC, furnish to shareholders dividend and redemption checks alleged
to have been lost, stolen, destroyed or not received; and
33. Record all incoming telephone conversations and telephonic
transactions that are received via the Fund's published customer
service numbers and retain such recordings for a minimum of six
months.
34. Post and perform shareholder transfers and post and perform exchanges
for shares of other funds with which the Fund has exchange privileges,
pursuant to shareholder instructions; and
35. Reconcile to Fund accounting records and pay dividends and other
distributions, including direct deposit credits through the Automatic
Clearing House ("ACH") upon proper written shareholder authorization.
B. Purchase of Shares. PFPC shall issue Shares and credit an account of an
investor, in the manner described in the Fund's prospectus, once it has
screened for blue sky compliance pursuant to Section 15(a)(xxvii) and
Transfer on Death registration compliance pursuant to Section 15(a)(xviii)
and receives:
1. A purchase order or application, either directly from an investor or
otherwise, complying with requirements for purchases prescribed by the
prospectus;
2. Proper information to establish a shareholder account; and
3. A purchase check or confirmation of receipt or crediting of available
funds for such order to the Fund's Custodian.
In opening new shareholder accounts, PFPC will assign account numbers. PFPC
shall assign Aquila Distributors, Inc. as broker of record whenever dealer
information is omitted and send a copy of any related application to Aquila
Distributors, Inc.
PFPC must receive a completed application before any redemption orders are
accepted and processed for an account opened directly by an investor.
C. Redemption of Shares. PFPC shall process requests to redeem Shares as
follows:
1. All requests to transfer or redeem Shares and payment therefore shall
be made in accordance with the Fund's prospectus, when the shareholder
tenders Shares in proper form, accompanied by such documents as PFPC
reasonably may deem necessary.
2. PFPC reserves the right to refuse to transfer or redeem Shares until
it is satisfied that the endorsement on the instructions is valid and
genuine and that the requested transfer or redemption is legally
authorized, and it shall incur no liability for the refusal, in good
faith, to process transfers or redemptions which PFPC, in its good
judgment, deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such
transfer or redemption.
3. When Shares are redeemed, PFPC shall deliver to the Fund's custodian
(the "Custodian") and the Fund or its designee a notification setting
forth the number of Shares redeemed. Such redeemed Shares shall be
reflected on appropriate accounts maintained by PFPC reflecting
outstanding Shares of the Fund and Shares attributed to individual
accounts.
4. PFPC shall, upon receipt of the monies provided to it by the Custodian
for the redemption of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures established from time
to time between PFPC and the Fund.
5. When a broker-dealer notifies PFPC of a redemption desired by a
customer, and the Custodian provides PFPC with funds, PFPC shall
prepare and send the redemption check to the broker-dealer and made
payable to the broker-dealer on behalf of its customer, unless
otherwise instructed in writing by the broker-dealer.
6. PFPC shall not process or effect any redemption requests with respect
to Shares of the Fund after receipt by PFPC or its agent of
notification of the suspension of the determination of the net asset
value of the Fund.
D. Dividends and Distributions. Upon receipt of a resolution of the Fund's
Board of Trustees authorizing the declaration and payment of dividends and
distributions and Written Instructions to PFPC, PFPC shall issue dividends
and distributions declared by the Fund in Shares, or, upon shareholder
election, pay such dividends and distributions in cash, if and as provided
for in the Fund's prospectus. Such issuance or payment, as well as payments
upon redemption as described above, shall be made after deduction and
payment of the required amount of funds to be withheld in accordance with
any applicable tax laws or other laws, rules or regulations. PFPC shall
timely mail to the Fund's shareholders and appropriate taxing authorities
such tax forms and other information, or permissible substitute notice,
relating to dividends and distributions paid by the Fund as are required to
be filed and mailed by applicable law, rule or regulation. PFPC shall
prepare, maintain and file with the IRS and other appropriate taxing
authorities reports relating to all dividends paid by the Fund to its
shareholders as required by tax or other law, rule or regulation.
E. Communications to Shareholders. PFPC shall address, enclose and mail all
communications by the Fund to its shareholders (pre-sorting where
reasonably practicable), including:
1. Reports to shareholders;
2. Confirmations of purchases and sales of Shares;
3. Monthly or quarterly statements (with extra print lines for additional
information, such as additional dividend information, to
shareholders), generally by the fifth business day after the dividend
payable date, providing a combined check and statement to shareholders
electing cash distributions;
4. Dividend and distribution notices (at year-end, such notices will be
upon Written Instructions);
5. Tax form information (upon Written Instructions);
6. Forms W-9 or W-8 as appropriate;
7. Prospectuses;
8. Account-related shareholder correspondence that is considered in
PFPC's sole discretion to be routine; and
9. Any other routine shareholder communications as agreed to between the
Fund and PFPC.
F. Records. PFPC shall maintain records of the accounts for each shareholder
showing the following information:
1. Name, address, United States Tax Identification or Social Security
number, and any pertinent beneficiary information;
2. Number and class of Shares held and number and class of Shares for
which certificates, if any, have been issued, including certificate
numbers and denominations;
3. Historical information regarding the account of each shareholder,
including dividends and distributions paid and the date and price for
all transactions in a shareholder's account;
4. Any stop or restraining order placed against a shareholder's account;
5. Any correspondence relating to the current maintenance of a
shareholder's account;
6. Information with respect to withholdings, including withholdings in
the case of a foreign account and accounts subject to backup
withholding; and
7. Any information required in order for the transfer agent to perform
any calculations contemplated or required by this Agreement.
PFPC will report errors related to the processing of records in the course of
its duties under this paragraph which in PFPC's reasonable judgment made in good
faith are material.
G. Lost or Stolen Certificates. PFPC shall place a stop notice against any
certificate reported to be lost, stolen, destroyed or not received and
comply with all applicable federal regulatory requirements for reporting
such loss or alleged misappropriation. A new certificate shall be
registered and issued only upon:
1. The shareholder's pledge of a lost instrument bond or such other
appropriate indemnity bond issued by a surety company approved by
PFPC; and
2. Completion of a release and indemnification agreement signed by the
shareholder to protect PFPC and its affiliates.
H. Shareholder Inspection of Fund Records. Upon a request from any Fund
shareholder to inspect Fund records, PFPC will notify the Fund and the Fund
will issue instructions granting or denying each such request. Unless PFPC
has acted contrary to the Fund's instructions, the Fund agrees and does
hereby release PFPC from any liability for refusal of permission for a
particular shareholder to inspect the Fund's records.
I. Withdrawal of Shares and Cancellation of Certificates. Upon receipt of
Written Instructions, PFPC shall cancel outstanding certificates
surrendered by the Fund to reduce the total amount of outstanding Shares by
the number of Shares surrendered by the Fund.
J. Fraud Detection Procedures. PFPC shall establish procedures that are
reasonably designed to detect fraudulent purchase, redemption and
distribution checks (including fraudulent or forged endorsements and
altered payment amounts); however, PFPC shall have no liability for loss
resulting from any fraud perpetrated or attempted to be perpetrated on the
Fund, unless PFPC has acted with willful misfeasance, bad faith, negligence
or reckless disregard of its duties hereunder. Such procedures shall take
into account the type of accounts involved, the sums involved and
cost/benefit considerations. PFPC shall not accept any third-party check
(i.e., an investment check whose payee is other than the Fund or PFPC)
except pursuant to Oral Instructions or Written Instructions.
K. Relationship Officer. PFPC agrees to provide a Relationship Officer to
serve as the primary point of contact between the Fund and PFPC. PFPC will
exercise due care in assigning an individual who is conversant with
standard investment company practices.
L. Lost Shareholders. PFPC shall perform such services as are required in
order to comply with rule 17Ad-17 of the 1934 Act (the "Lost Shareholder
Rule"), including, but not limited to, those set forth below. PFPC may, in
its sole discretion, use the services of a third party to perform some of
or all such services.
1. documentation of search policies and procedures;
2. execution of required searches;
3. tracking results and maintaining data sufficient to comply with the
Lost Shareholder Rule; and
4. preparation and submission of data required under the Lost Shareholder
Rule.
M. Retirement Plans.
1. In connection with the individual retirement accounts, simplified
employee pension plans, rollover individual retirement plans,
educational IRA's and XXXX individual retirement accounts ("XXX
Plans"), 403(b) Plans and money purchase and profit sharing plans
("Qualified Plans") (collectively, the "Retirement Plans") within the
meaning of Section 408 of the Internal Revenue Code of 1986, as
amended (the "Code") sponsored by the Fund for which contributions of
the Fund's shareholders (the "Participants") are invested solely in
Shares of the Fund, PFPC shall provide the following administrative
services:
a. Establish a record of types and reasons for distributions (i.e.,
attainment of age 59-1/2, disability, death, return of excess
contributions, etc.);
b. Record method of distribution requested and/or made;
c. Receive and process designation of beneficiary forms requests;
d. Examine and process requests for direct transfers between
custodians/trustees, transfer and pay over to the successor
assets in the account and records pertaining thereto as
requested;
e. Prepare any annual reports or returns required to be prepared and
/ or filed by a custodian of a Retirement Plan, including, but
not limited to, an annual fair market value report, Forms 1099R
and 5498; and file same with the IRS and provide same to
Participant/Beneficiary, as applicable; and
f. Perform applicable federal withholding and send
Participants/Beneficiaries an annual TEFRA notice regarding
required federal tax withholding.
(i) PFPC shall arrange for PFPC Trust Company to serve as
custodian for the Retirement Plans sponsored by the Fund.
(ii) With respect to the Retirement Plans, PFPC shall provide the
Fund with the associated Retirement Plan documents for use
by the Fund and PFPC shall be responsible for the
maintenance of such documents in compliance with all
applicable provisions of the Code and the regulations
promulgated thereunder.
N. Print Mail. The Fund hereby engages PFPC as its exclusive print/mail
service provider with respect to shareholder statements.
O. Internet Account Management Services. Fund and PFPC agree that the Fund is
a covered party to receive internet account management services pursuant to
the letter agreement dated November 4, 2003 from PFPC and accepted June 29,
2004 by Xxxxx X. Xxxxxxx on behalf of the Aquila Group of Funds and Fund
agrees to be bound by all terms, conditions, and provisions of that letter
agreement
P. Additional Services.
1. PFPC shall, in addition to the services herein itemized, if so
requested by the Fund and agreed to by PFPC, which shall bargain in
good faith regarding such requests and the fees and charges to be paid
therefore, for such additional fees and charges as the Fund and PFPC
may from time to time agree, perform and do all other acts and
services as required by the Fund's prospectus or the law or that are
customarily performed and done by transfer agents, dividend disbursing
agents, and shareholder servicing agents of open-end mutual funds such
as the Fund.
2. Upon request of the Fund, PFPC shall , in addition to the services
herein itemized, provide such additional services to the Fund and in
such manner as are normally provided by PFPC to its mutual fund
transfer agency customers in the normal course of business, subject to
additional mutually-agreed upon pricing, if any.
XVI. Privacy. PFPC agrees that, subject to the reuse and re-disclosure
provisions of Xxxxxxxxxx X-X, 00 XXX Part 248.11, it shall not disclose the
non-public personal information of investors in the Fund obtained under this
Agreement, except as necessary to carry out the services set forth in this
Agreement or as otherwise permitted by law or regulation. PFPC has adopted and
implemented procedures to safeguard non-public personal information and records,
including taking reasonable measures to protect against unauthorized access to
discarded information, that are reasonably designed to ensure the security and
confidentiality of customer records and information in accordance with
applicable state and federal standards and to ensure compliance with Regulation
S-P.
XVII. Anti-Money Laundering ("AML"). To the extent the other provisions of this
Agreement require PFPC to establish, maintain and monitor accounts of investors
in the Fund consistent with securities laws, PFPC shall perform reasonable
actions necessary to help the Fund be in compliance with Section 352 of the USA
PATRIOT Act, as follows: In this regard, PFPC shall:
A. establish and implement written internal policies, procedures and controls
reasonably designed to help prevent the Fund from being used to launder
money or finance terrorist activities;
B. provide for independent testing, by an employee who is not responsible for
the operation of PFPC's AML program or by an outside party, for compliance
with PFPC's established policies and procedures;
C. designate a person or persons responsible for implementing and monitoring
the operation and internal controls of PFPC's AML program; and
D. provide ongoing training of PFPC personnel relating to the prevention of
money-laundering activities. Upon the reasonable request of the Fund, PFPC
shall provide to the Fund:
1. a copy of PFPC's written AML policies and procedures (it being
understood such information is to be considered confidential and
treated as such and afforded all protections provided to confidential
information under this Agreement);
2. at the option of PFPC, a copy of a written assessment or report
prepared by the party performing the independent testing for
compliance, or a summary thereof, or a certification that the findings
of the independent party are satisfactory; and
3. a summary of the AML training provided for appropriate personnel. PFPC
agrees to permit inspections relating to its AML program by U.S.
Federal departments or regulatory agencies with appropriate
jurisdiction and to make available to examiners from such departments
or regulatory agencies such information and records relating to its
AML program as such examiners shall reasonably request. PFPC agrees to
notify the Fund promptly of the existence of a material deficiency in
the event that PFPC's AML compliance program is determined to be
materially deficient in a governmental or regulatory agency
examination. Without limiting or expanding the foregoing, the parties
agree the provisions of this Section 17 do not apply to Section 326 of
the USA PATRIOT Act (or other sections other than Section 352) or
regulations promulgated thereunder.
XVIII. Customer Identification Program ("CIP") Services.
A. To help the Fund comply with its Customer Identification Program (which the
Fund is required to have under regulations issued under Section 326 of the
USA PATRIOT Act) PFPC will do the following:
1. Implement procedures under which new accounts in the Fund are not
established unless PFPC has obtained the name, date of birth (for
natural persons only), address and government-issued identification
number (collectively, the "Data Elements") for each corresponding
Customer (as defined in 31 CFR 103.131).
2. Use collected Data Elements to attempt to reasonably verify the
identity of each new Customer promptly before or after each
corresponding new account is opened. Methods may consist of
non-documentary methods (for which PFPC may use unaffiliated
information vendors to assist with such verifications) and documentary
methods (as permitted by 31 CFR 103.131), and may include procedures
under which PFPC personnel perform enhanced due diligence to verify
the identities of Customers the identities of whom were not
successfully verified through the first-level (which will typically be
reliance on results obtained from an information vendor) verification
process(es). Verification of the identity of each new Customer will
include comparing the database of Fund investor names and personal
information against the Office of Foreign Assets Control ("OFAC")
Specifically Designated Nationals and Blocked Persons list and
scanning the entire database each time the OFAC list is updated and to
determine whether the investor appears on any lists of known or
suspected terrorists or terrorist organizations issued by any federal
government agency and designated as such by the U.S. Department of the
Treasury.
3. Record the Data Elements and maintain records relating to verification
of new Customers consistent with 31 CFR 103.131(b)(3).
4. Regularly report to the Fund about measures taken under (i)-(iii)
above.
5. If PFPC provides services by which prospective Customers may subscribe
for shares in the Fund via the Internet or telephone, work with the
Fund to notify prospective Customers, consistent with 31 CFR
103.(b)(5), about the Fund's CIP.
B. Notwithstanding anything to the contrary, and without expanding the scope
of the express language in paragraph (a), PFPC need not collect the Data
Elements for (or verify the identity of) prospective customers (or
accounts) beyond the requirements of relevant regulations (for example,
PFPC will not verify the identity of customers opening accounts through
NSCC unless required by relevant regulations) and PFPC need not perform any
task that need not be performed for the fund to be in compliance with
relevant regulations.
C. Notwithstanding anything to the contrary, PFPC need not perform any of the
steps described above with respect to persons purchasing Shares via
exchange privileges.
D. PPFC will cooperate with the Fund to enable the Fund to conduct its
oversight related to PFPC CIP services as provided in Section 3(b) of this
Agreement. PFPC agrees to permit inspections relating to its CIP program by
U.S. Federal departments or regulatory agencies of such information and
records relating to its CIP program as such examiners shall reasonably
request. PFPC agrees to notify the Fund in due course in the event PFPC's
CIP program is determined to be materially deficient in governmental or
regulatory agency examination.
XVIIII. Duration and Termination.
A. This Agreement shall continue until terminated by the Fund on sixty (60)
days' prior written notice or by PFPC on one-hundred-twenty (120) days'
prior written notice to the other party.
B. In the event of termination by either party other than pursuant to
paragraph (c) below, all expenses associated with movement of records and
materials and conversion thereof to a successor transfer agent will be
borne by the terminating party and paid to the non-terminating party. In
the event of termination, PFPC agrees that it will use commercially
reasonable efforts to affect a smooth transition of services to such
successor provider within 120 days of the Fund's written notice of
designation of such successor service provider.
C. If a party hereto is guilty of a material failure to perform its duties and
obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting
Party, and if such material breach shall not have been remedied within
sixty (60) days after such written notice is given, then the Non-Defaulting
Party may terminate this Agreement by giving sixty (60) days written notice
of such termination to the Defaulting Party. In all cases, termination by
the Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this Agreement
or otherwise against the Defaulting Party. In the event of a termination
pursuant to this paragraph (c), the expenses referred to in paragraph (b)
shall be borne by the Defaulting Party.
D. Notwithstanding anything contained in this Agreement to the contrary,
should a merger, acquisition, change in control, re-structuring,
re-organization or any other decision involving the Fund or any affiliate
(as defined under the 0000 Xxx) of the Fund result in the Fund's desire to
cease to use PFPC as the provider of any of the services set forth
hereunder in favor of another service provider PFPC shall make a good faith
effort to facilitate a conversion of services to the Fund's successor
service provider, provided, however, there can be no guarantee that PFPC
will be able to facilitate such a conversion of services on the conversion
date requested by the Fund.
E. PFPC represents that it is currently registered with the appropriate
federal agency for the registration of transfer agents, or is otherwise
permitted to lawfully conduct its activities without such registration, and
that it will remain so registered or able to so conduct such activities for
the duration of this Agreement. PFPC agrees that it will promptly notify
the Fund in the event of any material change in its status as a registered
transfer agent. Should PFPC fail to be registered with the SEC as a
transfer agent at any time during the term of this Agreement, and such
failure to register does not permit PFPC to lawfully conduct its
activities, the Fund may, on written notice to PFPC, terminate this
Agreement upon five (5) days written notice to PFPC.
XX. Notices. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices shall be addressed
A. if to PFPC, at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attn.:
President;
B. if to the Fund, at 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000,
Attn: President or
C. if to neither of the foregoing, at such other address as shall have been
given by like notice to the sender of any such notice or other
communication by the other party. If notice is sent by confirming telegram,
cable, telex or facsimile sending device, it shall be deemed to have been
given immediately. If notice is sent by first-class mail, it shall be
deemed to have been given three days after it has been mailed. If notice is
sent by messenger, it shall be deemed to have been given on the day it is
delivered.
XXI. Amendments. This Agreement, or any term thereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement of
such change or waiver is sought.
XXII. Delegation; Assignment. PFPC may assign its rights and delegate its duties
hereunder to any majority-owned direct or indirect subsidiary of PFPC or The PNC
Financial Services Group, Inc., provided that PFPC gives the Fund thirty- (30)
days' prior written notice of such assignment or delegation.
XXIII. Counterparts. 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.
XXIV. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
XXV. Miscellaneous.
A. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the
parties may embody in one or more separate documents their agreement, if
any, with respect to delegated duties and Oral Instructions.
B. No Changes that Materially Affect Obligations. Notwithstanding anything in
this Agreement to the contrary, the Fund agrees not to make any
modifications to its registration statement or adopt any policies which
would affect materially the obligations or responsibilities of PFPC
hereunder without the prior written approval of PFPC, which approval shall
not be unreasonably withheld or delayed.
C. Insurance. PFPC shall maintain adequate fidelity, error and omissions and
other insurance coverage in connection with its transfer agent services
throughout the duration of this Agreement.
D. Captions. 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.
E. Information. The Fund will provide such information and documentation as
PFPC may reasonably request in connection with services provided by PFPC to
the Fund.
F. Governing Law. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
G. Partial Invalidity. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
H. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
I. Facsimile Signatures. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by such
party.
J. Customer Identification Program Notice. To help the U.S. government fight
the funding of terrorism and money laundering activities, U.S. Federal law
requires each financial institution to obtain, verify, and record certain
information that identifies each person who initially opens an account with
that financial institution on or after October 1, 2003. Certain of PFPC's
affiliates are financial institutions, and PFPC may, as a matter of policy,
request (or may have already requested) the Fund's name, address and
taxpayer identification number or other government-issued identification
number. PFPC may also ask (and may have already asked) for additional
identifying information, and PFPC may take steps (and may have already
taken steps) to verify the authenticity and accuracy of such information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: ---------------------------
Xxxxx Xxxxxx
Title: Senior Vice President
AQUILA THREE PEAKS HIGH INCOME FUND
By: ---------------------------
Xxxxx X. Xxxxxxxx
Title: President
AUTHORIZED PERSONS APPENDIX
On the date of the Agreement and thereafter until further notice, the
following persons shall be Authorized Persons as defined therein:
Name (Type) Signature
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx
Xxxxxxx X. Childs, III Xxxxxxx X. Childs, III
Xxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
Xxxxxx X. XxXxxxxx Xxxxxx X. XxXxxxxx
Xxxx X. Xxxxxxxx Xxxx X. Xxxxxxxx
Xxxxxxx X. X'Xxxxx Xxxxxxx X. X'Xxxxx
Xxxx X. Xxxxxxx Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
Exhibit A
Name Frequency
---- ---------
Capital Stock Reporting Daily
Daily Gain/Loss Detail Report Daily
Daily Price Report Daily
DTS Outstanding Trade List by Fund Daily
DTS Outstanding Wire Order and FundServ Trades Report Daily
Transaction Detail Report Daily
Transactions at a Glance Daily
CDSC Fees Class C Weekly
Dealer Commission Check Register / Dealer Commission Statement Weekly
Liquidation Report Weekly
Underwriter Fees Weekly
12b-1 Reports Monthly
Account Analysis by Type Monthly
Assets by Dealer for Management Company Monthly
Assets by Fund and Dealer Monthly
Blue Sky Sales Report Monthly
Cumulative Transaction Summary Monthly
Matrix Summary by Fund with Dealer Name Monthly
Matrix Summary by Management Company In Dealer Name Order Monthly
Matrix Summary by Management Company In Dealer Number Order Monthly
Month to Date Sales (Demographics by Account Group) Monthly
Monthly Price Reports Monthly
Monthly Statistical Report Monthly
Statistical Summary Monthly
Top Ten Accounts by Fund Monthly
Wire Order Purchase by Customer Settled Fund / Account Monthly
Wire Order Redemption by Customer Settled Fund / Account Monthly
Matrix Code Report by Dealer Quarterly
Special Dealer Extract Quarterly
New York City / New York State Semi-annual
$500.00 or less Report Yearly
New Account Report for Aquila Dealer #s 38242 & 38244 Yearly
