EXHIBIT (h.3)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of March 19, 1998 by and between The
OFFITBANK Investment Fund, Inc., a Maryland corporation (the "Fund"), and
PFPC INC., a Delaware corporation ("PFPC"), which is an indirect wholly owned
subsidiary of PNC Bank Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end 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 administration and
accounting services to its investment portfolios listed on Exhibit A attached
hereto and made a part hereof, as such Exhibit A may be amended from time to
time (each a "Portfolio"), 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 officer of the Fund and any
other person duly authorized by the Fund's Board of Directors to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PFPC. An Authorized Person's scope
of authority may be limited by the Fund by setting forth such limitation in
the Authorized Persons Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "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.
(f) "SEC" means the Securities and Exchange Commission.
(g) "SECURITIES LAWS" means the 1933 Act, the 1934 Act, the 1940
Act and the CEA.
(h) "SHARES" mean the shares of beneficial interest of any series
or class of the Fund.
(i) "WRITTEN INSTRUCTIONS" mean written instructions signed by an
Authorized Person and received by PFPC. The instructions, which shall be
timely relative to the action requested, may be delivered by hand, mail,
tested telegram, cable, telex, electronic transmission or facsimile sending
device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide
administration and accounting services to the each of the Portfolios, 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 Board of Directors, approving the appointment of PFPC
or its affiliates to provide services to each Portfolio and
approving this Agreement;
(b) a copy of Fund's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreement or agreements;
(d) a copy of the distribution agreement with respect to Shares
representing an interest in a Portfolio;
2
(e) a copy of any additional administration agreement with respect to
a Portfolio;
(f) a copy of any shareholder servicing agreement made in respect of
the Fund or a Portfolio; 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 Portfolio.
5. YEAR 2000 COMPLIANCE.
PFPC represents and warrants that the electronic data processing
systems and programs that it uses in connection with the provision of
services hereunder will be year 2000 compliant prior to 1999.
6. 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 and
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 Board of Directors or of the Fund's shareholders,
unless and until PFPC receives Written Instructions
3
to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions (except where such Oral Instructions are given
by PFPC or its affiliates) so 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.
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.
7. 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 be counsel for the Fund, the Fund's investment adviser or PFPC, at the
option of PFPC).
(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, PFPC may rely upon
and follow the advice of counsel. In the event PFPC so relies on the advice
of counsel, PFPC remains liable for any action or omission on the part of
PFPC which
4
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 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.
8. RECORDS; VISITS.
(a) The books and records pertaining to the Fund and the
Portfolios 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. 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:
5
(i) all books and records with respect to each Portfolio's
books of account;
(ii) records of each Portfolio's securities transactions; and
(iii) all other books and records as PFPC is required to
maintain pursuant to Rules 31a-1 and 31a-2 of the 1940
Act in connection with the services provided hereunder.
9. CONFIDENTIALITY. PFPC agrees to keep confidential all records of
the Fund and information relating to the Fund and its shareholders, 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 and may not be withheld where PFPC may be exposed to
civil or criminal contempt proceedings or when required to divulge such
information or records to duly constituted authorities.
10. 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 with respect to each
Portfolio. PFPC shall take all reasonable action in the performance of its
duties under this Agreement to assure that the necessary information is made
available to such accountants for the expression of their opinion, as
required by the Fund.
11. 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
6
or obligations under this Agreement.
12. COMPENSATION. As compensation for services rendered by PFPC during
the term of this Agreement, the Fund, on behalf of each Portfolio, will pay
to PFPC a fee or fees as may be agreed to in writing by the Fund and PFPC.
13. EXPENSES. PFPC shall furnish at its own expense personnel
necessary to perform its obligations under this Agreement. PFPC shall also
provide the items which it is obligated to provide under this Agreement, and
shall pay all compensation, if any, of officers or Directors of the Fund who
are affiliated persons of PFPC or any affiliated corporation of PFPC.
14. INDEMNIFICATION. The Fund, on behalf of each Portfolio, 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) attorneys' fees and disbursements arising
directly or indirectly from any action or omission to act which PFPC takes
(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. Any amounts payable by the
Fund hereunder shall be satisfied only against the relevant Portfolio's
assets and not against the assets of any other investment portfolio of the
Fund.
15. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of
the Fund or any
7
Portfolio 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 shall be liable for any damages
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, and PFPC shall
indemnify and hold harmless the Fund and each Portfolio from such damages.
(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 11, 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 or to any
Portfolio for any consequential, special or indirect losses or damages which
the Fund or any Portfolio 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.
16. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
8
PFPC will perform the following accounting services with respect to each
Portfolio:
(i) Journalize investment, capital share and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received from
the investment adviser for a Portfolio (the "Adviser") and
transmit trades to the Fund's custodian (the "Custodian")
for proper settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund with the
Custodian, 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) Post to and prepare the Statement of Assets and Liabilities
and the Statement of Operations;
(viii) Calculate various contractual expenses (E.G., advisory and
custody fees);
(ix) Calculate performance data of the Portfolios for
dissemination to information services covering the
investment company industry;
(x) Monitor the expense accruals and notify an officer of the
Fund of any proposed adjustments;
(xi) Control all disbursements and authorize such disbursements
upon Written Instructions;
(xii) Calculate capital gains and losses;
(xiii) Determine net income;
(xiv) Obtain security market quotes 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 each
Portfolio's Investments;
(xv) Transmit or mail a copy of the daily portfolio valuation to
the Adviser;
(xvi) Compute net asset value;
9
(xvii) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required, portfolio
average dollar-weighted maturity; and
(xviii) Prepare a monthly financial statement, which will include
the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
17. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following administration services with
respect to each Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii) Supply various normal and customary Portfolio and Fund
statistical data as requested on an ongoing basis;
(iv) Prepare for execution and file the Fund's Federal and state
tax returns;
(v) Prepare and file the Fund's semi-annual reports with the SEC
on Form N-SAR;
(vi) Prepare and file with the SEC the Fund's annual,
semi-annual, and quarterly shareholder reports;
(vii) Prepare, coordinate with Fund Counsel and file with the SEC
Post-Effective Amendments to the Fund's Registration
Statement, prepare reports to the Fund's shareholders of
record and the SEC including the preparation and filing of
Notices pursuant to Rule 24f-2 and assist in preparation of
notices of Annual or Special Meetings of Shareholders and
Proxy materials relating to such meetings;
(viii) Monitor each Portfolio's status as a regulated investment
company under Sub-chapter M of the Internal Revenue Code of
1986, as amended;
10
(ix) Supervise the Fund's transfer agent with respect to the
payment of dividends and other distributions to Shareholders;
(x) Assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and
printing of the Fund's semi-annual and annual reports to
shareholders;
(xi) Provide individuals reasonably acceptable to the Fund's
Board of Directors to serve as "non-policy making" officers
of the Fund, who will be responsible for the administration
of certain of the Fund's affairs as determined by the Fund's
Board of Directors;
(xii) Advise the Fund and its Board of Directors on matters
concerning the Fund and its affairs;
(xiii) Obtain and maintain fidelity bonds and directors and
officers/errors and omissions insurance policies for the
Fund in accordance with the requirements of Rules 17g-1 and
17d-1(d)(7) under the 1940 Act as such bonds and policies
are approved by the Fund's Board of Directors;
(xiv) Furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the
Fund and PFPC shall determine desirable;
(xv) Assist in monitoring and developing compliance procedures
for the Adviser of each Portfolio which will include, among
other matters, procedures to monitor compliance with each
Portfolio's investment objective, policies, restrictions,
tax matters and applicable laws and regulations;
(xvi) Provide consultation with Fund counsel and the Fund;
(xvii) Coordinate contractual relationships and communications
between the Fund and its contractual service providers;
(xviii) Monitor and maintain the Fund's compliance with the amounts
and conditions of each state qualification; and
(xix) Review for regulatory compliance and coordinate the filing
with the NASD of the sales literature (e.g. advertisements,
brochures and shareholder communications) with respect to
each of the Portfolios.
18. DURATION AND TERMINATION. This Agreement shall continue until
terminated by the Fund on sixty (60) days' prior written notice to PFPC, or
by PFPC on one hundred twenty (120) days
11
prior written notice to the Fund.
19. 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; (b) if to the Fund, at 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attn: Xxxxxxx X. 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.
20. 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.
21. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate
its duties hereunder to any wholly-owned direct or indirect subsidiary of PNC
Bank, National Association or PNC Bank Corp., provided that (i) PFPC gives
the Fund one hundred twenty (120) days' prior written notice; (ii) the
delegate (or assignee) agrees with PFPC and the Fund to comply with all
relevant provisions of the 1940 Act; 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).
12
22. 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.
23. FURTHER ACTIONS. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the
purposes hereof.
24. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties and Oral Instructions.
(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.
13
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 Xxxxxx
------------------------------
Title: Executive Vice President
---------------------------
The OFFITBANK Investment Fund, Inc.
By: /s/ Xxxxxxx Xxxxx
------------------------------
Title: Assistant Treasurer
---------------------------
14
EXHIBIT A
THIS EXHIBIT A, dated as of March 19, 1998, is Exhibit A to that certain
Administration and Accounting Services Agreement dated as of March 19, 1998
between PFPC Inc. and The OFFITBANK Investment Fund, Inc.
PORTFOLIOS
OFFITBANK California Municipal Fund
OFFITBANK Emerging Markets Fund
OFFITBANK Global Convertible Fund
OFFITBANK High Yield Fund
OFFITBANK Investment Grade Global Debt Fund
OFFITBANK Latin America Equity Fund
OFFITBANK Mortgage Securities Fund
OFFITBANK National Municipal Fund
OFFITBANK New York Municipal Fund
OFFITBANK Total Return Fund
OFFITBANK U.S. Government Securities Fund
15
AUTHORIZED PERSONS APPENDIX
NAME (Type) SIGNATURE
____________ ____________
____________ ____________
____________ ____________
____________ ____________
____________ ____________
____________ ____________
16
