SHAREHOLDER WEB SERVICES AGREEMENT
This Shareholder Web Services Agreement made this 25th day of January,
2001 by and between PBHG Funds, a Delaware business trust (the "Fund") on behalf
of its series and PBHG Fund Services, a Pennsylvania business trust ("Fund
Services").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as an open-end management
investment company of the series type and registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund has been reorganized into a Delaware business trust
from a predecessor fund that had been a Maryland corporation (this "Predecessor
Fund"); and
WHEREAS, pursuant to an Administrative Services Agreement dated July 1,
1996, the Predecessor Fund retained Fund Services to provide certain
administrative services to the Predecessor Fund and its portfolios
("Administrative Services Agreement"); and
WHEREAS, pursuant to a Shareholder Services Agreement dated January 1,
1998, the Predecessor Fund retained Fund Services to provide certain services to
the Predecessor Fund, its portfolios and the shareholders of those portfolios
which are supplemental and related to services provided by the Predecessor
Fund's transfer agent pursuant to a transfer agency agreement between the Fund
and its transfer agent ("Shareholder Services Agreement"); and
WHEREAS, pursuant to a Sub-Shareholder Services Agreement dated January
1, 1998, Fund Services, with the approval of the Predecessor Fund's Board of
Directors, engaged a sub-shareholder servicing agent to assist Fund Services in
providing certain services provided by Fund Services pursuant to the Shareholder
Services Agreement ("Sub-Shareholder Services Agreement"); and
WHEREAS, the Fund has assumed the obligations of the Predecessor Fund
under these agreements or has entered into substantially similar agreements with
Fund Services; and
WHEREAS, the Fund desires to retain Fund Services to perform
development and maintenance services on that certain web site that references
the Fund and its portfolios (the "PBHG Web Site"), none of which are currently
performed, and which the parties hereto do not intend to be performed, by Fund
Services pursuant to the Administrative Services Agreement or the Shareholder
Services Agreement or by the sub-shareholder services agent pursuant to the
Sub-Shareholder Services Agreement; and
WHEREAS, unaffiliated service vendors have traditionally performed web
development and maintenance services for the PBHG Web Site; and
WHEREAS, that portion of the costs incurred to perform the development
and maintenance services on the PBHG Web Site that directly relate to existing
shareholder education
or service, account activity and account maintenance was previously determined
by the Board to be a Fund expense; and
WHEREAS, that portion of the costs incurred to perform the development
and maintenance services that directly relate to attracting and educating
prospective investors has been paid for by Pilgrim Xxxxxx & Associates, Ltd.,
the Fund's investment adviser and an affiliate of Fund Services; and
WHEREAS, development and maintenance services provide ongoing
enhancements to the PBHG Web Site which increase the quality of shareholder
services and educational benefits provided to current shareholders of the Fund's
portfolios and the information available to prospective shareholders;
WHEREAS, the Fund and Fund Services reasonably believe that over time
it will be more cost efficient for the Fund if Fund Services performs some or
all of the development and maintenance services on the PBHG Web Site, while
retaining a service vendor to perform the balance of the services, when and if
necessary;
NOW THEREFORE, in consideration of the premises and mutual convenants
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. SERVICES:
The Fund hereby retains Fund Services to perform and Fund Services
hereby undertakes to use its best efforts to perform development and
maintenance services on the PBHG Web Site that directly and solely
relate to current Fund shareholder education or service, account
activity and account maintenance ("Web Services"). An illustrative
example of Web Services is a web site enhancement that increases the
amount of account information and service features that a current Fund
shareholder could access on the PBHG Web Site.
2. INTENTION OF PARTIES:
By entering into this Agreement, it is the intention of the parties
that the Web Services to be performed by Fund Services (except for
responding to e-mails sent to the Fund via the PBHG Web Site which was
intended to be a service performed by Fund Services under the
Shareholder Services Agreement) are not required to be provided by Fund
Services or any of its affiliates or agents under any existing
agreement between Fund Services and the Fund, including but not limited
to the Administrative Services Agreement and the Shareholder Services
Agreement, or by the sub-shareholder services agent pursuant to the
Sub-Shareholder Services Agreement. To the extent any existing
agreement between Fund Services, the sub-shareholder services agent and
the Fund could be interpreted to require Fund Services to provide Web
Services, that agreement is hereby amended to reflect the intention of
the parties as set forth in the immediately preceding sentence.
3. PERFORMING WEB SERVICES/USE OF THIRD PARTY SERVICE PROVIDERS:
Fund Services shall use its best efforts to perform Web Services. In
performing Web Services, Fund Services will, at all times, use
reasonable care, act in good faith and comply with all laws, rules and
regulations applicable to web sites and the content of
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information posted thereon, including but not limited to any filings
required to be made with the SEC and NASD. In addition, Fund Services
will, at its own expense, (a) provide personnel competent to perform
Web Services and (b) furnish the office facilities, furnishings,
equipment and other property necessary to perform Web Services.
Notwithstanding the foregoing, Fund Services may, from time to time, in
its sole discretion and at its own expense, retain outside service
vendors to perform some or all of Web Services. However, in retaining
these outside service vendors, Fund Services may not, without the
approval of the Fund's Board of Trustees, impair or assign its
obligation to use its best efforts to perform Web Services and its
obligation to use reasonable care and act in good faith when performing
Web Services.
4. FEES/BOARD REVIEW OF FEES:
In consideration of the Web Services to be performed by Fund Services,
the Fund will pay an annual fee, payable quarterly in arrears, to Fund
Services equal to $ 720,000.00. In no event will the Fund pay or be
billed for, through this fee or otherwise, any web development or
maintenance services that are related to attracting or educating
prospective shareholders. Illustrative examples of web maintenance and
development services relating to attracting or educating prospective
shareholders are branding and banner advertising on the PBHG Web Site.
At least once every six months, Fund Services will provide a report to
the Fund enumerating, in such detail as the Fund may request, (i) the
Web Services that Fund Services or an outside service vendor has
performed, including the costs Fund Services has incurred in this
performance, (ii) the Web Services that Fund Services or an outside
vendor anticipates performing in the near future and the expected costs
of such performance and (iii) the percent of PBHG Web site users who
are current Fund shareholders. To determine what percent of PBHG Web
Site users are current Fund shareholders, as opposed to prospective
shareholders, Fund Services will use random sampling techniques and
on-line surveys. Based on Fund Services' report and any other
information, report, evaluation, analysis or opinion provided by Fund
Services or reasonably requested by the Fund, the Fund will evaluate
the appropriateness of the fee, and determine whether the fee should be
adjusted.
5. MAINTAINING BOOKS AND RECORDS:
In performing Web Services, Fund Services will maintain customary
records, in particular, all records required to be maintained pursuant
to subparagraph (2)(iv) of paragraph (b) of Rule 31a-1 under the
Investment Company Act of 1940 (the "1940 Act"). Fund Services may send
periodically to the Fund, or to the person or location designated by
the Secretary or an Assistant Secretary of the Fund, all books,
documents and records no longer deemed needed for current purposes,
upon the understanding that these books, documents, and records will be
maintained by the Fund under and in accordance with the requirements of
Rule 17Ad-7 adopted under the Securities Exchange Act of 1934. These
books, documents and records will be safely stored by Fund for possible
future reference and will not be destroyed by the Fund without the
consent of Fund Services, which consent will not be unreasonably
withheld.
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6. OBLIGATIONS UNDER DST FAN SERVICES AGREEMENT:
To the extent that the provisions or requirements of the DST Fan
Services Agreement and any related agreement may impose obligations on
Fund Services to provide services, conform to a standard of care,
adhere to a stipulated process or procedure or otherwise undertake to
perform a defined duty or responsibility, or may require the Fund to
ensure that Fund Services fulfills those obligations, Fund Services
will perform those obligations and at all times will use reasonable
care and act in good faith in performing those obligations.
7. CERTAIN REPRESENTATIONS AND WARRANTIES OF FUND SERVICES:
Fund Services represents and warrants to the Fund that:
a. It is a business trust duly formed and validly subsisting under the
laws of the Commonwealth of Pennsylvania.
b. It is duly qualified to carry on its business in the Commonwealth of
Pennsylvania.
c. It is empowered under applicable laws and by its Declaration of
Trust and Bylaws to enter into and perform the services contemplated
in this Agreement.
d. It is registered as a transfer agent to the extent required under
the Securities Exchange Act of 1934.
e. All requisite proceedings of the Trustees have been taken to
authorize it to enter into and perform this Agreement.
f. It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
g. In performing Web Services, it will ensure compliance with all
applicable laws, rules and regulations applicable to web sites and
the content of information posted thereon, including but not limited
to any filings required to be made with the SEC and NASD.
8. CERTAIN REPRESENTATIONS AND WARRANTIES OF THE FUND:
The Fund represents and warrants to Fund Services that:
a. It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
b. It is an open-end management investment company registered under the
1940 Act.
c. A registration statement under the Securities Act of 1933 has been
filed and will be effective with respect to all shares of the Fund
being offered for sale.
d. All requisite steps have been and will continue to be taken to
register the Fund's shares for sale in all applicable states and
such registration will be effective at all times shares are offered
for sale in such states.
e. The Fund is empowered under applicable laws and by its Declaration
of Trust and Bylaws to enter into and perform this Agreement.
9. CERTAIN COVENANTS OF FUND SERVICES AND THE FUND:
a. RECORDS ARE PROPERTY OF THE FUND. To the extent required by Section
31 of the 1940 Act, and the rules thereunder, Fund Services agrees
that all records maintained by Fund Services relating to the
services to be performed by Fund
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Services under this Agreement are the property of the Fund and will
be preserved and will be surrendered promptly to the Fund on
request.
b. FINANCIAL STATEMENTS. Fund Services agrees to furnish to the Fund
annual reports of its financial condition, consisting of a balance
sheet, earnings statement and any other financial information
reasonably requested by the Fund. The annual financial statements
shall be certified by the independent auditors retained by the
parent of Fund Services.
c. INFORMATION CONCERNING THE FUND. The Fund agrees to furnish or
otherwise make available to Fund Services such information relating
to the business and affairs of the Fund as Fund Services may
reasonably require to discharge its duties and obligations
hereunder. The Fund further agrees to provide Fund Services with
information and updates relating to new product and service
introductions and sales and marketing efforts that may reasonably be
expected to impact shareholder activity on the PBHG Web Site so that
Fund Services can properly allocate the resources necessary to
fulfill its obligations under this Agreement.
d. COOPERATION IN SHAREHOLDER RESPONSES. The Fund agrees that the Fund
will, and shall cause the Fund's investment adviser to, cooperate
with Fund Services to the extent necessary to formulate appropriate
responses to written inquiries received from shareholders, via the
PBHG Web Site, concerning investment strategy and philosophy and
market commentary.
10. QUALITY CONTROL:
a. AUDITS. Fund Services shall be responsible for periodically
conducting quality control audits with respect to Web Services
performed or any outside service vendor with whom Fund Services has
contracted to perform Web Services. Fund Services shall promptly
report the results of such quality control audits to the Fund.
b. INSPECTIONS. Fund Services shall permit the Fund and its authorized
representatives, including, but not limited to, the Fund's
independent auditors, to have reasonable access to the personnel and
records of Fund Services and to make periodic inspections of the
operations of Fund Services at reasonable times during business
hours for the purpose of monitoring the quality of Web Services
performed by Fund Services and the fee to which Fund Services is
entitled under this Agreement.
c. MONITORING OF EXCHANGE PRIVILEGES. Fund Services shall use its
reasonable efforts to detect and prevent shareholder violations on
the PBHG Web Site of the Fund's exchange privilege as described in
the Fund's current prospectuses.
11. LIABILITY AND INDEMNIFICATION:
a. INDEMNIFICATION BY THE FUND. Fund Services shall not be responsible
for, and the Fund shall indemnify and hold Fund Services harmless
from and against, any and all losses, liabilities, claims, demands,
suits, costs and expenses (including reasonable attorneys' fees)
which may be asserted against Fund Services or for which Fund
Services may be held to be liable, arising out of, or are
attributable to, the Fund's failure to comply with the terms of this
Agreement, or arising out of or attributable to, the Fund's
negligence or willful misconduct or breach of any representation or
warranty of the Fund hereunder.
b. INDEMNIFICATION BY FUND SERVICES. The Fund shall not be responsible
for, and Fund Services shall indemnify the Fund, its officers and
directors and hold them
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harmless from and against, any and all losses, liabilities, claims,
demands, suits, costs and expenses (including reasonable attorneys'
fees) which may be asserted against the Fund or for which the Fund
may be held to be liable, arising out of, or attributable to, Fund
Services' failure to comply with the terms of this Agreement, or
arising out of, or are attributable to, any negligence or willful
misconduct or breach of any representation or warranty of Fund
Services hereunder.
c. NOTICE OF POTENTIAL CLAIMS; DEFENSE OF CLAIMS. Fund Services and the
Fund agree that each shall promptly notify the other in writing of
any situation which represents or appears to involve a claim which
may be the subject of indemnification hereunder, although the
failure to provide such notification shall not relieve the
indemnifying party of its liability pursuant to this Section 11. The
indemnifying party shall have the option to defend against any such
claim. In the event the indemnifying party so elects, it will notify
the indemnified party and shall assume the defense of such claim,
and the indemnified party shall cooperate fully with the
indemnifying party, at the indemnifying party's expense, in the
defense of such claim. If the indemnifying party elects not to
defend against such claim, the indemnified party shall be entitled
to advance of reasonable expenses to defend such claim.
Notwithstanding the foregoing, the indemnified party shall not enter
into any settlement of such matter without the written consent of
the indemnifying party, which consent shall not be withheld
unreasonably. The indemnifying party shall not be obligated to
indemnify the indemnified party for any settlement entered into
without the written consent of the indemnifying party. If the
consent of the indemnified party is required to effectuate any
settlement and the indemnified party refuses to consent to any
settlement negotiated by the indemnifying party, the liability of
the indemnifying party for losses arising out of or due to such
matter shall be limited to the amount to the rejected proposed
settlement.
d. Except for violations of Section 17c. hereunder, in no event and
under no circumstances shall either party to this Agreement be
liable to anyone, including, without limitation, to the other party,
for consequential damages for any act or failure to act under any
provision of this Agreement even if advised of the possibility
thereof.
e. SURVIVAL OF PROVISIONS. The obligations of Fund Services and the
Fund pursuant to this Section 11 survive the termination of this
Agreement.
12. LIMITATIONS ON SUBCONTRACTOR LIABILITY:
Nothing herein shall impose any duty upon Fund Services in connection
with or make Fund Services liable for the actions or omissions to act
of unaffiliated third parties such as, by way of example and not
limitation, Airborne Services and the U.S. mails, provided, if Fund
Services selected such third party, Fund Services shall have exercised
reasonable care in selecting the same. The foregoing limitation of
liability shall not be construed to relieve Fund Services of any
obligations under Section 3 of this Agreement with respect to Web
Services that are ultimately performed by an outside service vendor.
13. LIMITATION OF LIABILITY OF SHAREHOLDERS, TRUSTEES AND SERIES OF THE
TRUST:
As provided in the governing instruments of the Trust and pursuant to
Delaware Law:
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a. no Shareholder or Trustee of the Trust shall be personally liable
for any debts, liabilities, obligations or expenses incurred by, or
contracted for under this Agreement; and
b. (i) the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a
particular Series of the Trust shall be enforceable against the
assets of such Series only, and not against the assets of the
Trust generally or assets belonging to any other Series of the
Trust; and
(ii) none of the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to
the Trust generally that have not been allocated to a specified
Series of the Trust, or with respect to any other Series of the
Trust, shall be enforceable against the assets of such specified
Series.
14. TERM OF AGREEMENT:
This Agreement shall become effective on the day and year first written
above and, unless sooner terminated as hereinafter provided, shall
continue in effect for an initial period that will expire on December
31, 2002, and thereafter shall continue in effect from year to year
provided such continuance is approved at least annually by the vote of
a majority of the trustees of the Fund who are not parties to this
Agreement or "interested persons" (as defined by the 0000 Xxx) of any
such party, which vote shall be cast in person at a meeting called for
the purpose of voting on such approval.
15. TERMINATION/ASSIGNMENT:
Either party may terminate this Agreement on thirty (30) days' prior
written notice to the other party. Neither party may assign this
Agreement without the prior written consent of the other party. In the
case of the Fund, the prior written consent includes the approval by
the Board of Trustees of the Fund as described in Section 14.
16. NOTICES:
All notices to be given hereunder shall be deemed properly given if
given in writing, delivered in person, or if sent by U.S. mail, first
class, postage prepaid, or if sent by facsimile and thereafter
confirmed by mail, (i) if to Fund Services, to PBHG Fund Services, 0000
Xxxxxxx Xxxxx Xxxxx, Xxxxx, XX 00000-0000, Attn: Xxx X. Xxxxxxxx, and
(ii) if to the Fund, to The PBHG Funds, 0000 Xxxxxxx Xxxxx Xxxxx,
Xxxxx, XX 00000-0000, Attn: Xxxx X. Xxxx, or to such other address as
shall have been specified in writing by the party to whom such notice
is to be given.
17. FORCE MAJEURE:
In the event Fund Services is unable to perform its obligations or
duties under the terms of this Agreement because of any act of God,
strike, riot, act of war, equipment failure, power failure or damage or
other causes reasonably beyond its control, Fund Services shall not be
liable for any losses, damages, costs, charges, counsel fees, payments,
expenses or liability to any other party (whether or not a party to
this Agreement) resulting from such failure to perform its obligations
or duties under this Agreement or
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otherwise from such causes. This provision, however, shall in no way
excuse Fund Services from being liable to the Fund for any and all
losses, damages, costs, charges, counsel fees, payments and expenses
incurred by the Fund due to the non-performance or delay in performance
by Fund Services of its duties and obligation under this Agreement if
such non-performance or delay in performance could have been reasonably
prevented by Fund Services through back-up systems and other procedures
commonly employed by other persons in the mutual fund industry who
provide services similar to those to be provided by Fund Services under
this Agreement, provided that Fund Services shall have the right, at
all times, to mitigate or cure any losses, including by making
adjustments or corrections to any current or former shareholder
accounts.
18. MISCELLANEOUS:
a. GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania, except as such laws may conflict with the 1940 Act and
the rules thereunder or other applicable federal laws or regulations
or the Delaware Business Trust Act.
b. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid in whole or in part by a court decision, statute, rule,
or otherwise, the remaining provisions of the Agreement shall not be
affected thereby. Invalid provisions shall, in accordance with the
intent and purpose of this Agreement, be replaced by mutual consent
of the parties with such valid provisions which in their economic
effect come as closely as legally possible to such invalid
provisions.
c. CONFIDENTIALITY. Fund Services 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 prospective
shareholders, except, after prior notification to and approval in
writing by the Fund, which approval shall not be withheld
unreasonably and may not be withheld where Fund Services 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.
d. AMENDMENTS IN WRITING. Any part of this Agreement may be amended or
waived in writing signed by both parties.
e. HEADINGS AND CAPTIONS. The headings and captions contained in this
Agreement are included for convenience of reference only and in no
way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
f. INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund to take any action contrary to its Declaration of Trust or
Bylaws, or any applicable statutory or regulatory requirement to
which it is subject or by which it is bound, or to relieve or
deprive the Board of Trustees of its responsibility for and control
of the conduct of the affairs of the Fund.
g. ENFORCEABILITY BY SUCCESSORS AND ASSIGNS. All terms and provisions
of this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective successors
and permitted assigns.
h. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION. The
representations and warranties, and the indemnification extended
hereunder, if any, are intended to and shall continue after and
survive the expiration, termination or cancellation of this
Agreement.
i. NO JOINT VENTURE. Neither the execution nor performance of this
Agreement shall be deemed to create a partnership or joint venture
by and between the Fund and Fund Services. It is understood and
agreed that all services performed
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hereunder by Fund Services shall be as an independent contractor.
This Agreement is between Fund Services and the Fund and neither
this Agreement nor the performance of the services provided for
herein shall create any rights in any third parties. There are no
third party beneficiaries hereto.
19. WAIVER:
The failure of either party to insist upon the performance of any terms
or conditions of this Agreement or to enforce any rights resulting from
any breach of any of the terms or conditions of this Agreement,
including the payment of damages, shall not be construed as a
continuing or permanent waiver of any such terms, conditions, rights or
privileges, but the same shall continue and remain in full force and
effect as if no such forbearance or waiver had occurred.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed in duplicate as of the date set forth above.
ATTEST: PBHG FUNDS
/s/ Xxxxxx X. Xxxxx /s/ Xxx X. Xxxxxxxx
______________________________ By:___________________________
Xxxxxx X. Xxxxx Xxx X. Xxxxxxxx
Assistant Secretary Chief Financial Officer
Title:________________________ Title:________________________
ATTEST: PBHG FUND SERVICES
/s/ Xxxxxx X. Xxxxx /s/ Xxx X. Xxxxxxxx
______________________________ By:___________________________
Xxxxxx X. Xxxxx Xxx X. Xxxxxxxx
Vice President President
Title:________________________ Title:________________________
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