EXHIBIT (h)(4)
FIN 48 TAX SERVICES AGREEMENT
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THIS FIN 48 TAX SERVICES AGREEMENT ("Agreement") is entered into as of July 7,
2008 and effective as of September 8, 2008 or such other date as the parties
agree in writing (the "Effective Date") by and between PFPC INC., a
Massachusetts corporation ("PFPC"), and YIELDQUEST FUNDS TRUST, a Delaware
business trust ("Fund").
BACKGROUND
A. The Financial Accounting Standards Board ("FASB") released Interpretation
No.48, Accounting for Uncertainty in Income Taxes - an Interpretation of
FASB Statement 109 (as released and not amended, "FIN 48") in July, 2006.
B. FIN 48 is effective for fiscal years beginning after December 15, 2006 and
applies generally to mutual funds.
C. The Fund, on behalf of each of its investment portfolios (each, a
"Portfolio"), is responsible for complying with FIN 48. The Portfolios are
specified on Exhibit A hereto.
D. The Fund wishes to retain PFPC to provide the FIN 48 services described
below, and PFPC wishes to furnish such services, either directly or through
an affiliate or affiliates, as more fully described herein.
TERMS
In consideration of the premises and mutual covenants herein contained, and
intending to be legally bound hereby, the parties agree as follows:
1. Services. (a) PFPC shall provide the following FIN 48 services ("Services")
to the Fund with respect to each Portfolio's Tax Positions (as defined below)
for each Review Period (as defined below) during the term of this Agreement:
(i) Identification and documentation of all material tax positions taken by
the Fund and identified to PFPC ("Tax Positions") during (i) its fiscal
year ending October 31, 2008, and (ii) thereafter, each of its fiscal years
(each such fiscal year being a "Review Period");
(ii) Review of the Fund's: (A) tax provision workpapers, (B) excise tax
distribution workpapers, (C) income and excise tax returns, (D) tax
policies and procedures, and (E) Subchapter M compliance workpapers;
(iii) Determination as to whether the Tax Positions have been consistently
applied and documentation of any inconsistencies;
(iv) Review of relevant statutory authorities;
(v) Review of any tax opinions and legal memoranda prepared by tax counsel
or tax auditors to the Fund;
(vi) Review of standard mutual fund industry practices, to the extent such
practices reasonably may be determined by PFPC; and
(vii) Delivery of a written report to the Fund with respect to the above.
(b) The following are expressly excluded from the Services: (i) assessment of
risk of any challenge by the Internal Revenue Service or other taxing authority
against any Tax Position (including, without limitation, whether it is "more
likely than not" such Tax Position would be sustained); (ii) calculation of any
tax benefit measurement, in whole or in part, that may be required by FIN 48 if
any "more likely than not" threshold has not been met. Any such estimate or
calculation is subject to review and approval by Fund's independent public
accountants and management of the Fund.
(c) PFPC's Services shall not include any tax opinion or tax advice, and none
of the Services shall be deemed to be or constitute a tax opinion or advice.
2. COMPENSATION; DISCLOSURE.
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(a) As compensation for Services rendered by PFPC during the term of this
Agreement, the Fund shall pay to PFPC fees as may be agreed to in writing from
time to time by the Fund and PFPC.
(b) The Fund hereby represents and warrants to PFPC that (i) the terms of this
Agreement, and (ii) the fees and expenses associated with this Agreement, have
been fully disclosed to and approved by the Board of Trustees of the Fund (the
"Board").
3. INFORMATION; COOPERATION. The Fund shall provide such information and
documentation as PFPC may reasonably request in connection with the Services.
The Fund shall seek the cooperation of its independent public accountants and
shall make such accounting information available to PFPC as it may reasonably
request.
4. PFPC OWNERSHIP. PFPC shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, know-how, patents, copyrights,
trade secrets, and other related legal rights used by PFPC in connection with
the Services. The Fund shall be entitled to retain all records and workpapers
created or reviewed by PFPC on behalf of the Fund in connection with providing
Services to the Fund under this Agreement.
5. DURATION AND TERMINATION. This Agreement shall be effective on the Effective
Date and shall continue for a period of one (1) year (the "Initial Term"). Upon
the expiration of the Initial Term, this Agreement shall automatically renew for
successive terms of one (1) year ("Renewal Term") each, unless the Fund or PFPC
provides written notice to the other of its intent not to
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renew. Such notice must be received not less than thirty (30) days prior to the
expiration of the Initial Term or the then current Renewal Term. After
termination of this Agreement, PFPC shall be entitled to full payment of all of
its fees, compensation, costs and expenses hereunder.
6. NOTICES. Notices shall be addressed:
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(a) if to PFPC:
(b) if to the Fund:
or if to neither of the foregoing, at such other address as shall have been
given by like notice to the sender of any such notice or other communication by
the other party. If notice is sent by confirming electronic delivery, hand 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 five
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.
7. CONFIDENTIALITY.
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(a) Each party shall keep confidential all material information relating to the
other party's business ("Confidential Information") disclosed hereunder.
Confidential Information shall include (i) data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer profiles,
customer lists, sales estimates, business plans, and internal performance
results relating to the past, present or future business activities of the Fund
or PFPC, their respective subsidiaries and affiliated companies; (ii) scientific
or technical information, design, process, procedure, formula, or improvement
that is commercially valuable and secret in the sense that its confidentiality
affords the Fund or PFPC a competitive advantage over its competitors; (iii)
confidential or proprietary concepts, documentation, reports, data,
specifications, computer software, source code, object code, flow charts,
databases, inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (iv) any information expressly designated as Confidential
Information in writing.
(b) Notwithstanding the foregoing, information shall not be Confidential
Information and shall not be subject to such confidentiality obligations if: (i)
it is already known to the receiving party at the time it is obtained; (ii) it
is or becomes publicly known or available through no wrongful act of the
receiving party; (iii) it is rightfully received from a third party who, to the
best of the receiving party's knowledge, is not under a duty of confidentiality;
(iv) it is released by the protected party to a third party without restriction;
(v) it is requested or required to be disclosed by the receiving party pursuant
to a court order, subpoena, governmental or regulatory agency request or law
(provided the receiving party will provide the other party written notice of the
same, to the extent such notice is permitted); (vi) release of such information
by PFPC is necessary or desirable in connection with the provision of Services;
(vii) it is Fund information provided by PFPC in connection with an independent
third party compliance or other review;
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(viii) it is relevant to the defense of any claim or cause of action asserted
against the receiving party; or (ix) it has been or is independently developed
or obtained by the receiving party.
8. RESPONSIBILITY OF THE PARTIES.
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(a) PFPC shall be under no duty to take any action or render any service
hereunder to or on behalf of the Fund except as specifically set forth herein or
as may be specifically agreed to by PFPC and the Fund in a written amendment
hereto, and PFPC shall have no liability to the Fund or any other entity or
governmental authority with respect to any Tax Positions. PFPC shall have no
liability either for any error or omission of any other servicer provider
(including any accounting firm or tax adviser) to the Fund or for any failure to
discover any such error or omission. The Fund shall be responsible for: (i) all
filings, tax returns and reports on all Tax Positions, and (ii) the payment of
all taxes and similar items (including without limitation penalties and interest
related thereto).
(b) Notwithstanding anything in this Agreement to the contrary: (i) neither PFPC
nor its affiliates shall be liable for any consequential, incidental, exemplary,
punitive, special or indirect losses or damages whether or not the likelihood of
such losses or damages was known by PFPC or its affiliates; and (ii) PFPC's
liability to the Fund for any loss, claim, suit, controversy, breach or damage
of any nature whatsoever (including but not limited to those arising out of or
related to this Agreement) and regardless of the form of action or legal theory
("Loss") shall not exceed the fees received by PFPC for services provided
hereunder during the twelve (12) months immediately prior to the date of such
Loss; provided that PFPC's cumulative maximum liability for all Losses shall not
exceed $100,000. PFPC shall be liable only 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, fraud or reckless disregard of its
duties under this Agreement.
(d) The Fund shall have a duty to mitigate damages for which PFPC may become
responsible.
9. ENTIRE AGREEMENT; AMENDMENTS; SEVERABILITY. This Agreement embodies the
entire agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof. This
Agreement, or any term hereof, may be changed or waived only by a written
amendment, signed by the party against whom enforcement of such change or waiver
is sought. 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.
10. NO REPRESENTATIONS OR WARRANTIES. Except as expressly provided in this
Agreement, PFPC hereby disclaims all representations and warranties, express or
implied, made to the Fund or any other person, including, without limitation,
any warranties regarding quality, suitability, merchantability, fitness for a
particular purpose, title or non-infringement or otherwise (irrespective of any
course of dealing, custom or usage of trade), of any services or any goods
provided incidental to the Services.
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11. FORCE MAJEURE. Notwithstanding anything in this Agreement to the contrary,
(i) PFPC shall not be liable for losses, delays, failure, errors, interruption
or loss of data occurring directly or indirectly by reason of circumstances
beyond its reasonable control, including without limitation acts of God; action
or inaction of civil or military authority; public enemy; war; terrorism; riot;
fire; flood; sabotage; epidemics; labor disputes; civil commotion; interruption,
loss or malfunction of utilities, transportation, computer (including Internet)
or communications capabilities; insurrection; elements of nature; or
non-performance by a third party.
12. GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware in the United States and governed by Delaware law, without regard to
principles of conflicts of law.
13. ASSIGNMENT; SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES. PFPC may
assign this Agreement to any affiliate of PFPC or of The PNC Financial Services
Group, Inc., provided that PFPC gives the Fund thirty (30) days' prior written
notice of such assignment. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. Except as expressly set forth in this Agreement, nothing
herein is intended or shall be construed to confer upon any third party any
right, remedy or claim under or by reason of this Agreement.
14. COUNTERPARTS; FACSIMILE SIGNATURES. 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. The facsimile signature
of any party to this Agreement shall constitute the valid and binding execution
hereof by such party.
15. SURVIVAL. Sections 5, 8 and 10 shall survive the termination of this
Agreement for the duration of the statute of limitations applicable thereto.
IRS CIRCULAR 230 DISCLOSURE:
TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE INTERNAL REVENUE SERVICE,
PFPC INFORMS THE FUND THAT ANY U.S. TAX ADVICE CONTAINED IN ANY COMMUNICATION
FROM PFPC TO THE FUND (INCLUDING ANY FUTURE COMMUNICATIONS) IS NOT INTENDED OR
WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF (i) AVOIDING
PENALTIES UNDER THE INTERNAL REVENUE CODE OR (ii) PROMOTING, MARKETING OR
RECOMMENDING TO ANOTHER PARTY ANY TRANSACTION OR MATTER ADDRESSED HEREIN OR
THEREIN.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
PFPC INC.
By: /s/ Xxx X. Xxxxxxxx
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Name: Xxx X. Xxxxxxxx
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Title: Senior Vice President
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YIELDQUEST FUNDS TRUST
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Treasurer and Chief Financial Officer
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