EXHIBIT (k)(2)
ADMINISTRATION, ACCOUNTING AND INVESTOR SERVICES AGREEMENT
THIS AGREEMENT is made as of August 31, 2000 by and between X.X.
XXXXXX HEDGE FUND SERIES/CORE LLC, a Delaware limited liability company (the
"Fund"), and PFPC INC., a Massachusetts corporation ("PFPC").
W I T N E S S E T H :
WHEREAS, the Fund is registered as a closed-end, non-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
administration, accounting and investor services provided for herein, and PFPC
wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any person duly authorized by the Fund's
directors to give Oral Instructions and Written Instructions on behalf
of the Fund and listed on the Authorized Persons Appendix attached
hereto or any amendment thereto as may be received by PFPC from time
to time. An Authorized Person's scope of authority may be limited to
the extent set forth in the Authorized Persons Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "MEMBER" shall have the same meaning given such term in the LLC
Agreement (as hereinafter defined).
(f) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be
an Authorized Person.
(g) "ORGANIZATIONAL DOCUMENTS" means the Fund's charter or articles of
incorporation, Limited Liability Company Agreement ("LLC Agreement"),
bylaws, confidential memorandum and other documents constituting the
Fund.
(h) "SEC" means the Securities and Exchange Commission.
(i) "SECURITIES LAWS" means the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(j) "WRITTEN INSTRUCTIONS" mean written instructions signed by an
Authorized Person or a person reasonably believed by PFPC to be an
Authorized Person and received by PFPC. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide administration,
accounting and investor services to the Fund, in accordance with the terms
set forth in this Agreement. PFPC accepts such appointment and agrees to
furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC with the following:
(a) certified or authenticated copies of the resolutions of the Fund's
directors, approving the appointment of PFPC or its affiliates to
provide services and approving this Agreement;
(b) a copy of the Fund's most recent effective registration statement on
Form N-2 under the 1940 Act, as filed with the SEC;
(c) a copy of all of the Fund's Organizational Documents;
(d) a copy of any distribution agreement with respect to the Fund;
(e) a copy of any additional administration agreement with respect to the
Fund;
(f) a copy of any investor servicing agreement made with respect to the
Fund; and
(g) copies (certified or authenticated, where applicable) of any and all
amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS. PFPC undertakes to comply with all
applicable requirements of the Securities Laws, and any laws, rules and
regulations of governmental authorities having jurisdiction with respect to
the duties to be performed by PFPC hereunder. Except as specifically set
forth herein, PFPC assumes no responsibility for such compliance by the
Fund or any other party.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions or Written
Instructions it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to
this Agreement. PFPC may assume that any Oral Instruction or Written
Instruction received hereunder is not in any way inconsistent with the
provisions of organizational documents or this Agreement or of any
vote, resolution or proceeding of the Fund's directors or of the
Fund's Members, unless and until PFPC receives Written Instructions to
the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions and shall endeavor to ensure that PFPC receives the
Written Instructions by the close of business on the same day that
such Oral Instructions are received. The fact that such confirming
Written Instructions are not received by PFPC shall in no way
invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions. PFPC agrees to notify the Fund
promptly if confirming Written Instructions are not timely received or
if they differ from such Oral Instructions. Where Oral Instructions or
Written Instructions reasonably appear to have been received from an
Authorized Person, PFPC shall incur no liability to the Fund in acting
upon such Oral Instructions or Written Instructions provided that
PFPC's actions comply with the other provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or advice,
including Oral Instructions or Written Instructions, from the
Fund.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any question
of law pertaining to any action it should or should not take,
PFPC may request advice at its own cost from such counsel of its
own choosing (who may, without limitation, be counsel for the
Fund, or PFPC, at the option of PFPC), provided that such counsel
is selected with reasonable care.
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral Instructions or Written Instructions
PFPC receives from the Fund, and the advice PFPC receives from
counsel selected with reasonable care, PFPC may rely upon and
follow the advice of such counsel. PFPC shall promptly inform the
Fund of such conflict and, in any event, before taking the action
in question. If PFPC relies on the advice of counsel, PFPC will
remain liable for any action or omission on the part of PFPC
which constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard by PFPC of any duties,
obligations or responsibilities set forth in this Agreement.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it
takes or does not take in reliance upon directions, advice or
Oral Instructions or Written Instructions it receives from the
Fund or from counsel selected with reasonable care and which PFPC
believes, in good faith, to be consistent with those directions,
advice and Oral Instructions or Written Instructions. Nothing in
this section shall be construed so as to impose an obligation
upon PFPC (i) to seek such directions, advice or Oral
Instructions or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral Instructions or
Written Instructions unless, under the terms of other provisions
of this Agreement, the same is a condition of PFPC's properly
taking or not taking such action. Nothing in this subsection
shall excuse PFPC when an action or omission on the part of PFPC
constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard by PFPC of any duties, obligations or
responsibilities set forth in this Agreement.
7. RECORDS; VISITS.
(a) The books and records pertaining to the Fund, which are in the
possession or under the control of PFPC, shall be the property of the
Fund. Such books and records shall be prepared and maintained as
required by the 1940 Act and other applicable securities laws, rules
and regulations and as otherwise provided in this Agreement. The Fund
and Authorized Persons shall have access to such books and records at
all times during PFPC's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be
provided by PFPC to the Fund or to an Authorized Person, at the Fund's
expense.
(b) PFPC shall keep the following records:
(i) all books and records with respect to the Fund's books of
account;
(ii) records of the Fund's investment transactions; and
(iii) all other books and records as the Fund is required to
maintain pursuant to Rule 31a-1 of the 1940 Act in
connection with the services of PFPC provided hereunder.
(c) Upon termination of this Agreement, PFPC in accordance with the Fund's
reasonable request, shall, in accordance with Written Instructions,
deliver a copy of the books and records pertaining to the Fund, which
are in the possession or under control of PFPC, to the Fund or any
other person designated by the Fund.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the Fund
and information relating to the Fund and the Members, unless the release of
such records or information is otherwise consented to, in writing, by the
Fund. The Fund agrees that such consent shall not be unreasonably withheld.
The Fund further agrees that, should PFPC be required to provide such
information or records to duly constituted authorities (who may institute
civil or criminal contempt proceedings for failure to comply), PFPC shall
not be required to seek the Fund's consent before disclosing such
information, but agrees to advise the Fund in writing of the request before
disclosing such information, if PFPC is not precluded from doing so by any
applicable law.
9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide account analyses, fiscal
year summaries, and other audit-related schedules as the Fund or such
accountants may reasonably request. PFPC shall take all reasonable action
in the performance of its duties under this Agreement to ensure that the
necessary information is made available to such accountants for the
expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provisions for
emergency use of electronic data processing equipment to the extent
appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PFPC shall have no liability with respect
to the loss of data or service interruptions caused by equipment failure,
provided such loss or interruption is not caused by PFPC's own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties or obligations under this Agreement.
11. COMPENSATION. As compensation for services rendered by PFPC during the term
of this Agreement, the Fund will pay to PFPC a fee or fees as may be agreed
to in writing by the Fund and PFPC.
12. INDEMNIFICATION.
(a) The Fund agrees to indemnify and hold harmless PFPC and its affiliates
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the
Securities Laws and any state or foreign securities and Blue Sky laws,
and amendments thereto), and expenses, including, without limitation,
reasonable attorneys' fees and disbursements (collectively, "Losses")
arising directly or indirectly from any action which PFPC takes or
does not take (i) at the request or on the direction of or in reliance
on the advice of the Fund or (ii) upon Oral Instructions or Written
Instructions. Neither PFPC, nor any of its affiliates, shall be
indemnified against any liability (or any expenses incident to such
liability) arising out of PFPC's or its affiliates own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, the Fund
shall not be liable to PFPC or its affiliates for any consequential,
special or indirect losses or damages which PFPC or its affiliates may
incur or suffer, whether or not the likelihood of such losses or
damages was known by the Fund.
13. RESPONSIBILITY OF PFPC.
(a) 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 obligated to exercise care
and diligence in the performance of its duties hereunder, to act in
good faith and to use its best efforts, within reasonable limits, in
performing services provided for under this Agreement. PFPC agrees to
indemnify and hold harmless the Fund from Losses arising out of PFPC's
failure to perform its duties under this Agreement to the extent such
damages arise out of PFPC's willful misfeasance, bad faith, gross
negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC shall not be liable for losses
beyond its control, provided that PFPC has acted in accordance with
the standard of care set forth above; and (ii) PFPC shall not be
liable for (A) the validity or invalidity or authority or lack thereof
of any Oral Instruction or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this
Agreement, and which PFPC reasonably believes to be genuine; or (B)
subject to Section 10 of this Agreement, delays or errors or loss of
data occurring by reason of circumstances beyond PFPC's control,
including acts of civil or military authority, national emergencies,
labor difficulties, fire, flood, catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC nor its affiliates shall be liable to the Fund for any
consequential, special or indirect losses or damages which the Fund
may incur or suffer by or as a consequence of PFPC's or any
affiliates' performance of the services provided hereunder, whether or
not the likelihood of such losses or damages was known by PFPC or its
affiliates.
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following accounting services with respect to
each portfolio:
(i) Journalize investment, capital and income and expense
activities;
(ii) Maintain individual ledgers for investment securities;
(iii) Maintain historical tax lots for each security;
(iv) Record and reconcile corporate action activity and all other
capital changes;
(v) Reconcile cash and investment balances of the Fund with the
Fund's custodian(s), and provide the Adviser with the
beginning cash balance available for investment purposes.
(vi) Update the cash availability throughout the day as required
by the Adviser;
(vii) Calculate contractual expenses, including management fees
and incentive allocation, as applicable, in accordance with
the Fund's confidential memorandum;
(viii) Post to and prepare the Statement of Assets and Liabilities
and the Statement of Operations in U.S. dollar terms;
(ix) Monitor the expense accruals and notify an officer of the
Fund of any proposed adjustments;
(x) Calculate capital gains and losses;
(xi) Determine net income;
(xii) Determine applicable foreign exchange gains and losses on
payables and receivables;
(xiii) Obtain daily security market quotes and currency exchange
rates from independent pricing services approved by the
Adviser, or if such quotes are unavailable, then obtain such
prices from the Adviser, and in either case calculate the
market value of the Fund's investments in accordance with
the applicable valuation policies or guidelines provided in
writing by the Fund to PFPC and reasonably acceptable to
PFPC;
(xiv) Transmit or mail to the Adviser a copy of the daily
portfolio valuation, cash projection and various reports as
requested by the Adviser;
(xv) Research and recommend portfolio accounting tax treatment
for unique security types and other accounting developments
applicable to the Fund;
(xvi) Arrange for the computation of the net asset value in
accordance with the provisions of the Fund's LLC Agreement
and confidential memorandum within 20 business days after
the end of a fiscal Period (as such term is defined in the
LLC Agreement). PFPC agrees to advise the Fund of all
securities valuations received from the underlying funds as
well as all missing securities valuations on the 17th
business day after the end of a Fiscal Period and,
thereafter, if the Fund fails to provide PFPC with the
missing securities valuations by the 18th business day after
the end of the Fiscal Period, PFPC's obligation under this
clause (xvi) shall be suspended until the end of the second
business day after the date PFPC has received all missing
securities valuations;
(xvii) As appropriate, compute yields, total return, internal rate
of return, expense ratios, portfolio turnover rate, and, if
required, portfolio average dollar-weighted maturity; and
(xviii) Prepare a monthly financial statement in U.S. Dollars, which
includes the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
(xix) Prepare a monthly reporting package which includes the
following reports as detailed by the Adviser:
Trial Balance
Accounting - Custody Asset Reconcilement
Accounting - Custody Cash Reconcilement
Expense Schedules Subscription/Redemption
Journals Realized Gain/Loss Valuation
Reports Detailed Investor Capital Reports
Incentive Fee Calculations Earned Income
Journals Trade Journals
(xx) Supply additional reports as may be reasonably requested by
the Adviser from time to time.
15. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS. PFPC will
perform the following administration services if required with respect to
each portfolio:
(i) Prepare monthly security transaction listings;
(ii) Supply various normal and customary Fund statistical data as
requested on an ongoing basis;
(iii) Prepare for execution and file the Fund's Federal Form 1065
and state tax returns;
(iv) Coordinate contractual relationships and communications
between the Fund and its contractual service providers;
(v) Prepare in accordance with U.S. GAAP and 1940 Act
Regulations and file the Fund's Annual and Semi-Annual
Reports with the SEC on Form N- SAR via XXXXX;
(vi) Coordinate printing of the Fund's annual and semi-annual
shareholder reports; and
(vii) Perform such additional administrative duties relating to
the administration of the Fund as may subsequently be agreed
upon in writing between the Fund and PFPC.
16. DESCRIPTION OF INVESTOR SERVICES ON A CONTINUOUS BASIS. PFPC will perform
the following functions:
(i) Maintain and monitor post office box for incoming client
mail;
(ii) Mail offering documents for qualified investors with
instructions from an Authorized Person;
(iii) Track offering document mailing and return using control
number system and prepare report of results to the Fund as
requested;
(iv) Mail welcome letters to new Members detailing amount of
commitment and payment instructions;
(v) Accept client proceeds and reconcile to signed subscription
documentation;
(vi) Mail notice for tender offers;
(vii) Receive tender applications from Members;
(viii) Obtain approval for tender applications from the Board of
Directors of the Fund;
(ix) Process tender transactions and send proceeds to Members
according to the Fund's offering memorandum;
(x) Generate and maintain promissory notes for Members
participating in tender offer;
(xi) Upon completion of the annual Fund audit, identify any
excess of the net asset value of the interest payment as of
the Valuation Date over the initial payment which will be
identified as a Contingent Payment, and remit proceeds to
the Member;
(xii) Maintain the register of Members and enter on such register
all issues, transfers and repurchases of interests in the
Fund;
(xiii) Maintain quality control procedures to ensure accuracy of
the register of Members and any supporting systems,
databases, reports, electronic files, hard-copy files and
other data storage devices;
(xiv) Provide quality control statistics to the Fund on a regular
basis no less frequently than monthly;
(xv) Arrange for the calculation of the issue and repurchase
prices of interests in the Fund in accordance with the LLC
Agreement and the Fund's confidential memorandum;
(xvi) Allocate income, expenses, gains and losses to individual
Members' capital accounts in accordance with applicable tax
laws and with the Fund's confidential memorandum;
(xvii) Provide reporting to the Fund for issues, transfers,
repurchases and changes to the register of Members;
(xviii) Provide to the Fund remote access to Member information
contained in PFPC's fund accounting system including most
recent market value, transaction history, capital
contributions since inception, income allocation, accrued
incentive allocation, and performance information for the
Fund and client;
(xix) Provide data file transmissions of Member data as requested
by the Fund and acceptable to PFPC;
(xx) Calculate the Incentive Allocation in accordance with the
Fund's LLC Agreement and reallocate corresponding amounts
from the applicable Members' accounts to the Adviser's
account;
(xxi) Prepare and mail monthly to each Member a statement of
account activity and market values including transaction
history, capital contributions, income allocation, accrued
incentive allocation, performance information for the Fund
and client and any additional materials as requested by the
Fund.
(xxii) Prepare and mail notification of distributions, liquidations
or other activities as requested by the Fund;
(xxiii) Calculate and process distributions, liquidations or other
activities as requested by the Fund;
(xxiv) Support operational review meetings between PFPC and the
Fund on a semi-annual basis or more frequently as requested
by either party;
(xxv) Prepare and mail annually to each Member a Form K-1 in
accordance with applicable tax regulations; and
(xxvi) Assist in the preparation of and mail proxy materials, as
required by the Fund.
17. DURATION AND TERMINATION. This Agreement shall continue until terminated by
the Fund or by PFPC on sixty (60) days' prior written notice to the other
party. In the event the Fund gives notice of termination, all expenses
associated with movement (or duplication) of records and materials and
conversion thereof to a successor service provider (or each successive
service provider, if there are more than one), and all trailing expenses
incurred by PFPC, will be borne by the Fund.
18. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex
or facsimile sending device. If notice is sent by confirming telegram,
cable, telex or facsimile sending device, it shall be deemed to have been
given immediately. If notice is sent by first-class mail, it shall be
deemed to have been given three days after it has been mailed. If notice is
sent by messenger, it shall be deemed to have been given on the day it is
delivered. Notices shall be addressed (a) if to PFPC, at 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attn: Xxxx X. Xxxxxxx; (b) if to the
Fund, c/o X.X. Xxxxxx Investment Management Inc, 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxxxxx Xxxxx; or (c) if to neither of
the foregoing, at such other address as shall have been provided by like
notice to the sender of any such notice or other communication by the other
party.
19. AMENDMENTS. This Agreement, or any term thereof, may be changed or waived
only by written amendment, signed by the party against whom enforcement of
such change or waiver is sought.
20. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its duties
hereunder to any affiliate (as defined in the 0000 Xxx) of or any
majority-owned direct or indirect subsidiary of PFPC or The PNC Financial
Services Group, Inc., provided that (i) PFPC gives the Fund (60) days'
prior written notice; (ii) the delegate (or assignee) agrees with PFPC and
the Fund to comply with all relevant provisions of the Securities Laws, and
any laws, rules and regulations of governmental authorities having
jurisdiction with respect to the duties to be performed by the delegate (or
assignee) hereunder; and (iii) PFPC and such delegate (or assignee)
promptly provide such information as the Fund may request, and respond to
such questions as the Fund may ask, relative to the delegation (or
assignment), including, without limitation, the capabilities of the
delegate (or assignee). No such delegation shall relieve PFPC of its
obligations hereunder.
21. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
22. FURTHER ACTIONS. Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
23. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating
to the subject matter hereof.
(b) CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(c) GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(d) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: /s/ Xxxxxxx X. Xxxxx
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XXXXXXX X. XXXXX
Title: Executive Vice President
X.X. XXXXXX HEDGE FUND SERIES/CORE LLC
By: /s/ Xxxxx X. Xxxxxxxx
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XXXXX X. XXXXXXXX
Title: Vice President
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
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