ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of , 1996 by and between THE FBR FAMILY OF
FUNDS, a Delaware business trust (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
Trustees 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 may be delivered by
hand, mail, tested telegram, cable, telex or facsimile sending device.
2. Appointment. The Fund hereby appoints PFPC to provide administration
and accounting services to the each of the Portfo- lios, 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:
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(a) certified or authenticated copies of the resolutions of the
Fund's Board of Trustees, 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 each class
of Shares representing an interest in a Portfolio;
(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
(f) copies (certified or authenticated, where applica- ble) 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. 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
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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 Trustees or of
the Fund's shareholders, unless and until PFPC receives Written Instructions 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.
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
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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 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
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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 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:
(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 Rule 31a-1 of the 1940 Act in
connection with the services provided hereunder.
8. 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
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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.
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 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.
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, on behalf of each Portfolio, will pay to
PFPC a fee or fees as may be agreed to in
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writing by the Fund and PFPC.
12. 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.
13. Responsibility of PFPC.
(a) PFPC shall be under no duty to take any action on behalf of the
Fund or any 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
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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.
(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, 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
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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 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 Opera- tions;
(viii) Calculate various contractual expenses (e.g., advisory
and custody fees);
(ix) Monitor the expense accruals and notify an officer of
the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing
services approved by the
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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;
(xiv) Transmit or mail a copy of the daily portfolio valuation
to the Adviser;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity; and
(xvii) 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.
15. 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;
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(vii) Assist in the preparation of registration statements and
other filings relating to the registration of Shares;
(viii) Monitor each Portfolio's status as a regulated
investment company under Sub-chapter M of the Internal
Revenue Code of 1986, as amended;
(ix) Coordinate contractual relationships and communications
between the Fund and its contractual service providers;
and
(x) Monitor the Fund's compliance with the amounts and
conditions of each state qualification.
16. Duration and Termination. This Agreement shall continue until
terminated by either party on sixty (60) days' prior written notice to the other
party.
17. 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________________________________, Attn:___________________________;
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.
18. Amendments. This Agreement, or any term thereof, may be
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changed or waived only by written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
19. 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
thirty (30) 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).
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
22. 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.
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(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:___________________________
Title:________________________
THE FBR FAMILY OF FUNDS
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By:___________________________
Title:________________________
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EXHIBIT A
THIS EXHIBIT A, dated as of ________________, 1996, is Exhibit A to
that certain Administration and Accounting Services Agreement dated as of
_________________________, 1996 between PFPC Inc. and THE FBR FAMILY OF FUNDS.
PORTFOLIOS
FBR Small Cap Financial Fund
FBR Financial Services Fund
FBR Virtual Information Fund
FBR Growth/Value Fund
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AUTHORIZED PERSONS APPENDIX
NAME (Type) SIGNATURE
__________________________________ ________________________________
__________________________________ ________________________________
__________________________________ ________________________________
__________________________________ ________________________________
__________________________________ ________________________________
__________________________________ ________________________________
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________________________, 1996
THE FBR FAMILY OF FUNDS
Re: Administration and Accounting Services Fees
Dear Sir/Madam:
This letter constitutes our agreement with respect to compensation to
be paid to PFPC Inc. ("PFPC") for services provided under the terms of an
Administration and Accounting Services Agreement dated ______, 1996 between The
FBR Family of Funds (the "Fund") and PFPC (the "Agreement"). Pursuant to
paragraph 11 of that Agreement, and in consideration of the services to be
provided to the Portfolios listed on Exhibit A to the Agreement, the Fund will
pay PFPC an annual administration and accounting fee, to be calculated daily and
paid monthly. The Fund will also reimburse PFPC for its out-of-pocket expenses
incurred on its behalf, including, but not limited to: postage and mailing,
telephone, telex, federal express and outside independent pricing service
charges, and record retention/storage.
The annual administration and accounting fees shall be an asset based
fee of .075% of each Portfolio's first $1 billion of average daily net assets;
and .05% of each Portfolio's average daily net assets over $1 billion. These
fees are exclusive of out-of-pocket expenses.
The minimum monthly fee shall be $6,250 for each Portfolio, exclusive
of out-of-pocket expenses. For each Portfolio with more than one class or
sub-class, there shall be an additional minimum monthly fee of $1,875 per class
or sub-class with respect to that Portfolio for each class or sub-class beyond
the first one.
The fee for the period from the day of the year this Agreement is
entered into until the end of that year shall be prorated according to the
proportion which such period bears to the full annual period.
If during the first three years of a Portfolio's operations, PFPC is
removed from the Administration and Accounting Services Agreement referenced
above, the Fund shall pay any costs of time and material associated with the
conversion and PFPC will recoup 100% of the fees waived with respect to that
Portfolio during the Portfolio's first year of operations.
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If the foregoing accurately sets forth our agreement and you intend to
be legally bound thereby, please execute a copy of this letter and return it to
us.
Very truly yours,
PFPC INC.
By:____________________________
Accepted:
THE FBR FAMILY OF FUNDS
By:________________________________
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________________________, 1996
THE FBR FAMILY OF FUNDS
Re: ADMINISTRATION AND ACCOUNTING SERVICES FEE WAIVER
Dear Sir/Madam:
PFPC Inc. ("PFPC") agrees to waive certain fees under an Administration
and Accounting Services Agreement dated ________, 1996 between PFPC and THE FBR
FAMILY OF FUNDS as follows: for the first two months of each Portfolio's
operations PFPC shall waive 100% of its minimum base fee (excluding
miscellaneous fees and out-of-pocket costs) to the extent the minimum fee is
applicable; thereafter, PFPC's minimum fee shall be charged in increments of 10%
per month. Thus, during the third calendar month of operations, each Portfolio
will pay 10% of the minimum fee rates; 20% during the fourth month; 30% during
the fifth month; etc.; and 100% during the twelfth month and thereafter.
Very truly yours,
PFPC INC.
By: ___________________________________
Title:
Acknowledged:
THE FBR FAMILY OF FUNDS
By: _______________________
Title:
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