ADMINISTRATION AND
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of the 12th day of July 1991, by and between DFA
U.S. LARGE CAP PORTFOLIO INC., a Maryland corporation (the "Fund"), and
PROVIDENT FINANCIAL PROCESSING CORPORATION ("PFPC"), a Delaware corporation
which is an indirect wholly-owned subsidiary of PNC Financial Corp.
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund wishes to retain PFPC to provide certain administrative
and accounting services, and PFPC is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints PFPC to provide certain
administrative and accounting services to the Fund for the period and on the
terms set forth in this Agreement. PFPC accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Paragraph 12 of this Agreement. The Fund presently issues one series or
class of shares which is described in the Prospectus delivered to
PFPC herewith, and may from time to time issue separate series or classes or
classify and reclassify shares of such series or class. Hereinafter each such
class shall be referred to as a "Portfolio". The records, notices, reports and
services provided by PFPC hereunder shall be prepared, kept, maintained and
furnished by PFPC in respect of each Portfolio of the Fund existing on the date
hereof, and any Portfolio(s) organized by the Fund after the date hereof as
agreed in writing by the Fund and PFPC.
2. DELIVERY OF DOCUMENTS. The Trustee has furnished PFPC with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing the
appointment of PFPC to provide certain administration and accounting services
for the Fund and approving this Agreement;
(b) Appendix A identifying and containing the signatures of the
Fund's officers and other persons authorized to issue Oral Instructions and to
sign Written Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Articles of Incorporation filed with the Maryland
Department of Assessments and Taxation on March 19, 1990 and all amendments
thereto (such Articles of Incorporation as presently in effect and as they shall
from time to time be amended, are herein called the "Charter");
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(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called "By-Laws");
(e) The current Facility Agreement with Dimensional Fund Advisors
Inc. ("DFA") and the Fund (the "Advisory Agreements");
(f) The current Agreement between the Fund and DFA Securities Inc.;
(g) The Custodian Agreement between Provident National Bank
("Provident") and the Fund dated as of July 12, 1991 (the "Custodian
Agreement");
(h) The Transfer Agency Agreement between Provident Financial
Processing Corporation and the Fund dated as of July 12, 1991 (the "Transfer
Agency Agreement");
(i) The Fund's most recent Registration Statement on Form N-lA under
the Securities Act of 1933 (the "1933 Act") (File No. 33-__________) and under
the 1940 Act, as filed with the SEC on May 14, 1991 relating to Shares of the
Fund's Common Stock (hereinafter "Shares"), $.01 par value, and all amendments
thereto; and
(j) The Fund's most recent prospectus or prospectuses and Statements
of Additional Information relating to the Portfolios (such prospectuses and all
amendments and supplements to such Prospectus and Statement of Additional
Information are herein called the "Prospectus").
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The Fund will furnish PFPC from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. DEFINITIONS.
(a) "AUTHORIZED PERSON". As used in this Agreement, the term
"Authorized Person" means any officer of the Fund and any other person, whether
or not any such person is an officer or employee of the Fund, duly authorized by
the Board of Directors of the Fund to give Oral and Written Instructions on
behalf of the Fund and listed on Appendix A listing persons duly authorized to
give Oral or Written Instructions on behalf of the Fund as may be received by
PFPC from time to time.
(b) "ORAL INSTRUCTIONS". As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person. The Fund agrees to deliver to PFPC, at the time and in the
manner specified in Paragraph 4(b) of this Agreement, Written Instructions
confirming Oral Instructions.
(c) "WRITTEN INSTRUCTIONS". As used in this Agreement, the term
"Written Instructions" means written instructions delivered by hand, mail,
tested telegram, cable, telex or facsimile sending device, and received by PFPC,
signed by two Authorized Persons. Written Instructions include electronic
transmissions properly originated and confirmed by the Fund.
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(d) "AFFILIATE". As used herein, "Affiliate" means any company that
controls, is controlled by, or is under common control with PFPC.
4. INSTRUCTIONS CONSISTENT WITH CHARTER, ETC.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral or Written Instructions. Although PFPC may know of the provisions of
the Charter and By-Laws of the Fund, PFPC may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent with any
provisions of such Charter or By-Laws, or any vote, resolution or proceeding of
the Shareholders, or of the Board of Directors, or of any committee thereof.
(b) PFPC shall be entitled to rely upon any Oral Instructions and any
Written Instructions actually received by PFPC from the Fund and any Affiliate,
provided such Affiliate has not acted negligently (unless such an Affiliate has
received and transmitted erroneous instructions received from an Authorized
Person who is not an Affiliate) pursuant to this Agreement. The Fund agrees to
forward to PFPC Written Instructions confirming Oral Instructions in such manner
that the Written Instructions are received by PFPC, whether by hand delivery,
telex, facsimile sending device or otherwise, by the close of business of the
same day that such Oral Instructions are given to PFPC. The Fund agrees that
the fact that such confirming Written Instructions are not received by PFPC
shall in no way affect the validity of the transactions or enforceability of the
transactions authorized by
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the Fund by giving Oral Instructions. The Fund agrees that PFPC shall incur no
liability to the Fund in acting upon Oral Instructions given to PFPC by the
Fund hereunder concerning such transactions, provided such instructions
reasonably appear to have been received from an Authorized Person.
5. SERVICES ON A CONTINUING BASIS.
(a) In preparing the accounting records of the Fund, PFPC shall
comply with generally accepted accounting principles (GAAP) or with an
alternative method described in Written Instructions provided that such
alternative method is not unreasonable and would not be burdensome to PFPC.
PFPC will perform the following accounting services for the Fund on an
ongoing or a daily basis, as appropriate, it being understood that the
services provided hereunder shall be provided on a per Portfolio basis in a
manner that properly identifies the Portfolio as to which such services
relate:
(1) On a daily basis, journalize the Fund's investment, capital
Share and income and expense activities and post to the
general ledger;
(2) Verify with the custodian, investment buy/sell trade tickets
which may be sent electronically via modem from the Fund and
which may include securities acquired for Fund shares when
received from the Fund transmit verified trades to the
Fund's custodian for proper
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settlement, and PFPC shall promptly notify the Fund of any
trades received which have not been so verified;
(3) Maintain individual ledgers for investment securities;
(4) Maintain historical tax lots for each security;
(5) Reconcile cash and investment balances with the custodian,
and provide the Fund with the beginning cash balances
available for investment purposes;
(6) Update the cash availability and projected
receivables/payables throughout the day as required by the
Fund and direct the custodian to invest idle cash in
repurchase agreements, and/or registered investment
companies, and/or in other liquid investments as mutually
agreed upon in accordance with the Written Instructions of
the Fund.
(7) Post to and prepare the Statement of Assets and Liabilities
and the Statement of Operations;
(8) Calculate various contractual expenses (e.g., advisory and
custody fees) and confirm to the Fund the amounts paid by
the Fund in respect of such contracts as provided for
therein;
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(9) Monitor the expense accruals and notify Fund management of
any proposed adjustments;
(10) Control all disbursements and authorize such disbursements
upon Written Instructions;
(11) Calculate capital gains and losses;
(12) Determine net income;
(13) Obtain security market quotes from independent pricing
services approved by the Fund, or if such quotes are
unavailable, then obtain such prices from, or in accordance
with the directions of, the Fund, and in either case
calculate the market value of the Fund's investments;
(14) Transmit or mail a copy of the daily portfolio valuations
and a listing of acquisitions and dispositions of securities
of the Fund and, as of each month-end, transmit or mail a
floppy diskette reflecting securities holdings to the Fund;
(15) Consistent with the requirements of the prospectus dated May
14, 1991 or Written Instructions which change those
requirements, compute the net asset values and, where
applicable, the public offering prices of the Portfolios and
promptly report thereon to NASDAQ and the custodian;
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' (16) Compute, and report to the Fund, each Portfolio's yields,
total return, expense ratios, portfolio turnover rate, and,
portfolio average dollar-weighted maturity; and
(17) Compute amounts of foreign currency needed to settle foreign
securities transactions, and in accordance with Written
Instructions, enter into forward currency contracts with
banks and brokers.
(b) In addition to the accounting services described in the foregoing
Paragraph 5(a), PFPC will:
(1) Prepare monthly financial statements, which will include the
following items (the form and content of such statements shall be in
accordance with generally accepted accounting principles):
Schedule of Investments
Statement of Assets and Liabilities
Statement of Shareholders' Equity
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses;
(2) Prepare quarterly broker security transactions summaries,
including monthly reports of brokerage commissions paid setting forth such
information as the Fund may reasonably request and as to which the parties
may agree;
(3) Prepare monthly security transaction listings;
(4) Supply various Fund statistical data and reports as requested by
the Fund on an ongoing basis including the reports set forth on Schedule A
hereto;
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(5) Prepare for execution and file the Fund's Federal and state
income tax returns, Federal Excise Tax returns, tax returns for the States
of Maryland and California and any supporting schedules to such returns and
assist the Fund in determining the amount, types and timing of dividend and
capital gains distributions necessary for each Portfolio to avoid being
required to pay Federal Income or Excise taxes on its income and gains;
(6) Assist in the preparation of and file the Fund's Semi-Annual
Reports with the SEC on Form N-SAR;
(7) Assist in the preparation of and file with the SEC the Fund's
annual, semi-annual, and quarterly Shareholder reports;
(8) Assist in the preparation of registration statements on Form N-lA
and other filings relating to the registration of Shares;
(9) Monitor and report monthly to the Fund's Board each Portfolio's
status as a regulated investment company under Sub-chapter M of the
Internal Revenue Code of 1986, as amended;
(10) In the event that any securities transaction of the Fund fails to
settle in accordance with Written or Oral Instructions, PFPC shall promptly
notify the Fund; and
(11) Monitor each Portfolio's securities positions to determine
whether, with respect to 75 percent of the value of each Portfolio's total
assets, more than 5 percent of the value of
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each Portfolio's total assets are invested in any one issuer and, if so, alert
the Fund as soon as practicable of such circumstances.
6. RECORDS. PFPC shall keep the following records:
(a) all books and records with respect to the Fund's books of
account, including without limitation those required by rule 3la-1 under the
1940 Act (except paragraphs b(4) and (9)) and records necessary to support each
Portfolio's tax returns; and
(b) records of the Fund's securities and exchange listed financial
futures and forward currency transactions.
The books and records pertaining to the Fund which are in the possession of
PFPC shall be the property of the Fund and shall be returned to the Fund or its
designee upon request. Such books and records shall be prepared and maintained
as required by the 1940 Act and other applicable laws and rules and regulations.
The Fund, or the Fund's authorized representatives, 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 the Fund's authorized designee or representative
at the Fund's expense.
7. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide them with account analyses,
fiscal year summaries, and such other information, including audit related
schedules, as may be necessary to assure that the necessary information is made
available to such accountants for the expression of their opinion, as such may
be required by the Fund from time to time.
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8. CONFIDENTIALITY. PFPC agrees on behalf of itself and its employees to
treat confidentially all records and other information relative to the Fund and
its prior, present or potential Shareholders or relative to the Advisor, except,
after prior notification to and approval in writing by the Fund, which approval
may not be withheld where PFPC may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund.
9. EQUIPMENT FAILURES. In the event of equipment failures beyond PFPC's
control, PFPC shall, at no additional expense to the Fund, promptly notify the
Fund and take prompt, reasonable steps to minimize service interruptions but
shall have no liability with respect thereto except, at its own expense, to
reconstruct any records of the Fund that PFPC is required to prepare and
maintain hereunder. PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provision for
emergency use of electronic data processing equipment to the extent appropriate
equipment is available. An equipment failure shall be beyond PFPC's control if
it results from one or more of the events described in the last sentence of the
first paragraph of Paragraph 14 hereunder.
10. RIGHT TO RECEIVE ADVICE.
PFPC shall be protected in any action or inaction PFPC takes in reliance on
advice of PFPC Is counsel. PFPC shall promptly
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notify the Fund of the receipt of such advice within reasonable
time.
11. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. PFPC agrees to
perform its duties hereunder in accordance with applicable law; however, PFPC
assumes no responsibility for ensuring that the Fund complies with the
applicable requirements of the 1933 Act, the 1934 Act, the 1940 Act, the CEA,
and any laws, rules and regulations of governmental authorities having
jurisdiction.
12. COMPENSATION. As compensation for the services rendered by PFPC
during the term of this Agreement, the Fund will pay to PFPC an annual fee
calculated daily and payable monthly, as may be agreed to in writing from time
to time by the Fund and PFPC.
13. INDEMNIFICATION. (a) The Fund agrees to indemnify and hold harmless
PFPC and its sub-contractors from all taxes, charges, expenses (except expenses
that are inherent to its duties hereunder) , assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the
Securities Exchange Act of 1934, the 1940 Act, the CEA, and any state and
foreign securities and blue sky laws, all as or to be amended from time to time)
including (without limitation) reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or thing which PFPC takes or does
or omits to take or do (i) at the request or on the direction of or in reliance
on the advice of the Fund or the Fund's counsel on behalf of the Fund or (ii)
upon Oral or Written Instructions provided by the Fund, or an
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Affiliate, provided such Affiliate has not acted negligently (unless such
Affiliate has received and transmitted erroneous instructions received from an
Authorized Person that is not an Affiliate) PROVIDED, that neither PFPC nor any
of its subcontractors shall be indemnified against any liability (or any
expenses incident to such liability) arising out of PFPC's own misfeasance, bad
faith, negligence or disregard of its duties or responsibilities described in
this Agreement.
(b) PFPC shall not pay or settle any claim, demand, expense or
liability in respect of which PFPC is entitled to be indemnified pursuant to
paragraph (a) above an ("Indemnifiable Claim") without the express written
consent of the Fund. PFPC shall notify the Fund promptly of receipt of
notification of an Indemnifiable Claim. Unless the Fund notifies PFPC within 30
days of receipt of Written Notice of such Indemnifiable Claim that the Fund does
not intend to defend such Indemnifiable Claim, the Fund shall defend PFPC from
such Indemnifiable Claim. The Fund shall have the right to defend any
Indemnifiable Claim at its own expense, such defense to be conducted by counsel
selected by the Fund. Further, PFPC may join the Fund in such defense at PFPC's
own expense, but to the extent that it shall so desire, the Fund shall direct
such defense. If the Fund shall fail or refuse to defend, pay or settle an
Indemnifiable Claim, PFPC, at the Fund's expense consistent with limitations
concerning attorney's fees expressed in Paragraph 13(a) hereof, may provide its
own defense.
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14. RESPONSIBILITY OF PFPC. PFPC hereby represents that it is experienced
in the provision of the services covered by this Agreement. In the performance
of its duties hereunder, PFPC shall be obligated to exercise due care and
diligence and to act in a timely manner and in good faith to assure the accuracy
and completeness of all services performed under this Agreement. PFPC shall be
under no duty to take any action on behalf of the Fund except as specifically
set forth herein or as may be specifically agreed to by PFPC in writing. PFPC
shall be responsible for its own negligent failure to perform its duties under
this Agreement. In assessing negligence for purposes of this Agreement, the
parties agree that the standard of care applied to PFPC's conduct shall be the
care that would be exercised by a similarly situated service provider, supplying
substantially the same services under substantially similar circumstances.
Notwithstanding the foregoing, PFPC shall not be responsible for losses beyond
its control, provided that PFPC has acted in accordance with the provisions of
this Agreement and the standard of care set forth above and provided further
that PFPC shall only be responsible for that portion of losses or damages
suffered by the Fund attributable to the negligence of PFPC. Losses shall be
beyond PFPC's control if they result from or occur because of delays or errors
or loss of data provided by a person other than PFPC or its Affiliates, or their
respective employees or agents, or acts of civil or military authority, national
emergencies, labor difficulties (other than those of PFPC or its Affiliates),
fire, equipment failure resulting
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from forces external to the premises of PFPC or its Affiliates, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply external to the premises of PFPC
or its Affiliates and such other circumstances beyond PFPC's control.
Without limiting the generality of the foregoing or of any other provision
of this Agreement, PFPC in connection with its duties under this Agreement shall
not be under any duty or obligation to inquire into and shall not be liable for
or in respect of the validity or invalidity or authority or lack thereof of any
Oral or Written Instruction received from the Fund, or an Affiliate, provided
such Affiliate has not acted negligently (unless such an Affiliate has received
and transmitted erroneous instructions received from an Authorized Person that
is not an Affiliate), notice or other instrument which conforms to the
applicable requirements of this Agreement, and which PFPC reasonably believes to
be genuine.
PFPC shall have no liability to the Fund for any losses or damages, the
nature of which is or was remote, unforeseen, unforeseeable or beyond the scope
of reasonable anticipation at the time this Agreement was executed.
15. DURATION AND TERMINATION. This Agreement shall continue in effect for
one year from the date that the Fund begins to invest in stocks that comprise
the Standard & Poor's 500 Composite Stock Price Index (the "investment date").
This Agreement may be terminated by either party on or after the first
anniversary of the
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investment date upon not less than 180 days prior written notice to the other
party. The foregoing provisions notwithstanding, either party may terminate
this Agreement in the event of a material breach of the terms hereof after
written notice to the other party of such breach and a reasonable time for cure
of such breach, unless such breach is not curable and, in such circumstances,
this Agreement shall terminate, at the option of the injured party, three months
after the date such notice is given.
16. NOTICES. All notices and other communications, including Written
Instructions (collectively referred to as "Notice" or "Notices" in this
Paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notices shall be addressed (a) if to PFPC at
PFPC's address, Bellevue Corporate Center, 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000; (b) if to the Fund, at the address of the Fund; or (c) if to
neither of the foregoing, at such other address as shall have been notified to
the sender of any such Notice or other communication. All postage, cable, telex
and facsimile sending device charges arising from the sending of a Notice
hereunder shall be paid by the sender.
17. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
18. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
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19. DELEGATION. On thirty (30) days prior written notice to the Fund,
PFPC may assign its rights and delegate its duties hereunder to any wholly-owned
direct or indirect subsidiary of PFPC National Bank or PNC Financial Corp
provided that (i) the delegate agrees with PFPC to comply with all relevant
provisions of this Agreement and applicable law; and (ii) PFPC and such delegate
shall promptly provide such information as the Fund may request, and respond to
such questions as the Fund may ask, relative to the delegation, including
(without limitation) the capabilities of the delegate. In the event of such
delegation, PFPC shall remain liable under this Agreement.
20. 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.
21. MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding between the
parties hereto, and supersedes all prior agreements and understandings, relating
to the subject matter hereof, provided that the parties hereto may embody in one
or more separate documents their agreement, if any, with respect to Written
and/or Oral Instructions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof of otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in Delaware and governed by
Delaware law. If any provision of this Agreement shall be held or made invalid
by a court decision,
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statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
DFA U.S. LARGE CAP PORTFOLIO INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
PROVIDENT FINANCIAL PROCESSING
CORPORATION
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------
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