Exhibit 99.B9(b)
PBHG ADVISOR FUNDS, INC.
SUB-ADMINISTRATIVE SERVICES AGREEMENT
SUB-ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") made as of the _____
day of __________, 1998, by and among PBHG Advisor Funds, Inc., a Maryland
corporation (the "Company"), PBHG Fund Services, a Pennsylvania business trust
(the "Administrator"), and SEI Fund Resources, a Delaware business trust (the
"Sub-Administrator").
W I T N E S S E T H:
WHEREAS, the Company is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator and the Company have entered into an
Administrative Services Agreement (the "Administrative Services Agreement")
pursuant to which the Administrator will provide administrative services to the
Company and each of its several series (the "Funds"), which are identified in
Schedule A to the Administrative Services Agreement; and
WHEREAS, the Company and the Administrator desire to retain the
Sub-Administrator to provide certain administrative services to the Company, and
each Fund, and the Administrator in the manner and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DUTIES AND RESPONSIBILITIES OF THE SUB-ADMINISTRATOR.
The Sub-Administrator shall assist the Administrator in connection with
the Administrator's duties and responsibilities to the Company specified in the
Administrative Services Agreement. In addition, the Sub-Administrator shall
perform or supervise the performance by others of all administrative services in
connection with the operations of the Funds, other than those administrative
services to be provided by the Administrator pursuant to the Administrative
Services Agreement. The administrative services to be provided by the
Sub-Administrator pursuant to this Agreement shall include general
administrative services, regulatory reporting services, fund accounting
services, and such services as set forth herein. The duties of the
Sub-Administrator shall be confined to those expressly set forth herein and no
implied duties are assumed by or may be asserted against the Sub-Administrator
hereunder. Without limiting the generality of the foregoing, the
Sub-Administrator shall provide the services described below:
1.1. GENERAL ADMINISTRATIVE SERVICES.
1.1.1. OFFICE AND OTHER FACILITIES. Furnish, without cost to the
Company or the Administrator, or provide and pay the cost of, such office
facilities, furnishings, and office
equipment as are necessary for the performance of the Sub-Administrator's
duties to the Company under this Agreement.
1.1.2. PERSONNEL. Provide, without additional remuneration from or
other cost to the Company or the Administrator, the services of individuals
competent to perform all of the Sub-Administrator's duties under this Agreement.
1.1.3. BOOKS AND RECORDS. Maintain customary records, on behalf of the
Company, in connection with the performance of the Sub-Administrator's duties
under this Agreement. In connection with this, the Sub-Administrator shall
monitor and oversee the performance of its agents and the Company's independent
auditors with respect to all financial, accounting, corporate, and other records
required to be maintained and preserved by the Company or on its behalf so that
such records will be maintained in accordance with the provisions of rules and
regulations of the Securities and Exchange Commission ("SEC") under Section
31(a) of the 1940 Act.
1.1.4. REPORTS TO THE COMPANY. Assist the Administrator in furnishing
to or placing at the disposal of the Company such information, reports,
evaluations, analysis, and opinions relating to its duties as the Company may at
any time or from time to time reasonably request, or as the Administrator may
reasonably deem helpful to the Company. The Sub-Administrator also shall assist
the Administrator in the preparation of all necessary agendas and related
meeting materials for meetings of the Board of Directors.
1.1.5. SHAREHOLDER INQUIRIES. Respond to all inquiries from Company
shareholders or otherwise answer communications from Company shareholders if
such inquiries or communications are directed to the Sub-Administrator. If any
such inquiry or communication would be more properly answered by one of its
agents or those agents of the Company listed in Section 1 above, the
Sub-Administrator will refer the inquiry to the Administrator to direct to the
appropriate party for response.
1.1.6. AUTOMATED FUND SYSTEMS. Assist in implementing and monitoring
the Company's use of automated systems for: (i) the purchase, sale, redemption
and transfer of Company shares; (ii) 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 (iii) the
recording and tracking of such transactions and/or payments. The
Sub-Administrator also shall assist in developing, implementing, and monitoring
the Company's use of automated communications systems with brokers, dealers,
custodians, and other service providers, including without limitation trade
clearance systems.
1.2. ACCOUNTING. The Sub-Administrator shall on a continuing basis perform
the fund accounting services and other functions described below.
1.2.1. FINANCIAL STATEMENTS. Maintain the Company's general ledger,
including expense accruals and payments, and prepare the Company's and each
Fund's annual and semi-annual financial statements. On a monthly basis, with
respect to each Fund, the Sub-Administrator shall prepare and provide to the
Administrator and the Company monthly reports as mutually agreed to by the
parties (in U.S. dollars) which may include the following items: schedule
2
of investments; statement of assets and liabilities; statement of operations;
statement of changes in net assets; cash statement; and schedule of capital
gains and losses.
1.2.2. OVERSIGHT. Assist in developing, reviewing, maintaining, and
monitoring the effectiveness of Company accounting policies and procedures, in
light of industry standards and the "Audits of Investment Companies" of the
American Institute of Certified Public Accountants and, in this regard, devote
particular attention to areas where accounting standards may change or develop.
In this capacity, the Sub-Administrator shall assist in the resolution of
recommendations made by the Fund's independent auditors to improve internal
controls and shall implement such recommendations as required by the Board.
1.2.3. FUND VALUATION AND ACCOUNTING. Conduct, or monitor and oversee,
portfolio valuation procedures, including without limitation procedures for the
calculation of expenses and the control of disbursements of each Fund. The
Sub-Administrator shall calculate, or monitor and oversee the calculation of,
the daily net asset value ("NAV") of each Portfolio in accordance with the
procedures described in the Company's then-current registration statement and
such other procedures as may be established by the Company's Board of Directors.
The Sub-Administrator, on a daily basis, shall provide by electronic
transmission or other mutually agreed upon means, such NAV information to: (i)
the investment adviser and sub-adviser for each Fund; (ii) the NASD for
reporting to newspapers and other news media; and (iii) all sub-transfer agents
that have entered into agreements with the Company. In connection with this
responsibility, the Sub-Administrator shall determine or oversee the
determination of the value of each Fund's assets, and shall review and monitor
pricing methodologies relating to such valuation, procedures, including: (i)
oversight of any third-party pricing services used by them; (ii) establishment
and maintenance of appropriate "back up" pricing service arrangements so that
the NAV for each Fund will be provided to each required party specified above;
(iii) assistance in the review and verification of daily securities price
changes in excess of percentages specified by the Sub-Administrator (and
promptly reported to the Administrator); (iv) review for "stale" prices; and (v)
assistance in determining the resolution of any NAV calculation errors.
Notwithstanding the foregoing, the Sub-Administrator shall bear no
responsibility for incorrect prices provided by a third party pricing service,
provided the Sub-Administrator fulfills its obligation as described above.
The Sub-Administrator shall also prepare annual Company and/or Fund expense
budgets and the determination of related daily accruals. In addition, the
Sub-Administrator shall: determine the Company's and each Fund's net income both
in terms of U.S. dollars and, if appropriate, foreign currencies; calculate
capital gains and losses and, if appropriate, foreign exchange gains and losses;
control all disbursements from the Company and authorize such disbursements upon
written instructions, which may be continuing instructions, from the
Administrator or such other persons authorized by the Fund's Board of Directors;
calculate various contractual expenses for budget and accrual purposes;
reconcile cash and investment balances of each Fund with the Company's custodian
and provide each Fund's investment adviser or, if applicable, sub-adviser with
the beginning cash balance available for investment purposes in both U.S.
dollars and, if appropriate, foreign currency; and maintain historical tax lots
for each security and foreign currency. The Sub-Administrator shall also for
each Fund: monitor timely income collection and tax reclaims; monitor daily
expense accruals and the related calculation of investment advisory fee waivers
and/or expense reimbursements
3
(if any) and notify the Administrator of any proposed adjustments thereto; and
assist in developing and reviewing daily accounting reports for the Funds.
1.2.4.PERFORMANCE DATA. Calculate performance data of each Fund for
dissemination to information services covering the investment company industry,
including, as appropriate, each Fund's average annual total return, cumulative
total return, expense ratio, and portfolio turnover rate. In connection with
this function, the Sub-Administrator shall, as reasonably requested by the
Company's Board of Directors, develop fund performance and other databases to
facilitate internal and external reporting and shall monitor the calculation of
financial information.
1.2.5. OPERATIONS. Participate, as reasonably requested, in the
development of policies and procedures, including operational, accounting,
reporting, and monitoring procedures, to effectuate securities and other
transactions on behalf of the Company and the Funds, including, stated
objectives as appropriate, securities lending programs, the establishment and
use of lines of credit on behalf of the Company and/or inter-Fund lending
capabilities, and the establishment and use of inter-Fund securities trading
capabilities. In connection with the foregoing, the Sub-Administrator shall,
upon reasonable request, assist in the preparation of any application for
exemptive or no-action relief, if required.
1.2.6. CASH BALANCES. Participate, as reasonably requested, in the
development of policies and procedures, including operational, accounting,
reporting, and monitoring procedures, regarding the management of the Funds'
cash balances, including procedures regarding the use of "sweep" transactions
and repurchase agreements, the temporary reinvestment of credits to cash
balances, and the processing of dividends and other disbursements to the Funds.
In connection with the foregoing, the Sub-Administrator shall assist in the
preparation of any application for exemptive or no-action relief, if required.
The Sub-Administrator shall also provide the cash availability throughout each
day, as required by each Fund's investment adviser or, if applicable,
sub-adviser.
1.3. OVERSIGHT OF AGENTS AND SERVICE PROVIDERS.
The Sub-Administrator shall on a continuing basis perform the
oversight and other services and functions described below:
1.3.1. IN GENERAL. Assist the Administrator and Company counsel in the
preparation, negotiation, and administration of contracts on behalf of the
Company with third-party service providers, such as the Company's distributor,
custodian, transfer agent, sub-transfer agents, and intermediaries with respect
to mutual fund alliance programs. At the reasonable request of the Company or
the Administrator, the Sub-Administrator shall assist in the preparation of
reports to the Company on the performance and service quality of these service
providers, as more fully described in Section 1.3.2. below. The
Sub-Administrator shall review the performance of each Fund's custodian or
custodians regarding the timely recording of cash receipts and disbursements and
position reconciliation and shall periodically report to the Administrator its
findings in that regard, as mutually agreed to by the parties. The
Sub-Administrator shall also monitor and review compliance as documented and
reported by each Fund's custodian or custodians with Rule 17f-5 under the 1940
Act, as applicable. The Sub-Administrator shall have no responsibility for
supervising the performance of the investment adviser or sub-adviser for each
Fund.
4
1.3.2. SERVICE QUALITY STANDARDS. Assist the Administrator in
establishing service quality standards and developing and implementing
procedures for monitoring and benchmarking the performance of third-party
service providers, such as those specified in Section 1.3.1. above, against
industry standards. Upon reasonable request, the Sub-Administrator shall provide
the Administrator and the Company's Board of Directors with periodic reports
concerning the results of monitoring of the performance and service quality of
these service quality of these service providers.
1.4. OVERSIGHT OF TRANSFER AGENT AND DIVIDEND DISBURSING AGENT.
The Sub-Administrator shall on a continuing basis perform the
oversight and other services and functions described below:
1.4.1. POLICIES AND PROCEDURES. Assist the Administrator in the
development of policies and procedures concerning the transfer agent's
processing of shareholder transactions, including policies and procedures
concerning inactive or dormant accounts and compliance with related escheatment
requirements, telephone exchanges and redemptions, effectuation of transactions
through the use of facsimile transmissions, name and address changes, and the
receipt and maintenance of appropriate legal documentation. The
Sub-Administrator also shall participate in the establishment of policies and
procedures for ensuring that shareholder redemption requests are timely honored,
even in periods of significant or unusual market activity. The Sub-Administrator
also shall assist in the development of controls over, and policies and
procedures governing, the Company's cash remittance processing, and the
processing of dividend and distribution payments, check writing, wire
redemptions and other disbursements.
1.4.2. COMPLIANCE WITH SERVICE QUALITY STANDARDS. Assist the
Administrator in establishing service quality standards and developing and
implementing procedures for monitoring and benchmarking the transfer agent's
performance against industry standards in areas such as: compliance with initial
and subsequent investment minimums; accuracy of the establishment of new
accounts, including the establishment of shareholder privileges and dividend
reinvestment options; accuracy of transaction processing, including monetary and
non-monetary transactions; timeliness of problem resolution and correspondence,
including review of shareholder complaints; compliance with document completion
and retention requirements; timeliness and accuracy of confirmations and
periodic shareholder statements; and quality of telephonic communications with
shareholders, including a review of abandon rates, response times, and average
talk time. The Sub-Administrator also shall review and participate in
determinations concerning the resolution of "as of" transactions in accordance
with the Company's policies as approved by the Administrator and the Board of
Directors of the Company.
1.4.3. OVERSIGHT OF SHAREHOLDER TRANSACTIONS. Assist the Company, as
requested, in developing and implementing procedures with respect to omnibus
accounts, in order to ensure that such accounts are properly serviced and that
Company expenses are allocated appropriately.
1.4.4. TRANSFER AGENT EXPENSES. Assist the Administrator, as
requested, in reviewing the level and allocation of transfer agent out-of-pocket
expenses charged to the Company
5
with respect to whether particular expenses are appropriately charged to the
Company and appropriately allocated among the Funds.
1.5. REPORTS, FILINGS, AND COMMUNICATIONS.
The Sub-Administrator on a continuing basis shall perform the
reporting and other services and functions described below:
1.5.1. REPORTS AND FILINGS. Assist in the development, preparation,
and filing of all reports and communications by the Company to Company
shareholders and all reports and filings necessary to maintain the registrations
and qualifications of the Company's shares under federal and state "Blue Sky"
securities laws, including registration statements, prospectuses, statements of
additional information, proxy statements, semi-annual reports for the Company on
Form N-SAR, all sales reports, and all required notices pursuant to Rule 24f-2
of the 1940 Act. The Sub-Administrator also shall assist with and coordinate the
layout and printing of publicly disseminated prospectuses and the Company's
semi-annual and annual reports to shareholders.
1.5.2. STATE BLUE SKY FILINGS. Prepare all reports, applications, and
documents (including reports regarding the sale and redemption of the Company's
shares as may be required in order to comply with state Blue Sky securities
laws) as may be necessary or desirable to: (i) register and maintain the
registration of the Company's shares with state securities authorities; and (ii)
monitor the sale of the Company's shares for compliance with state Blue Sky
securities laws. The Sub-Administrator shall file with the appropriate state
securities authorities all registration statements and reports for the Company
and the Company's shares, and all amendments thereto and other filings as may be
necessary or convenient to register the Company and the Company's shares and
keep such registration effective with state security authorities so as to enable
the Company to make a continuous offering of its shares in all 50 states and the
District of Columbia.
1.5.3. SHAREHOLDER COMMUNICATIONS. Coordinate mailing Company
prospectuses, notices, proxy statements, proxies and other reports to Company
shareholders, and supervise and facilitate the solicitation of proxies solicited
by the Company for all shareholder meetings, including tabulation process for
shareholder meetings.
1.5.4. TAX RETURNS. Coordinate and supervise the preparation and
filing of all required tax returns for the Company and monitor the accuracy of
all tax reports sent to shareholders of the Company.
1.6. LEGAL AND AUDIT SERVICES.
The Sub-Administrator on a continuing basis shall perform the services
and functions described below:
1.6.1. INDEPENDENT AUDITS. Assist in the coordination of the Company
audit process and provide, upon request, account analysis, fiscal year
summaries, and other audit-related schedules. In connection with this
responsibility, the Sub-Administrator shall take all actions to assure that
necessary information is made available to the Company's independent auditor for
the
6
expression of its opinion, as such may be required by the Company from time to
time. The Sub-Administrator also shall assist and participate in the resolution
of issues raised in the audit process.
1.6.2. 1940 ACT. The Sub-Administrator shall obtain and keep in
effect, at the Company's expense, fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company 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 Company's Board of Directors. The
Sub-Administrator also shall develop and maintain fund manager "handbooks" to
facilitate compliance by portfolio managers with respect to investment
restrictions. In addition, the Sub-Administrator shall assist the Company's
Administrator in monitoring the Company's compliance with provisions of the 1940
Act and the rules and regulations thereunder as well as compliance with each
Fund's investment objectives, program, policies and restrictions. In connection
with this responsibility, the Sub-Administrator shall promptly advise the
Company and the Administrator as to any compliance problems or issues detected.
1.6.3. TAX COMPLIANCE. Monitor compliance with the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
regulations thereunder, applicable to regulated investment companies, including:
portfolio diversification requirements and minimum distribution requirements;
review of expense allocations to individual classes to ensure compliance with
applicable IRS pronouncements regarding preferential dividends; wash sales;
short-short income; qualifying income; asset diversification; and investments in
Passive Foreign Investment Companies. In connection with this responsibility,
the Sub-Administrator shall monitor and advise the Company and the Funds as to
their status as "regulated investment companies" under the Code.
1.6.4. REGULATORY EXAMINATIONS. Assist in the Company's participation
in regulatory examinations, including examinations by the SEC, the National
Association of Securities Dealers, Inc., and/or state securities regulators. In
connection therewith, the Sub-Administrator, on behalf of the Company, shall
provide such information as the regulator may reasonably request, and shall
assist and participate in the resolution of any issues raised in connection with
such examinations.
1.7. DISASTER RECOVERY. The Sub-Administrator shall employ, monitor and
oversee disaster recovery and related back-up procedures and facilities commonly
utilized by others in the mutual fund industry. In this regard, the
Sub-Administrator shall enter into and maintain in effect with appropriate
parties, at no additional expense to the Company, one or more agreements making
appropriate and reasonable provision for emergency use of electronic data
processing equipment and other equipment and/or facilities necessary for the
performance of its duties and obligations under this Agreement in the event of
emergency conditions or equipment failures.
7
2. EXPENSES.
2.1. EXPENSES PAID BY THE SUB-ADMINISTRATOR.
2.1.1. IN GENERAL. The Sub-Administrator shall bear all of its
expenses in connection with the performance of its duties under this Agreement,
except documented out-of-pocket expenses or expenses associated with telephone
support relating to shareholder services.
2.1.2. WAIVER OR ASSUMPTION AND REIMBURSEMENT OF EXPENSES BY THE
SUB-ADMINISTRATOR. The waiver or assumption and reimbursement by the
Sub-Administrator of any expense of the Company that the Sub-Administrator is
not required by this Agreement to waive, assume or reimburse shall not obligate
the Sub-Administrator to waive, assume or reimburse the same or any similar
expense of the Company on any subsequent occasion, unless so required pursuant
to a separate agreement between the Company and the Sub-Administrator.
2.2. EXPENSES PAID BY THE COMPANY. The Company shall bear all expenses of
its organization, operation, and business not specifically waived, assumed, or
agreed to be paid by the Administrator or the Sub-Administrator, as provided in
this Agreement, the Administrative Services Agreement of any other agreement
between the Company and the Administrator or the Sub-Administrator, and as
described in the Company'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 Sub-Administrator, the Administrator shall pay the
Sub-Administrator a fee per Fund: (i) at the annual rate of .07% of the average
daily assets of each Fund with respect to $2.5 billion of the total average
daily net assets of the Company; and (ii) at the annual rate of .025% of the
average daily net assets of each Fund with respect to the total average daily
net assets of the Company in excess of $2.5 billion.
3.2. METHOD OF COMPUTATION. The Sub-Administrator's fee shall accrue on
each calendar day and the sum of the daily fee accruals shall be paid monthly to
the Sub-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 Funds, as determined in accordance with the current Prospectuses
of the Company, as of the close of business on the last preceding business day
on which the Company 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.
8
3.4. RESPONSIBILITY FOR PAYMENT. The Sub-Administrator shall not be
entitled to receive any payment for the performance of its services hereunder
from the Company and shall look solely and exclusively to the Administrator for
payment of all fees for such services.
4. SUB-ADMINISTRATOR'S USE OF THE SERVICES OF OTHERS.
The Sub-Administrator may at its own cost employ, retain, or otherwise
avail itself of the services and facilities of other persons or organizations
for the purpose of providing the Sub-Administrator, the Administrator, or the
Company with such information or assistance as the Sub-Administrator may deem
necessary, appropriate, or convenient for the discharge of its duties hereunder
or otherwise helpful to the Administrator.
5. OWNERSHIP AND CONFIDENTIALITY OF RECORDS.
All records required to be maintained and preserved by the Company,
pursuant to rules or regulations of the SEC under Section 31(a) of the 1940 Act
and maintained and preserved by the Sub-Administrator on behalf of the Company,
are the property of the Company and shall be surrendered by the
Sub-Administrator promptly on request by the Company. The Sub-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 Sub-Administrator shall keep confidential any
information obtained in connection with its duties and shall disclose such
information only if the Company has authorized such disclosure or if such
disclosure is expressly required by applicable law or federal or state
regulatory authorities.
6. REPORTS TO THE SUB-ADMINISTRATOR.
The Company and/or the Administrator shall furnish or otherwise make
available to the Sub-Administrator such Prospectuses, Statements of Additional
Information, financial statements, proxy statements, reports, and other
information relating to the business and affairs of the Company as the
Sub-Administrator may, at any time or from time to time, require in order to
discharge its duties under this Agreement.
7. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Sub-Administrator
or any affiliated person of the Sub-Administrator to render similar corporate
administrative services to other investment companies, or to engage in other
business activities.
8. LIMITATION OF LIABILITY OF THE SUB-ADMINISTRATOR AND INDEMNIFICATION BY THE
COMPANY AND THE ADMINISTRATOR.
8.1. LIMITATION OF LIABILITY OF THE SUB-ADMINISTRATOR.
8.1.1. Neither the Sub-Administrator nor any of its directors,
officers, employees, or agents performing services for the Company and the
Administrator at the direction or request of the Sub-Administrator in connection
with the Sub-Administrator's discharge of its duties undertaken or
9
assumed with respect to this Agreement shall be liable for any act or omission
in the course of or in connection with the Sub-Administrator's services
hereunder, including any error of judgment or mistake of law or for any loss
suffered by the Company or the Administrator in connection with the matters to
which this Agreement relates; provided, that nothing herein contained shall be
construed to protect the Sub-Administrator or any such persons against any
liability to the Company or its shareholders or the Administrator to which the
Sub-Administrator or such persons 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 Company or the Administrator or for failure by the
Sub-Administrator or any such persons to exercise due care in rendering other
services to the Company or the Administrator. The limitation and liability
provisions set forth herein shall indefinitely survive the termination of this
Agreement.
8.1.2. The Sub-Administrator may apply to the Board of Directors of
the Company or to the Administrator at any time for instructions and may consult
counsel for the Company or the Administrator or the Sub-Administrator's own
counsel and with accountants and other experts with respect to any matter
arising in connection with the Sub-Administrator's duties, and the
Sub-Administrator shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instructions or with the
opinion of such counsel, accountants, or other experts.
8.1.3. The Sub-Administrator shall at all times have the right to
mitigate or cure any and all losses, damages, costs, charges, fees,
disbursements, payments, expenses and liabilities to the Company, its
shareholders or the Administrator.
8.2. INDEMNIFICATION BY THE COMPANY AND THE ADMINISTRATOR.
8.2.1. As long as the Sub-Administrator acts in good faith and with
due diligence and without negligence, the Company and the Administrator shall
indemnify the Sub-Administrator, its directors, officers, employees, and agents
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 Company or the Administrator 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 Company or the
Administrator may be asked for indemnification under Section 8.2.1., the Board
of Directors of the Company or the Administrator shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Sub-Administrator will use all reasonable care to
identify and notify the Board of Directors of the Company or the Administrator
promptly concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the Company or the
Administrator, but failure to do so in good faith shall not
10
affect the rights hereunder. The rights hereunder shall be limited, during each
term of this Agreement, to no more than six (6) months of fees of the
Sub-Administrator (as computed in accordance with Section 3.1 of this Agreement)
either (i) payable to the Sub-Administrator in accordance with Section 3 hereof
or (ii) if the Agreement has been terminated, those fees paid to the
Sub-Administrator for the six (6) month period prior to termination.
9. INDEMNIFICATION BY THE SUB-ADMINISTRATOR.
9.1. The Sub-Administrator shall indemnify the Company, the Administrator,
and their directors, officers, employees, and agents 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 Company and the
Administrator hereunder and arising or based upon the willful misfeasance or bad
faith of the Sub-Administrator, its directors, officers, employees, and agents
in the performance of its or their duties on behalf of the Company and the
Administrator. 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 Sub-Administrator may be asked for
indemnification under Section 9.1, the Sub-Administrator shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Company and the Administrator will use all
reasonable care to identify and notify the Sub-Administrator promptly concerning
any situation which presents or appears likely to present the probability of
such a claim for indemnification against the Sub-Administrator, but failure to
do so in good faith shall not affect the rights hereunder. The rights hereunder
shall be limited, during each term of this Agreement, to no more than six (6)
months of fees to the Sub-Administrator (as computed in accordance with Section
3.1 of this Agreement) either (i) payable to the Sub-Administrator in accordance
with Section 3 hereof or (ii) if the Agreement has been terminated, those fees
paid to the Sub-Administrator for the six (6) month period prior to termination.
10. FORCE MAJEURE.
In the event the Sub-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 Sub-Administrator shall not be liable for any
loss, damage, cost, charge, counsel fee, payment, expense or inability 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
Sub-Administrator from being liable to the Administrator or the Company or any
and all losses, damages, costs, charges, counsel fees, payments and expenses
incurred by the Administrator or the Company due to the non-performance or delay
in performance by the Sub-Administrator of its duties and obligation under this
Agreement if such non-performance or delay
11
in performance reasonably could have been prevented by the Sub-Administrator
through back-up systems and other procedures commonly employed by other
administrators and sub-administrators in the mutual fund industry, provided that
the Sub-Administrator shall have the right, at all times, to mitigate or cure
any losses, including the making of adjustments or corrections to any current or
former shareholder accounts.
11. 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
Sub-Administrator shall furnish to the Company or the Administrator, promptly
upon a request by the Company or the Administrator, such information as may be
reasonably necessary to evaluate the terms of this Agreement or any extension,
renewal, or amendment thereof.
12. 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 a resolution of the Board of Directors of the Company or by a vote
of a majority of the outstanding voting securities of the Company or, in the
case of an amendment to this Agreement with respect to a particular Fund, by a
resolution of the Board of Directors of the Company or by a vote of a majority
of the outstanding voting securities of such Fund.
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:
(a) for a material breach of this Agreement, upon thirty (30) days
prior written notice to the breaching party; provided that the breaching party
has not cured the material breach of this Agreement during 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 Company such action shall have been authorized by
resolution of the Board of Directors of the Company or by a vote of a majority
of the outstanding voting securities of the Company or, in the case of
termination with respect to a particular Fund, by a resolution of the Board of
Directors of the Company or by a vote of a majority of the outstanding voting
securities of such Fund. In the case of termination by the Sub-Administrator,
such termination shall not be effective until the Company and
12
the Administrator shall have contracted with one or more person(s) serve as
successor Sub-Administrator(s) for the Company and such persons(s) shall have
assumed such position.
14. MISCELLANEOUS.
14.1. NOTICES. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid: (a) if to the Sub-Administrator, to
SEI Fund Resources, Xxx Xxxxxxx Xxxxxx Xxxx, Xxxx, XX 00000, Attention: General
Counsel; (b) if to the Administrator, to PBHG Fund Services, 000 Xxxxxxxxx Xxxx,
Xxxxx, XX 00000, Attention: Xxxxx Xxxxxxxx; and (c) if to the Company, to PBHG
Advisor Funds, Inc., 000 Xxxxxxxxx Xxxx, Xxxxx, XX 00000, Attention: Xxxxxxx
Xxxxxxxxxx.
14.2. 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.
14.3. INTERPRETATION. Nothing herein contained shall be deemed to require
the Company 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
Company.
14.4. 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 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 SEC 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 SEC, whether of special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation, or order.
14.5. 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.
14.6. 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.
13
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers hereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: PBHG ADVISOR FUNDS, INC.
___________________________________ By:________________________________
Title:_____________________________ Title:_____________________________
ATTEST: PBHG FUND SERVICES
___________________________________ By:________________________________
Title:_____________________________ Title:_____________________________
ATTEST: SEI FUND RESOURCES
__________________________________ By:________________________________
Title:_____________________________ Title:_____________________________
14
SCHEDULE A
The Funds of the Company that will receive services pursuant to this Agreement
are:
PBHG Advisor Core Value Fund
PBHG Advisor Blue Chip Growth Fund
PBHG Advisor Global Technology & Communications Fund
PBHG Advisor Growth II Fund
PBHG Advisor Growth Opportunities Fund
PBHG Advisor High Yield Fund
PBHG Advisor Large Cap Concentrated Fund
PBHG Advisor New Contrarian Fund
PBHG Advisor Trend Fund
PBHG Advisor Cash Reserves Fund
PBHG Advisor Value Opportunities Fund
PBHG Advisor New Opportunities Fund
PBHG Advisor Enhanced Equity Fund
PBHG Advisor Master Fixed Income Fund
PBHG Advisor Short-Term Government Fund
PBHG Advisor REIT Fund
Date: __________, 1998
