FIN 48 TAX SERVICES AGREEMENT
THIS FIN 48 TAX SERVICES
AGREEMENT (“Agreement”), effective November 21, 2009 or such other date
as mutually agreed upon between the parties hereto, is between PNC Global Investment Servicing
(U.S.) Inc., a Massachusetts corporation (“PNC”), and Firsthand Funds, a Delaware
statutory trust (“Fund”).
BACKGROUND
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A.
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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.
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B.
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FIN
48 is effective for fiscal years beginning after December 15, 2006 and
applies generally to mutual funds.
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C.
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The
management of mutual funds is responsible for complying with FIN
48.
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D.
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The
Fund wishes to retain PNC to provide the FIN 48 services described below,
and PNC wishes to furnish such services, either directly or through an
affiliate or affiliates, as more fully described
herein.
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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)
PNC shall provide the following FIN 48 services (“Services”) to the Fund with
respect to the Fund’s Tax Positions (as defined below) for each Review Period
(as defined below) during the Term:
(i)
Identification
and documentation of all material tax positions taken by the Fund and identified
to PNC (“Tax Positions”) during (i) its December 31, 2009 fiscal
year(s), 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;
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(iii)
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Determination
as to whether the Tax Positions have been consistently applied and
documentation of any
inconsistencies;
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(iv)
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Review
of relevant statutory authorities;
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(v)
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Review
of any tax opinions and legal memoranda prepared by tax counsel or tax
auditors to the Fund;
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(vi)
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Review
of standard mutual fund industry practices, to the extent such practices
are known to or may reasonably be determined by PNC;
and
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(vii)
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Delivery
of a written report to the Fund with respect to the
above.
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(b) The
following are expressly excluded from the Services: (i) assessment of
risk of any challenge by the Internal Revenue Service or other any 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; and (iii) any tax opinion or tax advice, and nor shall any
of the Services be deemed to be or constitute a tax opinion or
advice.
2. Compensation;
Disclosure.
(a)
As compensation for Services rendered by PNC during the term of this Agreement,
the Fund shall pay to PNC fees as may be agreed to in writing from time to time
by the Fund and PNC.
(b)
The Fund hereby represents and warrants to PNC that (i) the terms of this
Agreement, (ii) the fees and expenses associated with this Agreement, and (iii)
any benefits accruing to PNC or to the adviser or sponsor to the Fund in
connection with this Agreement, have been fully disclosed to and approved by
persons with the legal authority to take such action on behalf of the Fund and
to make such disclosures to investors and others if required under any
applicable law.
3. Information;
Cooperation. The Fund shall provide such information and documentation as
PNC may reasonably request in connection with the Services. The
Fund's independent public accountants shall cooperate with PNC and make such
information available to PNC as it may reasonably request.
4. PNC
Ownership. PNC 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 PNC in connection with the Services.
5. Duration
and Termination.
This Agreement shall continue until terminated by the Fund or PNC on thirty (30)
days’ prior written notice to the other party. After termination of this
Agreement, PNC shall be entitled to full payment of all of its fees,
compensation, costs and expenses hereunder.
6. Notices. Notices shall be
addressed:
(a)
if to PNC: 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
President
(b)
if to the Fund: 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxxxxxxxxx 00000,
Attention: President
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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.
(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 PNC, 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 PNC 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 PNC is necessary or desirable in connection with the provision of Services;
(vii) it is Fund information provided by PNC in connection with an independent
third party compliance or other review; (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.
(a)
PNC 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 PNC and the Fund in a written amendment hereto, and
PNC shall have no liability to the Fund or any other entity or governmental
authority with respect to any Tax Positions. PNC shall have no
liability either for any error or omission of any other servicer provider
(including any accounting
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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 PNC 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 PNC or its affiliates; and (ii) the
aggregate cumulative liability of PNC and its affiliates to the Fund, the Fund’s
adviser, their affiliates, and any person or entity claiming through the Fund or
its affiliates 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 any section of this Agreement and any other agreement by and between PNC or
any of its affiliates and the Fund, the Fund’s adviser or any of their
affiliates (this Agreement, collectively with the Fund’s Transfer Agency
Services Agreement with PNC and the Fund’s Sub-Administration and Accounting
Services Agreement with PNC and the Fund’s adviser, the “Service Agreements”))
and regardless of the form of action or legal theory (“Loss”) shall not exceed
the greater of: (i) the fees actually paid to PNC and its affiliates
pursuant to the Service Agreements during the twelve (12) months immediately
preceding the date of the first such Loss; or (ii) five hundred thousand U.S.
dollars ($500,000). For the purposes of clarification, in the event a
Loss occurs prior to the end of twelve (12) months subsequent to the date of
this Agreement, the amount in part (i) above shall be calculated on a pro forma
basis based upon the fees actually paid to PNC and its affiliates pursuant to
the Service Agreements prior to the date of the Loss.
(c)
No party may assert a cause of action against PNC or any of its affiliates that
allegedly occurred more than the earlier of the applicable statute of
limitations or 36 months immediately prior to the filing of the suit (or, if
applicable, commencement of arbitration proceedings) alleging such cause of
action. Each party shall have a duty to mitigate damages for which the
other party may become responsible.
9. Indemnification. The Fund shall
indemnify, defend and hold harmless PNC and its affiliates from all damages,
losses, claims, suits, charges, expenses, taxes, assessments, claims and
liabilities (including, without limitation, attorneys’ fees and disbursements
and liabilities arising under any laws, rules and regulations), arising directly
or indirectly from any action or omission to act by PNC in connection with the
Services.
10. 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.
11. Non-Solicitation. During
the term of this Agreement and for one year thereafter, the Fund shall not (and
shall cause the Fund’s sponsor and affiliates not to) solicit or recruit for
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employment
or hire any of PNC’s employees. To solicit, recruit or
hire within the meaning of this provision does not include solicitation,
recruitment or hiring of a PNC employee, if the PNC employee was identified
solely as a result of the PNC employee’s response to a general advertisement in
a trade or industry publication or other similar general
solicitation.
12. No
Representations or Warranties. Except as expressly provided in
this Agreement, PNC 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.
13. Force
Majeure. Notwithstanding anything in this Agreement to the
contrary, (i) PNC 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.
14. 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.
15. Assignment;
Successors and Assigns; No Third-Party Beneficiaries. PNC may assign this
Agreement to any affiliate of PNC or of The PNC Financial Services Group, Inc.,
provided that PNC 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.
16. 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.
17. Survival. Sections
5, 9, 10, 12, and 15shall 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, PNC
informs the Fund that any U.S. tax advice contained in any communication from
PNC 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.
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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.
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PNC
GLOBAL INVESTMENT SERVICING (U.S.) INC.
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By:
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/s/ Xxx X.
Xxxxxxxx
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Name:
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Xxx
X. Xxxxxxxx
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Title:
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Senior
Vice President
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By:
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/s/ Xxxxx
Xxxxxx
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Name:
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Xxxxx
Xxxxxx
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Title:
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Trustee
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