EXHIBIT (h.2)
TRANSFER AGENCY AGREEMENT
AGREEMENT made this 22nd day of October, 2001, between HEARTLAND GROUP,
INC. (the "Company") having its principal place of business at 000 X. Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, and BISYS FUND SERVICES OHIO, INC.
("BISYS"), an Ohio corporation having its principal place of business at 0000
Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
WHEREAS, the Company desires that BISYS perform certain services for each
portfolio of the Company other than the Heartland High Yield Municipal Bond
Fund, the Heartland Short Duration High-Yield Municipal Fund and the Heartland
Taxable Municipal Fund (each portfolio other than such municipal funds being
individually referred to herein as a "Fund" and collectively as the "Funds");
and
WHEREAS, BISYS 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:
1. Services.
--------
BISYS shall perform for the Company the transfer agent services set
forth in Schedule A hereto. BISYS also agrees to perform for the Company such
special services incidental to the performance of the services enumerated herein
as agreed to by the parties from time to time. BISYS shall perform such
additional services as are provided on an amendment to Schedule A hereof, in
consideration of such fees as the parties hereto may agree. Services performed
by BISYS shall be performed in good faith, with reasonable care and consistent
with all applicable regulations and internal control procedures.
BISYS may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the
Company (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 BISYS and not the agent of the
Company or such Fund, and that BISYS 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.
2. Fees.
----
The Company shall pay BISYS for the services to be provided by BISYS
under this Agreement in accordance with, and in the manner set forth in Schedule
B attached hereto. Fees for any additional services to be provided by BISYS
pursuant to an amendment to Schedule B hereto shall be subject to mutual
agreement at the time such amendment to Schedule B is proposed.
3. Reimbursement of Expenses and Miscellaneous Service Fees.
--------------------------------------------------------
(A) In addition to paying BISYS the fees set forth in the Fee
Agreement, the Company agrees to reimburse BISYS for BISYS' out-of-pocket
expenses in providing services hereunder, including without limitation, the
following:
(a) All freight and other delivery and bonding charges
incurred by BISYS in delivering materials to and from the Company and in
delivering all materials to shareholders;
(b) All direct telephone, telephone transmission and
telecopy or other electronic transmission expenses incurred by BISYS in
communication with the Company, the Company's investment adviser or custodian,
dealers, shareholders or others as required for BISYS to perform the services to
be provided hereunder;
(c) Sales taxes paid on behalf of the Trust;
(d) Expenses associated with the tracking of "as-of" trades;
(e) The cost of microfilm or microfiche of records or other
materials; and
(f) Any expenses BISYS shall incur at the written direction
of an officer of the Company thereunto duly authorized.
(B) In addition, BISYS shall be entitled to receive the
following fees:
(a) A fee for managing and overseeing the report, print and
mail functions performed by third-party vendors selected by BISYS, not to exceed
$.04 per page for statements, and $.03 per page for confirmations, as well as
all costs of postage, couriers, stock computer paper, statements, labels,
envelopes, checks, reports, letters, tax forms, proxies, notices or other forms
of printed material (including the costs of preparing and printing all printed
materials) which shall be required by BISYS for the performance of the services
to be provided hereunder;
(b) System development fees, billed at the rate of $150 per
hour, as approved by the Company, and all systems-related expenses, agreed in
advance, associated with the provision of special reports and services pursuant
to Item 8 of Schedule C attached hereto; and
(c) Ad hoc reporting fees, billed at an agreed upon rate.
4. Effective Date.
--------------
This Agreement shall become effective as of the date first
written above (the "Effective Date").
5. Term.
----
This Agreement shall continue in effect with respect to a Fund,
unless earlier terminated by either party hereto as provided hereunder, until
October 21,
2
2005 (the "Initial Term"). Thereafter, unless otherwise terminated as provided
herein, this Agreement shall be renewed automatically for successive one year
periods ("Rollover Periods"). This Agreement may be terminated without penalty
(i) by provision of a notice of nonrenewal in the manner set forth below, (ii)
by mutual agreement of the parties or (iii) for "cause," as defined below, upon
the provision of ninety (90) days advance written notice by the party alleging
cause. Written notice of nonrenewal must be provided within ninety (90) days of
the end of the Initial Term or any Rollover Period, as the case may be.
For purposes of this Agreement, "cause" shall mean (a) a
material breach of this Agreement that has not been remedied for thirty (30)
days following written notice of such breach from the non-breaching party; (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; or (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.
After such termination, for so long as BISYS, with the
written consent of the Company, 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 BISYS but unpaid by the Company upon such
termination shall be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Company, in addition to
the fees and disbursements provided by the Fee Agreement and Section 3 hereof,
the amount of all of BISYS' cash disbursements in connection with BISYS'
activities in effecting such termination, including without limitation, the
delivery to the Company and/or its distributor or investment adviser and/or
other parties, of the Company's property, records, instruments and documents.
If, for any reason other than nonrenewal, mutual agreement
of the parties or "cause," as defined above, BISYS is replaced as transfer
agent, or if a third party is added to perform all or a part of the services
provided by BISYS under this Agreement (excluding any Sub-transfer Agent
appointed by BISYS as provided in Section 1 hereof), then the Company shall make
a one-time cash payment, in consideration of the fee structure and services to
be provided under this Agreement, and not as a penalty, to BISYS equal to the
sum of (i) $65,000 plus (ii) the balance due BISYS for the lesser of one year or
the remainder of the then-current term of this Agreement, assuming for purposes
of calculation of the payment that such balance shall be based upon the average
number of Company shareholder accounts for the twelve months prior to the date
BISYS is replaced or a third party is added.
In the event the Company (or any Funds, but excluding the
Wisconsin Tax-Free Fund), is merged into another legal entity in part or in
whole pursuant to any form of business reorganization or is liquidated in part
or in whole prior
3
to the expiration of the then-current term of this Agreement, the parties
acknowledge and agree that the liquidated damages provision set forth above
shall be applicable unless BISYS is retained by the successor to provide
transfer agency services consistent with this Agreement, including the level of
assets subject to such services. The one-time cash payment referenced above
shall be due and payable on the day prior to the first day in which BISYS is
replaced or a third party is added.
The parties further acknowledge and agree that, in the event
BISYS is replaced, or a third party is added, as set forth above, (i) a
determination of actual damages incurred by BISYS would be extremely difficult,
and (ii) the liquidated damages provision contained herein is intended to
adequately compensate BISYS for damages incurred and is not intended to
constitute any form of penalty.
In addition to the above liquidated damages, if, for any
reason, BISYS is terminated or replaced as transfer agent or receives a notice
of termination, (i) BISYS shall be entitled to immediate repayment of any unpaid
conversion costs, as referenced in that certain letter agreement between BISYS
and the Company dated as of September 12, 2001 and (ii) BISYS shall be relieved
of any further obligation to waive fees as set forth in Schedule B hereto.
6. Uncontrollable Events.
---------------------
BISYS 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; provided, however, that BISYS has taken
reasonable precautions to prevent and minimize uncontrollable events and service
interruptions
7. Legal Advice.
------------
BISYS shall notify the Company at any time BISYS believes that it is
need of the advice of counsel (other than counsel in the regular employ of
BISYS or any affiliated companies) with regard to BISYS' responsibilities and
duties pursuant to this Agreement; and after so notifying the Company, BISYS, at
its discretion, shall be entitled to seek, receive and act upon advice of legal
counsel of its choosing, such advice to be at the expense of the Company or
Funds unless relating to a matter involving BISYS' willful misfeasance, bad
faith, negligence or reckless disregard with respect to BISYS' responsibilities
and duties hereunder and BISYS shall in no event be liable to the Company or any
Fund or any shareholder or beneficial owner of the Company for any action
reasonably taken pursuant to such advice.
8. Instructions.
------------
Whenever BISYS 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, BISYS
shall be entitled to rely upon any certificate, letter or other instrument or
communication (including, without limitation, a facsimile copy of a
shareholder's signature guaranteed by an officer, employee or other authorized
agent of the Company), believed by BISYS to be genuine and to have been properly
made, signed or authorized by an officer or other authorized agent of the
Company or by the shareholder or shareholder's agent, as
4
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 Company or any other person authorized by the Company's
Board of Directors (hereafter referred to as the "Directors") or by the
shareholder or shareholder's agent, as the case may be. As to the services to be
provided hereunder, BISYS may rely conclusively upon the terms of the
Prospectuses and Statement of Additional Information of the Company relating to
the Funds to the extent that such services are described therein unless BISYS
receives written instructions to the contrary in a timely manner from the
Company.
9. Standard of Care; Reliance on Records and Instructions;
-------------------------------------------------------
Indemnification.
---------------
BISYS shall use its best efforts to ensure the accuracy of all
services performed under this Agreement, but shall not be liable to the Company
for any action taken or omitted by BISYS in the absence of bad faith, willful
misfeasance, negligence or from reckless disregard by it of its obligations and
duties. The Company agrees to indemnify and hold harmless BISYS, 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 BISYS' 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 BISYS by the Company, the investment adviser and on any records provided
by any fund accountant or custodian thereof; provided that this indemnification
shall not apply to actions or omissions of BISYS in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties, and further provided that prior to confessing any claim
against BISYS (which phrase shall be deemed to include a default judgment
against BISYS) which may be the subject of this indemnification, BISYS shall
give the Company written notice of and reasonable opportunity to defend against
said claim in its own name or in the name of BISYS.
BISYS agrees to indemnify and hold harmless each Fund, the Company and
the Company's employees, agents, directors, officers and nominees ("Indemnified
Persons") 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, reasonable counsel fees and other
expenses of every nature and character arising out of or in any way relating to
BISYS's actions or omissions in the course of performing its duties hereunder
where such actions or omissions are attributable to BISYS's bad faith, willful
misfeasance, reckless disregard or negligence; provided that, prior to
confessing any claim against any Indemnified Persons (which phrase shall be
deemed to include a default judgment against such Indemnified Person or
Persons), which claim is the subject of indemnification under this paragraph,
the Company shall give BISYS written notice of and reasonable opportunity to
defend against said claim in its own name or in the name of the Indemnified
Person or Persons.
10. Record Retention and Confidentiality.
------------------------------------
5
BISYS shall keep and maintain on behalf of the Company all books and
records which the Company or BISYS 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 Investment Company Act of 1940, as
amended (the "1940 Act"), relating to the maintenance of books and records in
connection with the services to be provided hereunder. BISYS further agrees that
all such books and records shall be the property of the Company and to make such
books and records available for inspection by the Company or by the Securities
and Exchange Commission (the "Commission") at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Company and its shareholders, except when requested to divulge such information
by duly-constituted authorities or court process, or requested by a shareholder
or shareholder's agent with respect to information concerning an account as to
which such shareholder has either a legal or beneficial interest or when
requested by the Company, or the dealer of record as to such account.
11. Reports.
-------
BISYS will furnish to the Company and to its properly-authorized
auditors, investment advisers, examiners, distributors, dealers, underwriters,
salesmen, insurance companies and others designated by the Company in writing,
such reports at such times as are prescribed in Schedule C attached hereto, or
as subsequently agreed upon by the parties pursuant to an amendment to Schedule
C. The Company agrees to examine each such report or copy promptly and will
report or cause to be reported any errors or discrepancies therein.
12. Rights of Ownership.
------------------
All computer programs and procedures developed to perform services
required to be provided by BISYS under this Agreement are the property of BISYS.
All records and other data except such computer programs and procedures are the
exclusive property of the Company and all such other records and data will be
furnished to the Company in appropriate form as soon as practicable after
termination of this Agreement for any reason.
6
13. Return of Records.
-----------------
Upon approval or request of the Company, BISYS shall promptly turn
over to the Company and cease to retain BISYS' files, records and documents
created and maintained by BISYS pursuant to this Agreement which are no longer
needed by BISYS in the performance of its services or for its legal protection.
If not so turned over to the Company, such documents and records will be
retained by BISYS for six years from the year of creation, at the Company's
expense. At the end of such six-year period, such records and documents will be
turned over to the Company unless the Company authorizes in writing the
destruction of such records and documents.
14. Bank Accounts.
-------------
The Company and the Funds shall establish and maintain such bank
accounts with such bank or banks as are selected by the Company, as are
necessary in order that BISYS may perform the services required to be performed
hereunder. To the extent that the performance of such services shall require
BISYS directly to disburse amounts for payment of dividends, redemption proceeds
or other purposes, the Company and Funds shall provide such bank or banks with
all instructions and authorizations necessary for BISYS to effect such
disbursements.
15. Representations of the Company.
------------------------------
The Company certifies to BISYS that: (a) as of the close of business
on the Effective Date, each Fund which is in existence as of the Effective Date
has authorized the number of shares specified in the Articles of Incorporation,
and (b) by virtue of its Articles of Incorporation, shares of each Fund which
are redeemed by the Company may be sold by the Company from its treasury, and
(c) this Agreement has been duly authorized by the Company and, when executed
and delivered by the Company, will constitute a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and remedies of creditors
and secured parties.
16. Representations of BISYS.
------------------------
BISYS represents and warrants that: (a) BISYS has been in, and shall
continue to be in compliance in all material respects with all provisions of
law, including Section 17A(c) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), required in connection with the performance of its duties
under this Agreement; and (b) the various procedures and systems which BISYS has
implemented with regard to safekeeping from loss or damage attributable to fire,
theft or any other cause of the blank checks, records, and other data of the
Company and BISYS' 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.
17. Insurance.
---------
BISYS shall maintain a fidelity bond covering larceny and embezzlement
7
and an insurance policy with respect to directors and officers errors and
omissions coverage in amounts that are appropriate in light of its duties and
responsibilities hereunder. BISYS shall notify the Company should its insurance
coverage with respect to professional liability or errors and omissions coverage
be canceled or reduced. Such notification shall include the date of change and
the reasons therefor. BISYS shall notify the Company 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 Company from time to
time as may be appropriate of the total outstanding claims made by BISYS under
its insurance coverage, including the extent to which all such claims may exceed
the total amount of coverage.
18. Information to be Furnished by the Company and Funds.
----------------------------------------------------
The Company has furnished to BISYS the following:
(A) Copies of the Articles of Incorporation and of any amendments
thereto, certified by the proper official of the state in which such Articles
have been filed.
(B) Copies of the following documents:
(a) The Company's Bylaws and any amendments thereto;
(b) Certified copies of resolutions of the Board of Directors
covering the following matters:
(c) Approval of this Agreement and authorization of a specified
officer of the Company to execute and deliver this Agreement and authorization
for specified officers of the Company to instruct BISYS hereunder; and
(d) Authorization of BISYS to act as Transfer Agent for the
Company on behalf of the Funds.
(e) A list of all officers of the Company, together with
specimen signatures of those officers, who are authorized to instruct BISYS in
all matters.
(f) Two copies of the following (if such documents are employed
by the Company):
(g) Prospectuses and Statement of Additional Information;
(h) Distribution Agreement; and
(i) All other forms commonly used by the Company or its
Distributor with regard to their relationships and transactions with
shareholders of the Funds.
(j) A certificate as to shares of the Company authorized,
issued, and outstanding as of the Effective Date of BISYS' appointment as
Transfer Agent (or as of the date on which BISYS' services are commenced,
whichever is the later date)
8
and as to receipt of full consideration by the Company for all shares
outstanding, such statement to be certified by the Treasurer of the Company.
19. Information Furnished by BISYS.
------------------------------
BISYS has furnished to the Company the following:
(A) BISYS' Articles of Incorporation.
(B) BISYS' Bylaws and any amendments thereto.
(C) Certified copies of actions of BISYS covering the following
matters:
(a) Approval of this Agreement, and authorization of a specified
officer of BISYS to execute and deliver this Agreement;
(b) Authorization of BISYS to act as Transfer Agent for the
Company.
(c) Amendments to Documents.
The Company shall furnish BISYS written copies of any
amendments to, or changes in, any of the items referred to in Section 18 hereof
forthwith upon such amendments or changes becoming effective. In addition, the
Company agrees that no amendments will be made to the Prospectuses or Statement
of Additional Information of the Company which might have the effect of changing
the procedures employed by BISYS in providing the services agreed to hereunder
or which amendment might affect the duties of BISYS hereunder unless the Company
first obtains BISYS' approval of such amendments or changes.
20. Reliance on Amendments.
----------------------
BISYS may rely on any amendments to or changes in any of the documents
and other items to be provided by the Company pursuant to Sections 18 and 20 of
this Agreement and the Company hereby indemnifies and holds harmless BISYS from
and against any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, counsel fees and other expenses of every nature
and character which may result from actions or omissions on the part of BISYS in
reasonable reliance upon such amendments and/or changes. Although BISYS is
authorized to rely on the above-mentioned amendments to and changes in the
documents and other items to be provided pursuant to Sections 18 and 20 hereof,
BISYS shall be under no duty to comply with or take any action as a result of
any of such amendments or changes unless the Company first obtains BISYS'
written consent to and approval of such amendments or changes.
21. Compliance with Law.
-------------------
Except for the obligations of BISYS set forth in Section 10 hereof,
the Company assumes full responsibility for the preparation, contents, and
distribution of each prospectus of the Company as to compliance with all
applicable requirements of
9
the Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act, and any
other laws, rules and regulations of governmental authorities having
jurisdiction. BISYS shall have no obligation to take cognizance of any laws
relating to the sale of the Company's shares. The Company represents and
warrants that no shares of the Company will be offered to the public until the
Company's registration statement under the 1933 Act and the 1940 Act has been
declared or becomes effective.
22. 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 the following address: if to the Company, to it at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, Attn: Xx. Xxxx Xxxxx, Chief Operating Officer; and
if to BISYS, to it at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, Attn: President,
or at such other address as such party may from time to time specify in writing
to the other party pursuant to this Section.
23. Headings.
--------
Paragraph headings in this Agreement are included for convenience only
and are not to be used to construe or interpret this Agreement.
24. 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 25 shall not limit or in any way affect
BISYS' right to appoint a Sub-transfer Agent pursuant to Section 1 hereof. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
25. Governing Law and Matters Relating to the Company as a Maryland
----------------------------------------------------------------
Corporation.
-----------
This Agreement shall be governed by and provisions shall be construed
in accordance with the laws of the State of Ohio. It is expressly agreed that
the obligations of the Company hereunder shall not be binding upon any of the
Directors, shareholders, nominees, officers, agents or employees of the Company
personally, but shall bind only the property of the Company. The execution and
delivery of this Agreement have been authorized by the Directors, and this
Agreement has been signed and delivered by an authorized officer of the Company,
acting as such, and neither such authorization by the Directors nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the property of the Company as provided in the Articles of
Incorporation.
26. Privacy.
-------
Nonpublic personal financial information relating to consumers or
customers of the Company provided by, or at the direction of the Company to
BISYS, or
10
collected or retained by BISYS in the course of performing its duties as
transfer agent shall be considered confidential information. BISYS shall not
give, sell or in any way transfer such confidential information to any person or
entity, other than affiliates of BISYS in order to perform the duties assumed by
BISYS hereunder except at the direction of the Company or as required or
permitted by law. BISYS shall have in place and shall maintain physical,
electronic and procedural safeguards reasonably designed to protect the
security, confidentiality and integrity of, and to prevent unauthorized access
to or use of records and information relating to consumers or customers of the
Company.
The Company represents to BISYS that it has adopted a Statement of its
privacy policies and practices as required by Securities and Exchange Commission
Regulation S-P and agrees to provide BISYS with a copy of that statement
annually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed all as of the day and year first above written.
HEARTLAND GROUP, INC.
By:___________________________
Title:
_______________________
BISYS FUND SERVICES OHIO, INC.
By:___________________________
Title:
_______________________
11
SCHEDULE A
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
HEARTLAND GROUP, INC.
AND
BISYS FUND SERVICES OHIO, INC.
TRANSFER AGENCY SERVICES
1. Shareholder Transactions
------------------------
a. Process shareholder purchase and redemption orders in accordance with
the description in the Company's registration statement.
b. Set up account information, including address, dividend option, taxpayer
identification numbers and wire instructions.
c. Issue confirmations in compliance with Rule 10b-10 under the Securities
Exchange Act of 1934, as amended.
d. Issue and mail quarterly statements for shareholders.
e. Process transfers and exchanges.
f. Process dividend payments, including the purchase of new shares, through
dividend reimbursement.
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 detailed 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 National
Association of Securities Dealers, Inc. 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.
4. Dealer/Load Processing (if applicable)
--------------------------------------
A-1
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 purchase of Fund shares.
c. Calculate fees due under 12b-1 plans for distribution and marketing
expenses in accordance with 12b-1 plans.
d. Track sales and commission statistics by dealer and provide for payment
of commissions on direct shareholder purchases in a load Fund.
e. Provide Gain/Loss tracking.
5. Shareholder Account Maintenance
-------------------------------
a. Maintain all shareholder records for each account in the Company.
b. Issue quarterly 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.
A-2
SCHEDULE B
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
HEARTLAND GROUP, INC.
AND
BISYS FUND SERVICES OHIO, INC.
FEES
BISYS shall be entitled to receive fees in accordance with the following
schedule:
Annual Fees:
Annual base fee per fund/cusip: $22,500
Plus
Annual per account fees: $22.50 for up to 70,000 non-networked accounts
$20.00 for non-networked accounts 70,001 and
above
$17.50 for networked accounts
$5.00 for closed accounts
Plus
Annual per XXX account fees: $15.00; $7.50 for Tax Year 2001 only
Implementation Fee:
$75,000, assuming conversion occurs the weekend of October 20, 2001. In
the event the conversion occurs at a later date, the implementation fee
is subject to increase. The implementation fee applies to project
management and pre-conversion staffing. In the event BISYS provides
services to the Municipal Funds, the Heartland Funds may share the
implementation fee with the Municipal Funds. BISYS shall not charge the
implementation fee twice.
BISYS shall also be entitled to receive miscellaneous service fees and
reimbursement of out-of-pocket expenses as set forth below. BISYS and
the Company agree that the costs associated with the conversion process
shall not exceed $245,000. The parties further agree that the costs of
conversion shall be paid in accordance with the schedule set forth on
Exhibit A attached hereto. Notwithstanding the foregoing, the Company
agrees that the balance of such conversions costs shall be immediately
due and payable to BISYS upon termination of this Agreement.
B-1
Out-of-pocket expenses and Miscellaneous Service Fees associated with
the conversion process and the on-going provision of services, such
as:
A. Out-of-Pocket Expenses
----------------------
. Telecommunications/electronic transmissions
. Courier (delivery services)
. State filing fees
. Check processing fees
. Records retention
. Fulfillment
. XXX Custody and other related fees
. NSCC - related costs and expenses
. Sales taxes
. Expenses incurred in tracking "as of" trades
B. Miscellaneous Service Fees
. Costs of statementing and confirmations, tax reports, print
management and oversight and related postage/delivery
. Systems conversion programming - $125 on first 600 hrs; $150
thereafter
. Post-conversion customized interfaces, programming and reports
. Special and Ad-hoc Reports-at an agreed upon rate
. System Development - at rate of $150/hour as approved by
client
Fee Waiver:
Provided that the Company has not breached its obligations under this
Agreement in any material respect, BISYS agrees to waive $137,000 of
its fees at the end of each year of the four-year term for an
aggregate of $548,000.
After Tax Return Calculations:
Option 1 (minimal requirement)
Provide after tax returns once per year at the funds fiscal year
end. This information will be distributed to the Company and
reflected in the annual prospectus update (N-1A).
Setup Costs (one time fee)
$1,000 per fund (including up to 3 classes)
$250 per additional class over 3
B-2
Annual Maintenance Fee
$250 per fund (including up to 3 classes)
$50 per additional class over 3
Option 2
Provide after tax returns daily and monthly for distribution
to clients. This option will give the Company the flexibility
to use the information to provide to customers, make
available to reps and to use in marketing materials.
Set Up Costs (one time fee)
$1,000 per fund (including up to 3 classes)
$250 per additional class over 3
Annual Maintenance Fee
$500 per fund (including up to 3 classes)
$100 per additional class over 3
Standard reports will be provided. If the Company wishes to make
changes to the reports in any way, there will be an hourly
programming charge to accommodate special requests.
Basic Interactive Voice Response Unit:
. Insert Client Message after initial greeting
. Price information by fund
. Price information by category (i.e. Money Market Funds,
Equity Funds, etc.)
. Personalized Watch List
. Sales Agent Account Inquiry Option
. Reorder Money Market checkbooks, duplicate statements,
duplicate tax forms
. Option to hear account balances on individual accounts or
hear account balances for all accounts
. Current and prior year-to-date balances for income dividends,
capital gains, and foreign tax
. Last three transactions by category (purchase, redemption,
exchange, etc.)
B-3
Basic IVR - $5000 Testing Fee & $500/month/complex Fee
WebSolutions(TM) - WebAccess(TM) (Inquiry Only):
Implementation: $25,000
Monthly: $3,100 plus usage fees:
Registered User Fees:
. $.50/user/month
General:
All fees are annualized and will be prorated on a monthly basis for billing
purposes. All fees and expenses shall be allocated to each portfolio on a
monthly basis based upon the percentage of net assets that each of the
portfolios represent as compared to the total net assets of the Fund.
The fees set forth in this schedule shall be increased annually commencing
on the one-year anniversary date of the Effective Date by the percentage
increase since the Effective Date in consumer prices for services as
measured by the United States Consumer Price Index entitled "All Services
Less Rent of Shelter" or a similar index should such index no longer be
published.
In addition, BISYS shall be entitled to be reimbursed for out-of-pocket
expenses and to receive miscellaneous service fees as set forth in this
Agreement.
B-4
SCHEDULE C
TO THE TRANSFER AGENCY AGREEMENT
BETWEEN
HEARTLAND GROUP, INC.
AND
BISYS FUND SERVICES OHIO, INC.
REPORTS
1. Daily Shareholder Activity Journal
2. Daily Fund Activity Summary Report
a. Beginning Balance
b. Dealer Transactions
c. Shareholder Transactions
d. Reinvested Dividends
e. Exchanges
f. Adjustments
g. Ending Balance
3. Daily Wire and Check Registers
4. Monthly Dealer Processing Reports
5. Monthly Dividend Reports
6. Sales Data Reports for Blue Sky Registration
7. A copy of the most recent report by independent public accountants
describing control structure policies and procedures relating to transfer
agency operations pursuant to AICPA Statement on Auditing Standards Number
70.
8. Such special reports and additional information that the parties may agree
upon, from time to time.
C-1
EXHIBIT A
Attach Conversion Cost Spreadsheet
