EXHIBIT 9(b)(2)
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") made as of the 1st day
of July, 1996 by and between The PBHG Funds, Inc., a Maryland corporation (the
"Fund"), and PBHG Fund Services, a Pennsylvania business trust (the
"Administrator").
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 as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to retain the Administrator to provide
administrative services to the Fund and each of its several series (the
"Portfolios"), which are identified in Schedule A hereto, in the manner and on
the terms and conditions hereinafter set forth; and
WHEREAS, the Fund and the Administrator propose to engage a
sub-administrator (the "Sub-Administrator") to provide certain administrative
services to the Fund and the Portfolios, subject to the approval of the Fund's
Board of Directors;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending to
be legally bound, do hereby agree as follows:
1. Duties and Responsibilities of the Administrator.
The Administrator shall oversee the administration of the Fund's and
each Portfolio's business and affairs as set forth herein and shall provide
certain services required for effective administration of the Fund and the
Portfolios. In connection therewith, the Administrator shall:
1.1. Office and Other Facilities. Furnish, without cost to the Fund, or
provide and pay the cost of, such office facilities, furnishings, and office
equipment as are necessary for the performance of the Administrator's duties to
the Fund under this Agreement.
1.2. Personnel. Provide, without additional remuneration from or other
cost to the Fund, the services of individuals competent to perform all of the
Administrator's obligations under this Agreement.
1.3. Agents. Assist the Fund in selecting, coordinating the activities
of, supervising and acting as liaison with any other person or agent engaged by
the Fund, including the Fund's depository agent or custodian, consultants,
transfer agent, sub-transfer agents, intermediaries
with respect to mutual fund alliance programs, dividend disbursing agent,
Sub-Administrator, independent accountants, and independent legal counsel. The
Administrator shall also monitor the functions of such persons and agents,
including without limitation the compliance of the Fund and the Fund's
custodians with Rule 17f-5 under the 1940 Act, if appropriate.
1.4. Directors and Officers. Authorize and permit the Administrator's
directors, officers, and employees that may be elected or appointed as directors
or officers of the Fund to serve in such capacities, without remuneration from
or additional cost to the Fund.
1.5. Books and Records. Maintain customary records, on behalf of the
Fund, in connection with the performance of the Administrator's duties under
this Agreement. The Administrator also will monitor and oversee the performance
of the agents specified in Section 1.3. above, to ensure that all financial,
accounting, corporate, and other records required to be maintained and preserved
by the Fund or on its behalf will be maintained in accordance with applicable
laws and regulations.
1.6. Cost Oversight. Monitor and review activities and procedures of
the Fund and its agents identified in Section 1.3. above, in order to identify
and seek to obtain possible service improvements and cost reductions. In
connection therewith, the Administrator shall, on a quarterly basis, prepare and
submit to the Fund a pro forma budget or similar document concerning the
estimated costs of providing the services to the Fund and shall monitor and
periodically report to the Fund's Board of Directors information and analysis
about the actual expenses incurred in providing such services.
1.7. Fund Accounting and Compliance Policies and Procedures. Assist in
developing, reviewing, maintaining, and monitoring the effectiveness of Fund
accounting and compliance policies and procedures, including portfolio valuation
procedures, expense allocation procedures, and personal trading procedures, and
the Fund's Code of Ethics. The Administrator also will assist and coordinate
participation by the Fund and its agents in any audit by its outside auditors or
any examination by federal or state regulatory authorities or any
self-regulatory organization. The Administrator also will oversee and coordinate
the activities of Fund accountants, outside counsel, and other experts in these
audits or examinations.
1.8. Fund Systems. Assist in developing, implementing, and monitoring
the Fund's use of automated systems for the purchase, sale, redemption and
transfer of Fund shares and the payment of Rule 12b-1 service fees to
broker-dealers and others that provide personal services, distribution support
services, and/or account maintenance services to shareholders, and for recording
and tracking such transactions and/or payments. The Administrator also will
assist in developing, implementing, and monitoring the Fund's use of automated
communications systems with brokers, dealers, custodians, and other service
providers, including without limitation trade clearance systems.
1.9. Reports to the Fund. Furnish to or place at the disposal of the
Fund such information, reports, evaluations, analyses, and opinions relating to
its administrative functions and the administrative functions performed by the
Sub-Administrator, as the Fund may, at any time or from time to time, reasonably
request or as the Administrator may deem helpful to the
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Fund. The Administrator also will assist in the preparation of agendas and other
materials for meetings of the Fund's Board of Directors and will attend such
meetings.
1.10. Reports and Filings. Provide appropriate assistance in the
development and/or preparation of all reports and communications by the Fund to
Fund shareholders and all reports and filings necessary to maintain the
registrations and qualifications of the Fund's shares under federal securities
law.
1.11. Shareholder Inquiries. Respond to all inquiries from Fund
shareholders or otherwise answer communications from Fund shareholders if such
inquiries or communications are directed to the Administrator. If any such
inquiry or communication would be more properly answered by one of the agents
listed in Section 1.3. above, the Administrator will coordinate, as needed, the
provision of their response.
2. Allocation of Expenses.
2.1. Expenses Paid by the Administrator.
2.1.1. In General. The Administrator shall bear all of its own
expenses in connection with the performance of its duties under this
Agreement.
2.1.2. Salaries and Fees of Directors and Officers. The
Administrator shall pay all salaries, expenses, and fees, if any, of
the directors, officers, and employees of the Administrator who are
directors, officers, or employees of the Fund.
2.1.3. Waiver or Assumption and Reimbursement of Fund Expenses
by the Administrator. The waiver or assumption and reimbursement by the
Administrator of any expense of the Fund that the Administrator is not
required by this Agreement to waive, or assume or reimburse, shall not
obligate the Administrator to waive, assume, or reimburse the same or
any similar expense of the Fund on any subsequent occasion, unless so
required pursuant to a separate agreement between the Fund and the
Administrator.
2.2. Expenses Paid by the Fund. The Fund shall bear all expenses of its
organization, operation, and business not specifically waived, assumed, or
agreed to be paid by the Administrator as provided in this Agreement or any
other agreement between the Fund and the Administrator, and as described in the
Fund's then-current Prospectuses and Statements of Additional Information.
3. Fees.
3.1. Compensation Rate. As compensation for all services rendered,
facilities provided, and expenses paid and any expense waived or assumed and
reimbursed by the Administrator, the Fund shall pay the Administrator a fee per
Portfolio at the annual rate of .15% of the average daily net assets of each
Portfolio.
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3.2. Method of Computation. The Administrator's fee shall accrue on
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Administrator by the fifth (5th) business day of the next calendar month.
The daily fee accruals shall be computed by multiplying the fraction of one (1)
over the number of calendar days in the year by the applicable annual rates
described in Section 3.1. above, and multiplying this product by the net assets
of the Portfolios, as determined in accordance with the current Prospectuses of
the Fund, as of the close of business on the last preceding business day on
which the Fund was open for business.
3.3. Proration of Fee. If this Agreement becomes effective or
terminates before the end of any month, the fee for the period from the
effective date to the end of such month or from the beginning of such month to
the date of termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such effectiveness
or termination occurs.
4. Administrator's Use of the Services of Others.
The Administrator may at its own cost employ, retain, or otherwise
avail itself of the services or facilities of other persons or organizations for
the purpose of providing the Administrator or the Fund with such information,
advice, or assistance as the Administrator may deem necessary, appropriate, or
convenient for the discharge of its obligations hereunder or otherwise helpful
to the Administrator, including consulting, monitoring, and evaluation services
concerning the Fund and the Portfolios.
5. Ownership and Confidentiality of Records.
All records required to be maintained and preserved by the Fund,
pursuant to rules or regulations of the Securities and Exchange Commission under
Section 31(a) of the 1940 Act, and maintained and preserved by the Administrator
on behalf of the Fund, are the property of the Fund and shall be surrendered by
the Administrator promptly on request by the Fund. The Administrator shall not
disclose or use any record or information obtained pursuant to this Agreement in
any manner whatsoever except as expressly authorized by this Agreement and
applicable law. The Administrator shall keep confidential any information
obtained in connection with its duties hereunder and shall disclose such
information only if the Fund has authorized such disclosure or if such
disclosure is expressly required by applicable law or federal or state
regulatory authorities.
6. Reports to the Administrator.
The Fund shall furnish or otherwise make available to the Administrator
such Prospectuses, Statements of Additional Information, financial statements,
proxy statements, reports, and other information relating to the business and
affairs of the Fund, as the Administrator may, at any time or from time to time,
reasonably require in order to discharge its obligations under this Agreement.
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7. Services to Other Clients.
Nothing herein contained shall limit the freedom of the Administrator
or any affiliated person of the Administrator to render corporate administrative
services to other investment companies or to engage in other business
activities; however, so long as this Agreement or any extension, renewal, or
amendment hereof shall remain in effect or until the Administrator shall
otherwise consent, the Administrator shall be the only administrator to the
Fund.
8. Limitation of Liability of the Administrator and Indemnification by the
Fund.
8.1. Limitation of Liability.
8.1.1. Neither the Administrator nor any of its directors,
officers, employees or agents performing services for the Fund, at the
direction or request of the Administrator in connection with the
Administrator's discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any act or
omission in the course of or in connection with the Administrator's
services hereunder, including any error of judgment or mistake of law
or for any loss suffered by the Fund, in connection with the matters to
which this Agreement relates; provided, that nothing herein contained
shall be construed to protect the Administrator or any such person
against any liability to the Fund or its shareholders to which the
Administrator or such person would otherwise be subject by reason of
willful misfeasance, bad faith, or negligence in the performance of its
or their duties on behalf of the Fund.
8.1.2. The Administrator's directors, officers, employees and
agents performing services for the Fund shall be covered by errors and
omissions and directors and officers liability insurance, as
appropriate, under a policy maintained by the Administrator or an
affiliate of the Administrator.
8.1.3. The Administrator may apply to the Board of Directors
of the Fund at any time for instructions and may consult counsel for
the Fund 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.
8.1.4. The Administrator shall at all times have the right to
mitigate or cure any and all losses, damages, costs, charges, fees,
disbursements, payments and liabilities to the Fund and its
shareholders.
8.2. Indemnification by the Fund.
8.2.1. As long as the Administrator acts in good faith and
with due diligence and without negligence, the Fund 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 (excluding consequential,
punitive or other
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indirect damages), costs, charges, reasonable counsel fees and
disbursements, payments, expenses, and liabilities (including
reasonable investigation expenses) arising directly or indirectly out
of the administrative services or any other service rendered to the
Fund hereunder. The indemnity and defense provisions set forth herein
shall indefinitely survive the termination of this Agreement.
8.2.2. 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 Fund may be asked to indemnify or hold the Administrator
harmless, the Board of Directors of the Fund 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 Board of Directors of
the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification
against the Fund, but failure to do so in good faith shall not affect
the rights hereunder.
8.2.3. The Administrator shall secure and maintain a fidelity
bond, or be covered by an affiliate's blanket fidelity bond, in at
least the amount required by Rule 17g-1 under the 1940 Act for joint
insurance bonds of investment companies.
9. Indemnification by the Administrator.
9.1. The Administrator shall indemnify the Fund, its officers and
directors and hold them harmless from and against any and all actions, suits,
and claims, whether groundless or otherwise, and from and against any and all
losses, damages (excluding consequential, punitive or other indirect damages),
costs, charges, reasonable counsel fees and disbursements, payments, expenses,
and liabilities (including reasonable investigation expenses) arising directly
or indirectly out of the administrative services or any other service rendered
to the Fund hereunder and arising or based upon the willful misfeasance, bad
faith, or negligence of the Administrator, its directors, officers, employees,
and agents in the performance of its or their duties on behalf of the Fund. The
indemnity and defense provisions set forth herein shall indefinitely survive the
termination of this Agreement.
9.2. 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 Administrator may be
asked to indemnify or hold the Fund, its officers, and directors harmless, the
Administrator shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further understood that the Fund
will use all reasonable care to identify and notify the Administrator promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification against the Administrator, but
failure to do so in good faith shall not affect the rights hereunder.
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10. Force Majeure.
In the event the Administrator 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, the Administrator shall not be liable for any and
all 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 otherwise from such causes. This provision, however, shall in no
way excuse the Administrator 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 the Administrator
of its duties and obligation under this Agreement if such non-performance or
delay in performance could have been reasonably been prevented by the
Administrator through back-up systems and other procedures commonly employed by
other administrators in the mutual fund industry, provided that the
Administrator 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.
11. Retention of Sub-Administrator.
The Administrator may retain a Sub-Administrator to perform corporate
administrative services to the Fund. The retention of a Sub-Administrator shall
be at the cost and expense of the Administrator. The Administrator shall pay and
shall be solely responsible for the payment of the fees of the Sub-Administrator
for the performance of its services for the Fund.
12. Term of Agreement.
The term of this Agreement shall begin 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, 1998.
Thereafter, this Agreement shall continue in effect from year to year, subject
to the termination provisions and all other terms and conditions hereof. The
Administrator shall furnish to the Fund, promptly upon its request, such
information as may be reasonably necessary to evaluate the terms of this
Agreement or any extension, renewal, or amendment thereof.
The assignment (as that term is defined in Section 2(a)(4) of the 1940
Act and rules thereunder) of this Agreement or any rights or obligations
thereunder shall be prohibited by either party without the written consent of
the other party. This Agreement shall inure to the benefit of and be binding
upon the parties and their respected permitted successors and assigns.
13. Termination of Agreement.
This Agreement may be terminated by any of the parties hereto, without
the payment of any penalty:
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(a) for a material breach of this Agreement, upon thirty (30)
days prior written notice to the other parties; provided, that
this Agreement shall not terminate if such material breach is
cured within such thirty (30) day period.
(b) following the initial term of this Agreement, for any
reason upon ninety (90) days' prior written notice to the
other parties; provided, that in the case of termination by
the Fund such action shall have been authorized by resolution
of the Board of Directors of the Fund or by a vote of a
majority of the outstanding voting securities of the Fund or,
in the case of termination with respect to a particular
Portfolio, by a resolution of the Board of Directors of the
Fund or by a vote of a majority of the outstanding voting
securities of such Portfolio. In the case of termination by
the Administrator, such termination shall not be effective
until the Fund and the Administrator shall have contracted
with one or more persons to serve as successor
Administrator(s) for the Fund and such person(s) shall have
assumed such position.
14. Amendment and Assignment of Agreement.
Any amendment to this Agreement shall be in writing and signed by the
parties hereto; provided, that no material amendment shall be effective unless
authorized by resolution of the Board of Directors of the Fund or by a majority
of the outstanding voting securities of the Fund or, in the case of an amendment
to this Agreement with respect to a particular Portfolio, by a resolution of the
Board of Directors of the Fund or a vote of a majority of the outstanding voting
securities of such Portfolio.
15. Miscellaneous.
15.1. Notices. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, (i) if to the
Administrator, to Pilgrim Xxxxxx Fund Services, 0000 Xxxxxxxx Xxxx Xxxxx 000,
Xxxxx, XX 00000, Attention: Xxxxx Xxxxxxxx, and (ii) if to the Fund, to The PBHG
Funds, Inc., 0000 Xxxxxxxx Xxxx Xxxxx 000, Xxxxx, XX 00000, Attention: Xxxxxxx
Xxxxxxxxxx.
15.2. Captions. The 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.
15.3. Interpretation. Nothing herein contained shall be deemed to
require the Fund to take any action contrary to its Articles of Incorporation or
By-Laws, 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 Directors
of its responsibility for and control of the conduct of the affairs of the Fund.
15.4. Definitions. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940
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Act shall be resolved by reference to such term or provision of the 1940 Act and
to interpretations thereof, if any, by the United States courts or, in the
absence of any controlling decision of any such court by rules, regulations, or
orders of the Securities and Exchange Commission validly issued pursuant to the
1940 Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is relaxed by a rule, regulation,
or order of the Securities and Exchange Commission, whether of special or of
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation, or order.
15.5. Severability. 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.
15.6. Governing law. Except insofar as the 1940 Act or other federal
laws and regulations may be controlling, this Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: THE PBHG FUNDS, INC.
By:
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Title: Title:
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ATTEST: PBHG FUND SERVICES
By:
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Title: Title:
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EXHIBIT A
THE PBHG FUNDS, INC.
The PBHG Funds, Inc. consists of the following Portfolios:
PBHG Growth Fund
PBHG Emerging Growth Fund
PBHG Core Growth Fund
PBHG Select Equity Fund
PBHG Large Cap Growth Fund
PBHG Technology & Communications Fund
PBHG International Fund
PBHG Cash Reserves Fund
PBHG Limited Fund
PBHG Large Cap 20 Fund
PBHG Large Cap Value Fund
PBHG Mid-Cap Value Fund
PBHG Strategic Small Company Fund
PBHG Small Cap Value Fund
Date: April ___, 1997
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