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Exhibit 9(b)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this day of September, 1997, by and
between PROFUNDS, a Delaware business trust (the "Company"), and BISYS FUND
SERVICES LIMITED PARTNERSHIP, d/b/a BISYS FUND SERVICES (the "Administrator"),
an Ohio limited partnership.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest ("Shares");
and
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Company as the Company and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Company hereby retains
the Administrator to act as the administrator of the Portfolios and to furnish
the Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform the
duties set forth below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and shall
not be deemed an agent of the Company.
ARTICLE 2. ADMINISTRATIVE SERVICES. Under the supervision of the
Company's Trustees and their designees, the Administrator shall manage,
administer and conduct all of the general business activities of the Company and
the Portfolios other than those which have been contracted to third parties by
the Company. The Administrator shall provide the Company with all necessary and
desirable regulatory reporting, office space, equipment, personnel, compensation
and facilities (including facilities for Shareholders' and Trustees' meetings)
for handling the affairs of the Company and carrying out the Administrator's
duties hereunder.
As part of its duties hereunder, the Administrator shall investigate,
assist in the selection of and conduct relations with custodians, depositories,
accountants, legal counsels, underwriters, brokers and dealers, corporate
fiduciaries, insurers, banks and persons in any other capacity deemed to be
necessary or desirable for the Portfolios' operations. The Administrator shall
oversee, examine and review the performance by others of other services provided
in connection with the operations of the Portfolios and shall provide the
Trustees of the Company with such reports regarding investment performance as
they may reasonably request; provided that the Administrator shall have
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no responsibility for supervising the performance by any investment adviser or
subadviser of its responsibilities.
Without limiting the generality of the foregoing, the Administrator
shall also provide the services that are set forth in Schedule B hereto;
provided, however, that the parties acknowledge and agree that the services to
be provided hereunder on behalf of the Money Market ProFund shall be limited to
those that are necessary and appropriate for a feeder fund that invests all of
its assets in a separate, unaffiliated registered investment company ("Master
Portfolio"). In that connection, the parties agree that the Administrator shall
bear no responsibility for the provision of any services to any Master Portfolio
in which the Money Market ProFund may invest its assets.
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all Trustees of the
Company who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Trustees of the
Company to perform services on behalf of the Company.
(B) THE COMPANY. The Company assumes and shall pay or cause to be paid
all other expenses of the Company not otherwise allocated herein, including,
without limitation, organization costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of custodial
services, the cost of initial and ongoing registration of the Shares under
Federal and state securities laws, fees and out-of-pocket expenses of Trustees
who are not affiliated persons of the Administrator or the Investment Adviser to
the Company or any affiliated corporation of the Administrator or the Investment
Adviser, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, and all fees and charges of investment
advisers to the Company.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Company shall pay to the Administrator compensation that is more
particularly described in the Omnibus Fee Agreement among the Administrator,
BISYS Fund Services, Inc. and the Company dated September , 1997. Such
compensation shall be calculated and accrued daily, and paid to the
Administrator quarterly. The Company shall also reimburse the Administrator for
its reasonable out-of-pocket expenses, including the travel and lodging expenses
incurred by officers and employees of the Administrator in connection with
attendance at Board meetings.
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If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) SURVIVAL OF COMPENSATION RIGHTS. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable law which cannot be waived or modified
hereby. (As used in this Article 5, the term "Administrator" shall include
partners, officers, employees and other agents of the Administrator as well as
the Administrator itself.)
So long as the Administrator acts in good faith and with due diligence
and without negligence, the Company assumes full responsibility and shall
indemnify the Administrator and hold it harmless from and against any and all
actions, suits and claims, whether groundless or otherwise, and from and against
any and all losses, damages, costs, charges, reasonable counsel fees and
disbursements, payments, expenses and liabilities (including reasonable
investigation expenses) arising directly or indirectly out of the
Administrator's actions taken or nonactions with respect to the performance of
services hereunder. The indemnity and defense provisions set forth herein shall
indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Company may be asked to indemnify or hold the
Administrator harmless, the Company shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Company promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Company, but failure to do so in good faith shall not affect the rights
hereunder.
The Company shall be entitled to participate at its own expense or, if
it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Company elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the
Company and satisfactory to the Administrator, whose approval shall not be
unreasonably withheld. In the event that the Company elects to assume the
defense of any suit and
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retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Company does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
The Administrator may apply to the Company at any time for instructions
and may consult counsel for the Company or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Company until receipt of written notice thereof from the Company.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and Shareholders of the Company are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of the Administrator and its counsel are or may be or become
similarly interested in the Company, and that the Administrator may be or become
interested in the Company as a Shareholder or otherwise.
ARTICLE 7. DURATION OF THIS AGREEMENT. The Term of this Agreement shall
be as specified in Schedule A hereto.
ARTICLE 8. ASSIGNMENT. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
the Administrator may, at its expense, subcontract with any entity or person
concerning the provision of the services contemplated hereunder. The
Administrator shall not, however, be relieved of any of its obligations under
this Agreement by the appointment of such subcontractor and provided further,
that the Administrator shall be responsible, to the extent provided in Article 5
hereof, for all acts of such subcontractor as if such acts were its own. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
ARTICLE 9. AMENDMENTS. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Company, and (ii) by the vote of a majority of
the Trustees of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Trustees meeting called
for the purpose of voting on such approval.
For special cases, the parties hereto may amend such procedures set
forth herein as may be appropriate or practical under the circumstances, and the
Administrator may conclusively assume that any special procedure which has been
approved by the Company does not conflict with or violate any
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requirements of its Declaration of Trust or then current prospectuses, or any
rule, regulation or requirement of any regulatory body.
ARTICLE 10. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.
ARTICLE 11. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Company, at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000; and if to the Administrator at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx
00000.
ARTICLE 13. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
PROFUNDS
By:
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Title:
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BISYS FUND SERVICES LIMITED
PARTNERSHIP
BY: BISYS FUND SERVICES, INC.,
GENERAL PARTNER
By:
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Title:
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF SEPTEMBER ______, 1997
BETWEEN PROFUNDS
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all Portfolios of the Company,
either now or hereafter created. The current portfolios of
___________, are set forth below: the Bull ProFund, the
UltraBull ProFund, the Bear ProFund, the UltraBear ProFund,
the OTC ProFund, and the U.S. Government Money Market ProFund.
Term: Pursuant to Article 7, the term of this Agreement shall
commence on the first day on which Shares of the Company are
publicly sold (the "Effective Date") and shall remain in
effect for a period of thirty (30) months following such
Effective Date ("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 60 days
advance written notice by the party alleging cause. Written
notice of nonrenewal must be provided at least 60 days prior
to 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 cured
within thirty (30) days following written notice of such
breach from the non-breaching party; (b) willful misfeasance,
bad faith, gross negligence or reckless disregard on the part
of the party to be terminated with respect to its obligations
and duties set forth herein; (c) 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 (d) 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.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, 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.
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Compensation due the Administrator and unpaid by the Company
upon such termination shall be immediately due and payable
upon and notwithstanding such termination. The Administrator
shall be entitled to collect from the Company, in addition to
the compensation described in this Schedule A, the amount of
all of the Administrator's cash disbursements for services in
connection with the Administrator's activities in effecting
such termination, including without limitation, the delivery
to the Company and/or its designees of the Company's property,
records, instruments and documents, or any copies thereof.
Subsequent to such termination, for a reasonable fee, the
Administrator will provide the Company with reasonable access
to any Company documents or records remaining in its
possession.
If, for any reason, the Administrator is replaced as fund
manager and administrator, or if a third party is added to
perform all or a part of the services provided by the
Administrator under this Agreement (excluding any sub-
administrator appointed by the Administrator as provided in
Article 7 hereof), then the Company shall make a one-time cash
payment, as liquidated damages, to the Administrator equal to
the balance due the Administrator for the remainder of the
term of this Agreement, assuming for purposes of calculation
of the payment that the asset level of the Company on the date
the Administrator is replaced, or a third party is added, will
remain constant for the balance of the contract term.
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XXXXXXXX X
TO THE ADMINISTRATION AGREEMENT
DATED AS OF SEPTEMBER __, 1997
BETWEEN PROFUNDS
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
DETAILED SERVICE LISTING
ADMINISTRATION
1. Maintain calendar and files for all Board and shareholder meeting
materials
2. Maintain and manage annual regulatory filing calendar and follow-up with
responsible parties
3. Obtain appropriate insurance coverage on behalf of the Company, as
approved by the Company's Board of Trustees, including a Fidelity Bond and
a Directors and Officers Errors and Omissions policy, and renew such
policies based upon terms and conditions that are recommended by the
Administrator and approved by the Company's Board of Trustees
4. Maintain insurance files for the Company
5. Review Company registration statements and proxy materials prepared by
Company counsel
6. Prepare operating manual for the Company
7. Review materials and reports prepared by Company auditors, and materials
prepared by Company counsel which is submitted to the Administrator
8. Communicate all income breakdown data to client services and transfer
agent and coordinate printing/mailing of state income letters
9. Prepare and file Annual and Semi-Annual Reports subject to review by
Company counsel and the Company's Independent Accountants
10. Coordinate printing and distribution of prospectuses
11. Coordinate printing, distribution and tabulation of proxies
12. Prepare and file Form N-SAR
13. Prepare and file Rule 24f-2 and Rule 24e-2 filings subject to review by
Company counsel
14. Coordinate 17f-2 audits with custodians
15. Apply for all portfolio tax i.d.#s
16. Coordinate all NRSRO rating meetings
17. Coordinate and facilitate NASDAQ registration
18. Coordinate and facilitate distribution of trustee/officer questionnaires
and respond to trustees/officers questions relating thereto
19. Coordinate seed money and establish control accounts for new Portfolios
20. Maintain open file summary, authorized signers list, and fund compliance
calendars
21. Review and file Forms 1120 RIC and 8613, as prepared by the Company's
Independent Accountants
22. Prepare and file (i) Forms 1099 DIV and 1099 MISC and (ii) state tax
returns, subject to review by the Company's Independent Accountants
23. Monitor and advise the Company and its Portfolios concerning their
regulated investment company status under the Internal Revenue Code
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24. Calculate contractual Company expenses and control all disbursements for
the Company, and as appropriate compute the Company's yields, total
return, expense ratios, portfolio turnover rate and, if required,
portfolio average dollar-weighted maturity
25. Calculate performance data of the Portfolios for dissemination to
information services covering the investment company industry
26. Assist with the design, development, and operation of the Portfolios,
including new classes, investment objectives, policies and structure
27. Advise the Company and its Board of Trustees on matters concerning the
Company and its affairs
COMPLIANCE
1. Review monthly compliance reports prepared by the investment adviser
2. Perform independent monthly portfolio compliance review of information
contained in fund accounting source reports
3. Coordinate all IRS quarterly compliance letters to investment advisers
4. Notify appropriate officers of xxxx-to-market issues
5. Monitor compliance by the Company with conditions imposed by Rule 18f-3
relating to multiple classes of shares
6. Quarterly review of securities transactions by persons designated in the
Company's Code of Ethics as access persons for purposes of determining
compliance with such Code of Ethics
7. Quarterly reporting of compliance with Company's Code of Ethics
8. Respond to the SEC Fund audits and coordinate SEC inspections
9. Respond to Fund audit requests from independent fund accountants
10. Provide proactive compliance consulting/advice to portfolio managers
11. Prepare broker allocation reports for review by the Company's investment
adviser
12. Monitor fidelity bond coverage for the Company
13. Perform initial on-site compliance training based on Fund-specific
compliance manuals prepared by BISYS
BOARD PROCESS AND MEETINGS
1. Prepare quarterly Board meeting responsibility chart
2. Provide at least one person to attend Board meetings
3. Prepare Board agendas and BISYS sections of Board materials
4. Prepare all Board minutes and agendas, subject to review by Company
counsel
5. Prepare special Board meeting materials
6. Review, as requested, investment adviser's report to be submitted to the
Board pursuant to applicable Company procedures
7. Coordinate Board book production and distribution
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LEGAL SERVICES
1. Provide support to Fund Administration and blue sky personnel
2. Prepare the following Company agreements, subject to review by Company
counsel: (i) Investment Advisory Agreement, (ii) Administration Agreement,
(iii) Fund Accounting Agreement, (iv) Transfer Agency Agreement, (v)
Omnibus Fee Agreement for Administration, Fund Accounting and Transfer
Agency services and (vi) shareholder service agreements for use with
various service organizations.
3. Prepare post-effective amendments to the Company's registration statement
representing the annual update of financial information for such
registration statement, subject to review by Company counsel, and file
such documents with the SEC
4. Except as provided in Item 3 above, review prospectuses, prospectus
supplements, statements of additional information, other registration
statement materials and proxy materials prepared by Company counsel and
file such documents with the SEC
5. Maintain files of registration statements, fund contracts, Company proxies
and other Company documents
6. Prepare for and conduct shareholder meetings
7. Prepare for and comply with any regulatory examinations of or involving
the Company
8. Advise on product development issues
9. Respond to regulatory agency (i.e., NASD, SEC, IRS, bank regulatory)
proposals
COMPLIANCE - DISTRIBUTION ACTIVITIES
1. Review all fund advertising and sales material for compliance with
applicable laws and regulations, subject to approval by Company counsel
2. File with appropriate regulatory authorities all advertising and sales
material following approval by Company counsel
3. Maintain and update Ad/Sales Lit files
4. Obtain finalized Ad/Sales Lit for compliance files
5. Respond to SEC advertising and sales literature comments subject to
approval by Company counsel
REGISTRATION/QUALIFICATION ACTIVITIES (FOR BISYS REPRESENTATIVES DISTRIBUTING
CLIENT'S FUNDS, IF APPLICABLE)
6. Review & ascertain that BISYS registered representatives are licensed in
appropriate jurisdictions
7. Process all registration functions for BISYS registered representatives
8. Coordinate NASD continuing education requirements for all BISYS registered
representatives
BROKER/DEALER COMPLIANCE ACTIVITIES
9. Review and execute selected Service Agreements, subject to approval by
Company counsel
10. Respond to industry proposals and communicate comments to Company officers
FUND OFFICERS
1. Provide officers for the Company, upon request
BLUE SKY
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1. Register the Company and its shares with appropriate state blue sky
authorities
2. Respond to state comments during the registration process
3. Obtain all sales permits required by relevant state authorities
4. Amend and renew sales permits as required from time to time
5. Monitor the sales of Shares in individual states on a daily basis and
report required sales to appropriate states
6. File all registration statements, Prospectuses, proxy statements, Rule
24f-2 Notices and other Fund reports and documents as required by state
law
7. Maintain fund blue sky calendars
8. Respond to all blue sky audit and examination issues
9. File all renewal registrations for existing Portfolios
10. Conduct blue sky fee analysis, upon request
11. Implement SRD electronic filings
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