Exhibit (h)(2)
SUB-ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of December 3, 2007 by and between PFPC Inc., a
Massachusetts corporation with offices located at 000 Xxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 ("PFPC"), and HighMark Capital Management, Inc. with
offices located at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000 ("HCM"), a
California corporation, for services to be provided with respect to the HighMark
Funds a Massachusetts business trust (the "Fund") with offices also located at
000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000.
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 has retained HCM as administrator 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"), each Portfolio of which may
consist of one or more classes of shares of beneficial interest ("Shares"), and
WHEREAS, HCM wishes to retain PFPC to provide sub-administration and
accounting services with respect to the Portfolios, 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 or HCM and any
other person duly authorized by the Fund's Board of Trustees or
HCM's Board of Directors to give Oral Instructions or Written
Instructions on behalf of the Fund or HCM. An initial list of such
persons is attached as Exhibit B. An Authorized Person's scope of
authority may be limited by setting forth such limitation in a
written document signed by both parties hereto.
(d) "DE-CONVERSION SERVICES" means those services that are identified in
Exhibit E to be performed by PFPC in accordance with and subject to
the provisions of this Agreement.
(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. PFPC may, in each separate instance, consider
and rely upon instructions it receives from an Authorized Person via
electronic mail as Oral Instructions.
(f) "SEC" means the Securities and Exchange Commission.
(g) "SECURITIES LAWS" means the 1933 Act, the 1934 Act and the 1940 Act.
(h) "SHARES" means the shares of beneficial interest of any series or
class of the Fund.
(i) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by an
Authorized
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Person (or a person reasonably believed by PFPC to be an Authorized
Person) and received by PFPC or (ii) trade instructions transmitted
(and received by PFPC) by means of an electronic transaction
reporting system access to which requires use of a password or other
authorized identifier. The instructions may be delivered
electronically (with respect to sub-item (ii) above) or by hand,
mail, tested telegram, cable, telex or facsimile sending device.
2. APPOINTMENT. HCM hereby appoints PFPC to provide sub-administration and
accounting services to each of the Portfolios, in accordance with the
terms set forth in this Agreement. PFPC accepts such appointment and
agrees to furnish such services. PFPC shall be under no duty to take any
action hereunder on behalf of the Fund or any Portfolio except as
specifically set forth herein or as may be specifically agreed to by PFPC
and HCM in a written amendment hereto. PFPC shall not bear, or otherwise
be responsible for, any fees, costs or expenses charged by any third party
service providers engaged by HCM, the Fund or any other third party
service provider to the Fund, unless otherwise agreed in writing by both
HCM and PFPC, or engaged, retained, employed, or otherwise contracted by
PFPC. Notwithstanding the foregoing sentence, PFPC shall be responsible
for any reasonable increase in such costs, fees or expenses to the extent
directly attributable to the failure of PFPC to provide timely service
under this Agreement, provided that HCM has given PFPC written notice of
such failure and a reasonable opportunity to remediate such failure. PFPC
must obtain prior written consent from HCM, which will not be unreasonably
withheld,
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in the event PFPC or its associates, engages, employs, or uses the
service(s) of a third party not located in the United States of America to
support the services that PFPC provides to HCM under this Agreement. No
engagement by PFPC of a third party will relieve PFPC of its obligations
under this Agreement. PFPC will comply in all material respects with the
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 as sub-administrator. HCM will
comply in all material respects with the 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 HCM as administrator.
3. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instruction or Written
Instruction it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to
this Agreement. PFPC may assume that any Oral Instruction or Written
Instruction received hereunder is not in any way inconsistent with
the provisions of organizational documents of HCM or the Fund or of
any vote, resolution or proceeding of HCM's Board of Directors or of
the Fund's Trustees or of the Fund's shareholders, unless and until
PFPC receives Written Instructions to the contrary.
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(c) HCM agrees to use commercially reasonable efforts 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 or
differ from the Oral Instructions shall in no way invalidate the
transactions or enforceability of the transactions authorized by the
Oral Instructions or PFPC's ability to rely upon such Oral
Instructions.
4. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND OR HCM. 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
or HCM.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any question of
law pertaining to any action it should or should not take, PFPC may
request advice from counsel of its own choosing (who may be counsel
for the Fund or the Fund's investment adviser (in which case such
counsel will be contacted through HCM) or counsel for PFPC, at the
option of PFPC). In the event counsel for the Fund or HCM responds
to such requests from PFPC, and in connection therewith incurs legal
fees or costs, the parties shall use good faith efforts to
appropriately allocate such fees or costs; with the understanding
that PFPC shall not be responsible for legal fees or costs
occasioned by PFPC's provision of regulatory administration
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services in the normal course of business.
(c) CONFLICTING ADVICE. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC receives
from the Fund or HCM and the advice or positions PFPC receives from
counsel, PFPC may rely upon and follow the advice or positions of
counsel. Nothing in this section shall be construed so as to impose
an obligation upon PFPC (i) to seek such positions or advice or Oral
Instructions or Written Instructions, or (ii) to act in accordance
with such positions or 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.
5. RECORDS; VISITS.
(a) The books and records pertaining to HCM, the Fund and the Portfolios
which are in the possession or under the control of PFPC shall be
the property of the Fund. 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 HCM or the Fund,
copies of any such books and records shall be provided by PFPC to
HCM, the Fund or to an Authorized Person, at HCM's or the Fund's
reasonable 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
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(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.
(c) Upon termination or expiration of this Agreement, all documents
(including any tangible media) related to this Agreement or the
services provided hereunder shall be handled as follows:
(i) ELECTRONIC DOCUMENTS. PFPC shall retain electronically the books and
records of the Fund that PFPC maintains electronically in the normal
course of business on behalf of the Fund pursuant to the terms of this
Agreement, and PFPC shall reasonably cooperate with HCM to assist to
respond to questions or requests for information (including without
limitation, requests from regulatory authorities) for such fees as the
parties mutually agree in writing;
(ii) HARD COPIES. HCM shall instruct PFPC to send hard copy books and
records of the Fund maintained in PFPC's facilities to PFPC's archive
vendor, or to HCM or its designee; and HCM shall either assume ownership
of the Fund's books and records maintained at the archive vendor or shall
instruct PFPC to cause the archive vendor to ship such books and records
to HCM or its designee, at HCM's cost.
(iii) Each party shall retain the documents it is required by law to
maintain;
(iv) Documents not covered by (i), (ii) or (iii) above shall be returned
to the party who owns the documents to the extent such party so requests,
or destroyed to the extent such party requests destruction; provided that,
any request for return
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or destruction is made within 90 days after the expiration or termination
of this Agreement;
(v) All documents related to this Agreement or the services provided
hereunder, retained by a party after termination or expiration of this
Agreement, that contain Confidential Information of the other party, shall
be maintained subject to the provisions of Section 6 of this Agreement;
(vi) Either party may request a copy of any document related to this
Agreement or the services provided hereunder retained by the other party
after termination or expiration of this Agreement; provided that, the
party making the request reimburses the other party for the reasonable
copying cost; and
(vii) Notwithstanding any other provision of this Section 5(c), any
document related to this Agreement or the services provided hereunder,
retained by a party after termination or expiration of this Agreement, may
be destroyed by such party according to its normal records destruction
schedule, provided that such schedule is consistent with applicable law.
6. CONFIDENTIALITY. Each party shall keep confidential any confidential or
proprietary information relating to the other party's business
("Confidential Information").
(a) Confidential Information shall include, but not be limited to, (i)
any 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,
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processes, policies and procedures for marketing, sales, and
customer service and support activities, financial service pricing
and profitability; customer and vendor contracts and related
documents, and internal performance results relating to the past,
present or future business activities of the Fund, HCM or PFPC,
their respective subsidiaries and affiliated companies; (ii) any
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, HCM or PFPC a
competitive advantage over its competitors; (iii) all 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; (iv) the names, addresses,
telephone and facsimile numbers, financial data, e-mail addresses,
and any other "Non-Public Personal Information" as that term is used
in the Xxxxx-Xxxxx-Xxxxxx Act of 1999 (the "Act"), regarding Fund
shareholders, or HCM's, its operating subsidiaries, or its
affiliates' customers, or prospective customers; (v) all trading
information, portfolio holdings information, investment models,
asset allocation models, and any similar information related to the
Fund; and (vi) anything designated as confidential by PFPC, the
Fund, or HCM in its reasonable discretion.
(b) Confidential Information does not include any information that (i)
is in the public domain, other than as a result of breach by the
recipient of the
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information of its obligations under this Agreement, (ii) is already
known to the receiving party at the time it is obtained; or (iii)
has been or is independently developed or obtained by the receiving
party, without reference to any of the other party's Confidential
Information.
(c) The provisions of this Section 6 shall survive termination of this
Agreement.
(d) HCM hereby informs PFPC that (i) HCM is subject to the consumer and
customer privacy provisions of the Act and Federal regulations that
implement the Act (the "Regulation"); (ii) the Confidential
Information covered by this Agreement may include Non-Public
Personal Information as defined in the Regulation; and (iii) that
HCM has certain obligations to protect the Confidential Information
from unauthorized disclosure to third parties. PFPC understands that
PFPC's willingness and ability to reasonably cooperate with and
assist HCM in this regard is a material factor in HCM's willingness
to enter into this Agreement, and such other agreements as HCM may
enter into, or have entered into, with PFPC, through which
agreements Confidential Information will be released from HCM to
PFPC. PFPC acknowledges that in the course of performing duties for
HCM it may receive, or otherwise have access to, data that may be
Confidential Information of HCM or the Fund. PFPC warrants that it
has developed and implemented procedures reasonably designed to
prevent the improper release of Confidential Information of HCM or
the Fund as required by the Act.
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(e) Specifically, and not by way of limitation, each party shall: (i)
maintain Confidential Information of the other party and the Fund in
physical and electronically secure media and facilities, subject to
commercially reasonable security procedures; (ii) not use, nor
permit its employees, agents, consultants or affiliates to use, such
Confidential Information for any purpose whatsoever except as
permitted by this Agreement or as required by applicable law; (iii)
neither use, nor permit use of, such data for any sales or marketing
purposes; and (iv) make and enforce policies and procedures in
hiring, training, and supervision of its staff, agents and
consultants in proper handling and protection of Confidential
Information. Neither party shall permit its employees or agents to
download, use or maintain Confidential Information on laptops, or
other personal portable devices, unless such information is
encrypted with a reasonable level of encryption protection.
(f) HCM hereby informs PFPC that HCM is a registered investment adviser
and an operating subsidiary of a national bank. PFPC hereby informs
HCM that PFPC is a registered transfer agent and affiliated with a
national bank. As such, each of HCM and PFPC is charged with a high
standard with respect to its own, and its customers', personal and
financial data, and, further, that such data can be misused if not
treated appropriately; and, therefore, breach of any provision of
this Section 6 by a party may expose the other party to
reputational, financial, and market risks, and to risk of regulatory
action, for which there is no adequate remedy at law or
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by way of damages alone. Therefore, each party stipulates and agrees
that in the event of any allegation of violation, or allegation of
any threatened violation, by it of the provisions of this Section 6,
a temporary restraining order, or preliminary and/or permanent
injunction, as the case may be, may forthwith issue upon showing of
probable cause of such actual or threatened breach, such order to
prohibit the misuse, improper copying, or improper release of any
such data in violation hereof.
(g) Confidential Information may be disclosed under the following
circumstances, provided that reasonable steps are taken in the
respective circumstances to ensure that the party to whom the
information is disclosed will maintain the confidentiality of the
information: (i) Disclosure is required pursuant to a court order,
subpoena, governmental or regulatory agency request or law; (ii)
Disclosure is made in the good faith belief that it is materially
relevant to the defense of a claim or cause of action asserted
against the disclosing party, provided that the written consent of
the other party has been obtained, unless the action is between the
parties and/or the Fund; (iii) Disclosure is made in connection with
an independent third party compliance or other review; or (iv)
Disclosure is necessary or appropriate in connection with the
provision of services under this Agreement.
(h) SECURITY BREACH. PFPC shall notify HCM of any security breach of
information covered under California Civil Code Section 1798.82 in
the most expedient time possible and without unreasonable delay, so
as to
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enable HCM to comply with Section 1798.82. Written confirmation must
be sent within forty-eight (48) hours of PFPC's confirmation of such
a security breach. , PFPC shall notify HCM of any other confirmed
security breach of Confidential Information promptly following
discovery.
(i) ADDITIONAL PROCEDURES IN THE EVENT OF SECURITY BREACH. PFPC agrees
to provide HCM written details regarding PFPC's internal
investigation regarding any security breach. HCM, at its reasonable
discretion, may request PFPC undertake a second more in-depth
investigation concerning specific aspects of the breach, and PFPC
will undertake commercially reasonable efforts to so, and will
provide to HCM results of its findings. PFPC shall not notify any
regulatory authority on behalf of the HCM unless HCM specifically
request in writing that the PFPC do so. For the avoidance of doubt,
the foregoing sentence shall not prevent PFPC from making
notifications to law enforcement agencies or any regulatory or
governmental agencies with jurisdiction over PFPC. PFPC and HCM
shall work together to formulate a plan reasonably designed to
prevent similar security breaches. In the event HCM determines with
reasonable likelihood that a misuse of Customer Information has
occurred, PFPC shall reasonably cooperate with HCM in attempting to
rectify said breach, which may include notifying HCM customers whom
HCM reasonably deems affected. PFPC and HCM shall jointly prepare a
customer notice. All costs and expenses reasonably incurred by HCM
as a direct result of a security breach shall be borne by PFPC to
the extent the breach is caused
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by PFPC's failure to maintain the Standard of Care (as defined
below) in the performance of its duties under this Agreement.
7. 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.
8. PFPC SYSTEM. PFPC shall retain title to and ownership of any and all of
its own data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions, discoveries,
patentable or copyrightable matters, concepts, expertise, patents,
copyrights, trade secrets, and other related legal rights utilized by PFPC
in connection with the services provided by PFPC under this Agreement.
9. 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 HCM or 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
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Agreement; provided however, that PFPC has made commercially reasonable
efforts to implement its business resumption plan.
10. COMPENSATION.
(a) As compensation for services rendered by PFPC during the term of
this Agreement, HCM will pay to PFPC a fee or fees as may be agreed
to in writing by HCM and PFPC from time to time.
(b) Subject to payment of filing fees to PFPC in advance, PFPC will
remit to the respective jurisdictions the requisite blue sky filing
fees for the shares of the relevant Portfolio(s) (or classes
thereof), and any fees for qualifying or continuing the
qualification of any Portfolio(s) (or classes thereof). HCM
acknowledges that PFPC may, to the extent required by law, receive
float benefits in connection with maintaining certain accounts
required to provide services under this Agreement.
(c) HCM hereby represents and warrants to PFPC that (i) the terms of
this Agreement, (ii) the fees and expenses associated with this
Agreement, and (iii) to the best of HCM's knowledge any benefits
accruing to PFPC or to HCM in connection with this Agreement,
including but not limited to any fee waivers, conversion cost
reimbursements, up front payments, signing payments or periodic
payments made or to be made by PFPC to HCM or any affiliate of HCM
relating to this Agreement, to the extent these benefits present a
possible conflict of interest between HCM and Fund, have been fully
disclosed to the Board of Trustees of the Fund and that, if
permitted by applicable law, such Board of Trustees has approved or
will approve
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the terms of this Agreement, any such fees and expenses, and any
such benefits.
(d) Notwithstanding the limitation of liability provisions of this
Agreement or the termination of this Agreement, HCM shall remain
responsible for paying to PFPC any fees (except for fees disputed by
HCM in good faith) set forth in the applicable fee letter. With
respect to any fees that HCM disputes, the parties agree to use good
faith efforts to resolve any such disputes, and upon resolution
thereof, HCM shall promptly pay to PFPC the amount mutually agreed,
if any, is due PFPC.
11. DISPUTE RESOLUTION PROCESS.
(a) Each of PFPC and HCM shall appoint an individual ("EXECUTIVE
CONTACT") who shall be the individual responsible for participating
in the dispute resolution process described in this Section 11. Each
Executive Contact shall possess the requisite corporate power and
authority to negotiate and implement, on behalf of the party he or
she represents, a settlement of any dispute between the parties
hereunder. Each of PFPC and HCM shall have the right from time to
time to appoint a successor to its then-current Executive Contact.
(b) NOTICE OF BREACH. Except with respect to claims for injunctive
relief, the following procedure will be adhered to in all claims,
disputes, and controversies arising out of or in connection with or
relating to this Agreement or the breach or alleged breach of this
Agreement. Upon the occurrence of a breach or default under this
Agreement, the aggrieved
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Party must send the other Party to this Agreement ("Receiving
Party") written notice of the nature of the claim, dispute or
controversy, with as much detail as possible regarding the dispute
(a "Dispute Notice").
(c) EFFECT OF OTHER REMEDIES AND CURE PERIODS PROVIDED IN THIS
AGREEMENT. To the extent any provision or Exhibit of this Agreement
shall provide a specific cure period applicable to a specific
breach, and or, a specific remedy applicable to such breach, such
provisions of this Agreement shall govern the breach, unless the
breach is either (i) disputed by a Party or (ii) the cure of the
breach is disputed by a Party. In the event a breach occurs for
which this Agreement does not provide a specific cure period, a
Party shall have thirty (30) days from its receipt of written notice
of the breach to cure the breach. If a breach is disputed by a
Party, or a cure of a breach is disputed by a Party, the dispute
shall be governed by this Section 11 "DISPUTE RESOLUTION PROCESS".
(d) MEETING. The respective managers of the parties who are responsible
for the day-to-day management of the relationship contemplated by
this Agreement (the "DESIGNEE MANAGERS") shall meet within ten days
after the date of receipt of the Dispute Notice to attempt to reach
an agreement about the nature of the dispute and a resolution of the
dispute. If the Designee Managers are unable to resolve the dispute
within such time period, the Executive Contacts of the parties shall
meet within thirty days after the date of receipt of the Dispute
Notice to attempt to reach an agreement about the nature of the
dispute and a resolution of the dispute.
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If the Executive Contacts cannot resolve the dispute within such
time period or any agreed upon extension, or if the terms and
conditions of the resolution or settlement of the dispute are
breached, either party may institute legal proceedings or litigation
against the other as it deems necessary. Except with respect to the
matter in dispute, pending resolution of any dispute covered by this
Section 11, both parties will continue their performance under this
Agreement including, without limitation, HCM's payment of all
amounts due to PFPC.
12. STANDARD OF CARE/LIMITATION OF LIABILITY.
(a) PFPC shall use commercially reasonable efforts in the performance of
its services under this Agreement; provided that, subject to the
terms of this Section 12, PFPC shall be liable to HCM (or any person
or entity claiming through HCM) for damages only to the extent
caused by PFPC's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties under this Agreement
("STANDARD OF CARE").
(b) Neither PFPC nor HCM shall be liable for (i) any consequential,
incidental, exemplary, punitive or special damages, or loss of
profits arising out of or in connection with either party's
respective obligations under this Agreement, whether or not the
likelihood of such damages was known by such party; (ii) any damages
that either party is required to pay for any reason whatsoever and
regardless of the form of action, shall not exceed, in the
aggregate, actual proven direct damages; and (iii) any damages
(including without limitation damages caused by delays, failure,
errors,
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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; national emergencies; public enemy; war;
terrorism; riot; fire; flood; catastrophe; sabotage; epidemics;
labor disputes; civil commotion; interruption, loss or malfunction
of utilities, transportation, computer or communications
capabilities; insurrection; elements of nature; non-performance by a
third party (except a third party directly or indirectly retained by
such party); failure of the mails; or functions or malfunctions of
the internet, firewalls, encryption systems or security devices
caused by any of the above; provided that PFPC uses commercially
reasonable efforts to implement its business resumption plan as soon
as practicable.
(c) PFPC shall not be under any duty or obligation to inquire into and
shall not be liable for the validity or invalidity, authority or
lack thereof, or truthfulness or accuracy or lack thereof, of any
instruction, direction, notice, instrument or other information
which PFPC reasonably believes to be genuine. PFPC shall not be
liable for any damages that are caused by actions or omissions taken
by PFPC in accordance with Written Instructions or advice of
counsel. PFPC shall not be liable for any damages to the extent
arising out of any action or omission to act by any prior service
provider of the Fund or for any failure to discover any such error
or omission despite reasonable diligence.
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(d) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(e) This Section 12 shall survive termination of this Agreement.
13. INDEMNIFICATION.
(a) Unless PFPC fails to meet its Standard of Care (defined in Section
12 above), HCM agrees to indemnify, defend and hold harmless PFPC
and its affiliates and their respective directors, officers, agents
and employees from all taxes, charges, assessments, claims, suits,
actions, damages, losses, liabilities, obligations, costs and
reasonable expenses (including reasonable attorneys' fees and court
costs, travel costs and other reasonable out-of-pocket costs related
to dispute resolution) to the extent caused by: (a) any action or
omission to act by any prior service provider of the Fund; and (b)
any action taken or omitted to be taken by PFPC in connection with
the provision of services to the Fund.
(b) PFPC agrees to indemnify, defend and hold harmless HCM, the Fund,
and their affiliates and their respective officers, directors, and
employees, from all taxes, charges, expenses, assessments, claims,
suits, actions, damages, losses, obligations, costs and liabilities
(including without limitation, reasonable attorney's fees and court
costs, travel costs and other reasonable out-of-pocket costs related
to dispute resolution) to the extent caused by PFPC's failure to
meet its Standard of Care under this Agreement.
(c) LEGAL ACTION AGAINST INDEMNIFICATION PARTY
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(i) NOTICE OF THE ACTION. A party that seeks indemnification under this
Agreement must promptly give the other party notice of any legal
action. But a delay in notice does not relieve an indemnifying party
of any liability to an indemnified party, except to the extent the
indemnifying party shows that the delay prejudiced the defense of
the action.
(ii) PARTICIPATING IN OR ASSUMING THE DEFENSE. The indemnifying party may
participate in the defense at any time or it may assume the defense
by giving notice to the other party. After assuming the defense, the
indemnifying party:
(1) must select an attorney that is satisfactory to the other party
(but the other party must not unreasonably withhold its consent);
(2) is not liable to the other party for any later attorney's fees
or for any other later expenses that the other party incurs, except
as approved by the indemnifying party;
(3) must not compromise or settle the action without the other
party's consent (but the other party must not unreasonably withhold
its consent); and
(4) is not liable for any compromise or settlement made without its
consent (but the other party must not unreasonably withhold its
consent).
(iii) FAILING TO ASSUME THE DEFENSE. If the indemnifying party fails to
participate in or assume the defense within 30 days after receiving
notice of the action, the indemnifying party is bound by any
determination made in the action or by any compromise or settlement
made by the other party.
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(d) This Section 13 shall survive termination of this Agreement.
14. DESCRIPTION OF ACCOUNTING AND ADMINISTRATIVE SERVICES ON A CONTINUOUS
BASIS. PFPC will perform the accounting and administrative services with
respect to each Portfolio described in Exhibit D to this Agreement.
15. DURATION AND TERMINATION.
(a) This Agreement shall continue until terminated by HCM or by PFPC on
120 days' prior written notice to the other party. In the event HCM
gives notice of termination, all expenses associated with movement
(or duplication) of records and materials and conversion thereof to
a successor accounting and administration services agent(s) (and any
other service provider(s)), and all trailing expenses incurred by
PFPC, will be borne by HCM.
(b) PFPC shall, if requested by HCM, make a good faith effort to
facilitate a conversion to HCM's successor service provider;
provided that PFPC does not guarantee that it will be able to effect
a conversion on the date requested by HCM.
(c) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other
party (the "Non-Defaulting Party") may give written notice thereof
to the Defaulting Party, and if such material breach shall not have
been remedied within thirty (30) days after such written notice is
given, then the Non-Defaulting Party may terminate this Agreement by
giving thirty (30) days written notice of such termination to the
Defaulting Party. In all cases, termination
Page 22 of 51
by the Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this
Agreement or otherwise against the Defaulting Party.
(d) OBLIGATIONS ON TERMINATION OF AGREEMENT
(i) FEES HCM shall pay PFPC (A) the fees for products and services
provided under this Agreement prior to the effective date of
expiration or termination; and (B) any reasonable fees for
de-conversion or other post-termination services which HCM may
request and PFPC may provide. Upon termination of this
Agreement, HCM will be obligated to reimburse PFPC for any
charges for telecommunication services and other third-party
provided services as referenced in EXHIBIT E, which are
incurred by PFPC on HCM's behalf for a period of ninety (90)
days following the termination of this Agreement.
(ii) DE-CONVERSION SERVICES Upon the termination of this Agreement
as set forth in this Section 15, and upon HCM's written
request, PFPC will provide HCM with the De-conversion
Services. The De-conversion Services will be provided at
PFPC's then prevailing fees for such services.
16. NOTICES. Notices shall be addressed (a) if to PFPC, at 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President (or such other
address as PFPC may inform HCM in writing); (b) if to HCM, at 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: President
(or such other address as HCM
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may inform PFPC in writing) or (c) 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 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.
17. AMENDMENTS. This Agreement, or any term thereof, may be changed or waived
only by written amendment, signed by both parties
18 ASSIGNMENT. Neither party may assign any interest in this Agreement
without the prior written consent of the other party (such consent not to
be unreasonably withheld); except that:
(i) PFPC may assign its interest in this Agreement to any majority-owned
direct or indirect subsidiary of PFPC or of The PNC Financial Services
Group, Inc., provided that PFPC gives HCM 30 days' prior written notice
thereof, and
(ii) HCM may assign its interest in this Agreement to any majority-owned
direct or indirect subsidiary of Mitsubishi UFJ Financial Group, Inc.
provided that (i) HCM gives PFPC 30 days' prior written notice thereof and
(ii) HCM's administration agreement with the Fund is assigned
contemporaneously to the same entity.
In the case of any assignment by PFPC, (A) PFPC or its assignee will
permit HCM to conduct reasonable due diligence on the assignee at least
similar to that conducted on PFPC in connection with this Agreement;
provided that, if the assignment is pursuant to (i) above, PFPC may
complete the assignment without
Page 24 of 51
the consent of HCM and whether or not such due diligence has been
completed at the time of the assignment, and (B) PFPC covenants that the
assignee has a capacity materially similar to the capacity of PFPC to
fulfill its obligations under this Agreement. PFPC or its assignee will
reasonably cooperate with any HCM due diligence on the assignee referred
to in the preceding sentence, including but not limited to, by providing
information promptly upon request and by permitting appropriate site
visits upon reasonable notice.
19. 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.
20. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. MISCELLANEOUS.
(a) Notwithstanding anything in this Agreement to the contrary, HCM
agrees to notify PFPC of any modifications made to the Fund's
Registration Statement or any Fund or HCM policies which affect
PFPC's responsibilities under this Agreement; provided that, PFPC
shall not be bound by any such modifications which, in either case,
would affect materially the obligations or responsibilities of PFPC
hereunder unless PFPC shall have accepted such modifications, which
acceptance shall not be unreasonably withheld.
(b) Except as expressly provided in this Agreement, PFPC hereby
disclaims all representations and warranties, express or implied,
made to HCM or
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any other person, including, without limitation, any warranties
regarding quality, suitability, merchantability, fitness for a
particular purpose or otherwise (irrespective of any course of
dealing, custom or usage of trade), of any services or any goods
provided incidental to services provided under this Agreement. PFPC
disclaims any warranty of title or non-infringement except as
otherwise set forth in this Agreement.
(c) This Agreement (together with its exhibits, the fee letter
referenced in Section 10, and a letter agreement regarding fund
officers between the parties dated as of the date hereof) 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. 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. Notwithstanding any provision hereof, the services of PFPC
are not, nor shall they be construed as constituting, legal advice
or the provision of legal services for or on behalf of HCM or any
other person.
(d) HCM will provide such information and documentation as PFPC may
reasonably request in connection with services provided by PFPC
under this Agreement.
(e) 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.
Page 26 of 51
The prevailing party in any lawsuit brought under this Agreement
shall be entitled to its costs of suit including reasonable
attorney's fees. For purposes of this provision, a party shall be
deemed to be the "prevailing party" with respect to an action only
if the tribunal deciding such action determines that such party has
prevailed on a substantial portion of its claims in such action such
that it is equitable for such party to be awarded attorneys' fees
and court costs.
(f) 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. 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 may
be explicitly stated in this Agreement, (i) this Agreement is not
for the benefit of any other person or entity and (ii) there shall
be no third party beneficiaries hereof except the Fund.
(g) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such party.
(h) To help the U.S. government fight the funding of terrorism and money
laundering activities, U.S. Federal law requires each financial
institution to obtain, verify, and record certain information that
identifies each person who initially opens an account with that
financial institution on or after October 1, 2003. Certain of PFPC's
affiliates are financial institutions, and PFPC may, as a matter of
policy, request (or may have already requested)
Page 27 of 51
HCM's name, address and taxpayer identification number or other
government-issued identification number, and, if such party is a
natural person, that party's date of birth. PFPC may also ask (and
may have already asked) for additional identifying information, and
PFPC may take steps (and may have already taken steps) to verify the
authenticity and accuracy of these data elements.
(i) During the term of this Agreement and for one year thereafter,
neither party shall (with the exceptions noted in the immediately
succeeding sentence) knowingly solicit or recruit for employment or
hire any of the other party's employees without the prior written
consent of that party. To "knowingly" solicit, recruit or hire
within the meaning of this provision does not include, and therefore
does not prohibit, solicitation, recruitment or hiring of an
employee if the employee was identified by such entity solely as a
result of the employee's response to a general advertisement by such
entity in a publication of trade or industry interest or other
similar general solicitation by such entity.
(j) THE PARTIES HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION RELATING TO OR ARISING OUT OF
THIS AGREEMENT. THE SCOPE OF THE WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER HEREIN, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
Page 28 of 51
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES
EACH ACKNOWLEDGE THAT THE WAIVER IS A MATERIAL INDUCEMENT FOR EACH
PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS
ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS THAT
EACH HAS HAD THE OPPORTUNITY TO HAVE LEGAL COUNSEL REVIEW THE
WAIVER. THE WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS WRITTEN CONSENT TO A TRIAL BY COURT.
Page 29 of 51
IN WITNESS WHEREOF, the parties hereto have caused this Sub-administration
and Accounting Services Agreement to be executed as of the day and year first
above written.
PFPC INC.
By: /s/ Xxx X. Xxxxxxxx
----------------------------
Name: Xxx X. Xxxxxxxx
Title: Sr. Vice President
HIGHMARK CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxx XX
----------------------------
Name: Xxxxx X. Xxxx XX
Title: Chief Executive Officer
Page 30 of 51
EXHIBIT A
THIS EXHIBIT A, dated as of December 3, 2007 is Exhibit A to that certain
Sub-Administration and Accounting Services Agreement dated as of December 3,
2007 between PFPC Inc. and HighMark Capital Management, Inc.
PORTFOLIOS
HighMark Balanced Fund
HighMark Cognitive Value Fund
HighMark Core Equity Fund
HighMark Enhanced Growth Fund
HighMark International Opportunities Fund
HighMark Large Cap Growth Fund
HighMark Large Cap Value Fund
HighMark Small Cap Advantage Fund
HighMark Small Cap Growth Fund
HighMark Small Cap Value Fund
HighMark Value Momentum Fund
HighMark Capital Growth Allocation Fund
HighMark Diversified Equity Allocation Fund
HighMark Growth & Income Allocation Fund
HighMark Income Plus Allocation Fund
HighMark Bond Fund
HighMark California Intermediate Tax-Free Bond Fund
HighMark National Intermediate Tax-Free Bond Fund
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HighMark Short Term Bond Fund
HighMark California Tax-Free Money Market Fund
HighMark Diversified Money Market Fund
HighMark U. S. Government Money Market Fund
HighMark 100% U. S. Treasury Money Market Fund
Page 32 of 51
EXHIBIT B
(initial authorized persons list)
Xxxxx Xxxx
Xxxxx Xxxxx
Xxxx Xxxxx
Xxxxxxxx Xxxx
Xxxxxxxxx Xxxxx
Xxxx Xxxxxx
Xxx Xxx
Xxxxxxx XxXxxx
Xxxxxx X'Xxxxxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
HighMark Funds Portfolio Management Teams
Page 33 of 51
EXHIBIT C
(intentionally omitted)
Page 34 of 51
EXHIBIT D
PFPC Inc. as sub-administrator shall provide the following services with respect
to the Fund or, if appropriate, each Portfolio:
FUND ACCOUNTING SERVICES:
1. Maintain the Fund's accounting books and records in accordance with
U.S. GAAP and PFPC's normal practices. Provide such records for
inspection upon reasonable request by the Administrator, auditors,
or regulatory agency.
2. Compute net asset value of each class of shares.
3. Journalize investment, capital share and income and expense
activities.
4. Verify investment buy/sell trade tickets when received from the
investment adviser for a Portfolio (the "Adviser").
5. Maintain individual ledgers for investment securities.
6. Maintain historical tax lots for each security.
7. Reconcile cash and investment balances of the Fund with the
Custodian on a daily basis, and provide the Adviser with the
beginning cash balance available for investment purposes.
8. Update the cash availability throughout the day as required by the
Adviser.
9. Calculate capital gains and losses.
10. Determine net income.
11. Post to and prepare the Statement of Assets and Liabilities and the
Statement of Operations.
12. Obtain security market quotes from independent pricing services
approved by the Adviser, or if such quotes are unavailable, then
notify the Adviser that it must convene the fair value committee to
provide such prices, and attend the fair value committee meeting and
provide minutes to the Adviser regarding each such meeting, and in
either case calculate the market value of each Portfolio's
investments in accordance with the Fund's Pricing and Valuation
Policies, as amended; provided that PFPC has received a copy of the
then-current Pricing and Valuation Policies, and has been provided a
reasonable opportunity to act thereon, and object to any aspect
thereof.
Page 35 of 51
13. Calculate required ordinary income and capital gain distributions,
coordinate estimated cash payments, and perform necessary
reconciliations with the transfer agent.
14. As appropriate, compute yields, total return, expense ratios,
portfolio turnover rate, and, if required, portfolio average
dollar-weighted maturity.
15. Transmit or email a copy of the daily portfolio valuation to the
Adviser.
16. Provide total daily net asset report in email form that details
assets by Portfolio and class and daily NAV change.
17. Provide a summary of the impact of the use of FT Interactive fair
value prices on the net asset value of the Portfolios on days on
which the fair valuation trigger is exceeded.
18. Provide weekly stale price review in accordance with fair valuation
pricing policy.
19. To the extent accurate information is made available to PFPC,
maintain accurate and up to date security masters on all portfolio
securities. Review the information contained in security masters
regularly to determine if they contain the data necessary for
accurate income accruals, security calls and maturities, security
classifications, and compliance reviews.
EXPENSE BUDGETING:
Calculate various contractual expenses (E.G., advisory and custody fees):
20. Prepare annual expense budget, regularly monitor the expense
accruals versus payments and notify an officer of the Fund of any
proposed adjustments to accruals.
21. Control all disbursements and authorize such disbursements upon
Written Instructions.
22. Provide a monthly summary of expense accruals, disbursements and
accrual rates to the Administrator.
23. Provide all monthly fund expense data and payment authorization
associated to the disbursements to advisor, administrator,
sub-administrator, distributor and intermediaries (if needed).
24. Maintain deferred compensation records for the Board of Trustees.
Page 36 of 51
25. In conjunction with the Fund's Custodian, issue payment to the Board
of Trustees within 24 hours of a board meeting.
PERFORMANCE & THIRD PARTY REPORTING SERVICES
26. Provide standardized performance reporting data, benchmarks
(including the calculation of blended benchmarks), indices etc. to
the Fund, the Adviser, and to other interested parties as reasonably
directed by the Advisor and agreed to by HCM and PFPC.
27. Provide performance, financial and expense information for
registration statements and proxies.
28. Communicate net asset value, yield, total return, portfolio holdings
or-other financial data to appropriate third party reporting
agencies or interested parties, and reasonably assist in resolution
of errors reported by such third party agencies.
29. Complete industry surveys as reasonably requested.
30. Communicate new product launches and changes in Portfolio product
line and Portfolio profiles to third party reporting services as
needed.
31. Provide feeds and/or data files (as requested by web provider),
containing pertinent fund data, to populate HCM Funds' website.
FINANCIAL REPORTING/REGULATORY FILINGS
32. Prepare the Fund's annual and semi-annual shareholder reports, and
prepare and coordinate the filing (via XXXXX) of Forms N-SAR, N-CSR,
24f-2, annual N-1A update, N-Q and N-PX (with the Fund providing the
voting records in the format required by PFPC). (Additional fees
apply for any additional reports or filings, to the extent PFPC can
prepare them.)
33. Provide information requested by and reasonably assist in the
resolution of issues identified by the Auditors relating to the
17f-2 filing.
34. Coordinate the mailing of the Portfolio Managers Questionnaire and
the Trustees and Officers Questionnaire for the annual N-1A update
process.
35. Manage annual and semi-annual report preparation process and annual
audits.
GENERAL SERVICES:
36. Subject to the terms of Exhibit F, provide an employee of PFPC to be
the Fund's Chief Financial Officer and such person shall also be the
Fund's principal financial
Page 37 of 51
officer. PFPC shall provide an additional service in connection with
such Chief Financial Officer as provided in Exhibit F.
37. Provide a sub-certification consistent with the requirements of the
Xxxxxxxx-Xxxxx Act of 2002 (including the regulations thereunder in
effect from time to time) pertaining to the Sub-Administrator's
services, for the purpose of providing a basis of support for the
Fund's certifying officers to render the certifications required by
Sarbanes Oxley. This sub-certification would pertain to information
that has been prepared, processed and reported by the
Sub-Administrator.
38. Prepare monthly broker commissions/security transaction summaries by
Portfolio.
39. Prepare monthly security transaction listings.
40. Supply various normal and customary Portfolio and Fund reports and
statistical data in order to support annual N-1A filings, commission
reporting, board reporting and marketing materials as reasonably
requested on an ongoing basis.
41. Administratively assist in obtaining fidelity bonds and directors
and officers/errors and omissions insurance policies for the Fund in
accordance with the requirements of Rules 17g-1 and 17d-l(7) under
the 1940 Act as such bonds and policies are approved by the Fund's
Board of Trustees. Coordinate the filing of the fidelity bond with
the SEC and monitor, on a monthly basis, the Fund's asset levels
against the associated minimum fidelity bond levels set forth in
Rule 17g-1.
42. Provide Fund information and data to assist in the creation of
marketing materials.
43. Provide Portfolio performance, expense and other financial data
(i.e., commission, revenue share etc.) for review and use by HCM in
its annual 15(c) presentation.
44. In consultation with HCM, create project plans and manage such plans
with respect to Portfolio mergers and liquidations, new Portfolio or
share class launches and redemptions-in-kind
45. At a reasonable service levels, provide informal input with respect
to general operational matters of the Fund.
46. Provide semi-annually, copies of the Sub-Administrator's SAS 70
reports and its most recent business continuity plan or summary
thereof with respect to the services provided hereunder.
47. Provide a monthly management report that details, among other
matters, service levels and fund statistics as agreed to by HCM and
PFPC.
48. Maintain books and records in accordance with relevant regulatory
statutes and standard industry practice which support the services
provided to the Fund by the
Page 38 of 51
Sub-Administrator. Provide such records for inspection upon request
by the Administrator, auditors, or regulatory agency.
COMPLIANCE
49. Upon conversion, establish post-trade (T+2) applicable Fund
compliance rules within PFPC's Compliance System limited to data
available through PFPC's fund accounting systems.
50. Add all new rules for new and existing portfolios to the Compliance
System as reasonably requested by the Administrator, limited to data
available to data available through PFPC's fund accounting systems.
51. Provide daily post-trade (T+2) compliance testing with respect to
certain applicable Fund investment policies and procedures,
guidelines and regulatory limitations/rules, limited to data
available through PFPC's fund accounting systems (as agreed upon
between HCM and PFPC).
52. Provide timely reporting of violations/exceptions and potential
violations identified to the Administrator.
53. With regards to the services provided to the Fund by the
Sub-Administrator, maintain policies and procedures reasonably
designed to prevent violations of Federal Securities Laws as defined
in SEC Rule 38a-1. Quarterly, provide certification to the
Administrator as to the reasonable design of these policies and
procedures, and reporting of any material compliance violations
noted. Annually, PFPC will provide a copy of the results of any
third party reviews of the operational effectiveness of PFPC's
policies and procedures.
54. Annually, provide the Administrator, either through PFPC's web-site
or otherwise, with any third-party reports relating to the review of
PFPC's operations and controls, including, but not limited to, SAS
70 reports and independent compliance reviews of the services
provided to the Fund by the various operational groups within PFPC.
PFPC will notify HCM of any material compliance violations that
impact the Fund, promptly following the time at which senior PFPC
personnel are made aware of such violation(s).
55. Annually, permit HCM's Compliance group to visit PFPC on-site to
review and test certain operational areas that service the Fund and
to conduct interviews with certain PFPC employees as agreed upon
between HCM and PFPC.
TAX SERVICES
56. Monitor and advise the Fund and its Portfolios on their regulated
investment company status under the Internal Revenue Code of 1986,
as amended.
Page 39 of 51
57. Prepare, sign and file all federal and state tax returns and
extensions for each Portfolio other than those required to be
prepared and filed by the Fund's transfer agent or custodian.
58. Review Portfolios for potential PFICs and forward to Advisor for
determination.
59. Prepare annual distribution estimates for review by advisor at a
minimum one quarter before year end and update one month prior to
month end.
60. Prepare and review all excise tax calculations.
61. Provide data, including tax reclassifications, for year-end 1099's
and review supplemental tax letters.
62. Prepare 1099s on behalf of the Fund for Board of Trustees and
various vendors as needed.
REGULATORY SERVICES
63. Provide industry perspective to counsel to the Fund and, where
applicable, to counsel to the Fund's independent Trustees.
64. Assist the Fund in handling and responding to routine regulatory
examinations with respect to records retained or services provided
by the Sub-Administrator, and coordinate with Fund's counsel in
responding to any non-routine regulatory examinations with respect
to such matters.
65. Prepare annual update to the Fund's registration statement on Form
N-1A and supplements for review by Adviser, Sub-Advisers,
Independent Auditors, Transfer Agent and Fund counsel. Manage the
process related to the preparation of these documents and coordinate
their filing with the SEC. Supplements limited to 6 supplements
annually not to exceed two pages in length.
66. Provide such fund accounting, financial, distribution (including
12b-1 reporting) and other reports (relative to the services
provided by PFPC) in connection with quarterly meetings of the Board
of Trustees as the Board may reasonably request, including, without
limitation, monthly brokerage commission reports and monthly sales
activity reports.
67. Provide individuals to serve as Secretary or Assistant Secretary of
the Fund, as requested.
68. Maintain a regulatory calendar for the Fund listing various SEC
filing and board approval deadlines.
Page 40 of 51
69. Coordinate the Fund's Board of Trustees' meeting schedule, agenda
and production of and mailing of materials for quarterly Board
meetings and one special Board meeting per calendar year.
70. Draft agendas and resolutions for quarterly board meetings.
71. Attend quarterly board meetings and draft and circulate minutes
thereof for review and finalization.
72. Handle blue sky matters, including preparing such reports,
applications and documents (including reports regarding the sale and
redemption of Fund shares if redemption information is provided by
the Fund as may be required in order to comply with state securities
law) as may be necessary or desirable to perform notice filing of
the Fund's shares with state securities authorities, monitoring sale
of Fund shares for compliance with state securities laws, and filing
with the appropriate state securities authorities the notice filing
statements and reports for the Fund and the Fund's shares and all
amendments thereto, as may be necessary or convenient to notice file
and keep effective the Fund and the Fund's shares with state
securities authorities to enable the Fund to make a continuous
offering of its shares.
All regulatory services are subject to the review and approval of Fund
Counsel.
COMMUNICATION
73. Coordinate and participate on bi-weekly "Service Calls" that include
various service providers (transfer agency, custodian,
distribution).
74. Meet weekly via telephone with administration team to discuss open
items.
75. Coordinate quarterly tax calls to review current tax issues and
relevant tax matters.
76. Communicate NAV errors within two business days of identification
and within 5 days for all other errors.
77. Communicate changes in PFPC senior personnel servicing the HCM
relationship within 2 weeks of receiving notice from such personnel.
OTHER
78. Perform any other services not addressed in this Exhibit D for the
Fund on such terms and for such fees as the parties may agree in
writing to from time to time.
[END OF EXHIBIT D]
Page 41 of 51
EXHIBIT E
DE-CONVERSION SERVICES
A. GENERAL. The following sets forth the general features of the plan for the
transition of the Services from PFPC to the successor provider (HCM or its
designee) upon the termination of this Agreement:
(1) PFPC personnel and other resources that will be used to perform
termination assistance services will include, PFPC staff, members of
PFPC's systems teams and conversion teams.
(2) HCM or its designee will take possession of the archived historical
records.
(3) The termination assistance services will include PFPC's provision of
a standard file extract for a point in time conversion, parallel
reporting to HCM or its designee for up to a two week period, and
thirty day post-termination support. The requisite information for
the termination assistance services are set forth below
(De-conversion Required Information).
(4) The timetable and process for effecting termination assistance
services that are designed to enable HCM to efficiently complete
disengagement without materially disrupting the quality of the
services are set forth below (De-conversion Plan-Pre Parallel &
Parallel). PFPC and HCM will reasonably cooperate, and if HCM is not
itself the successor provider, HCM will cause its designee, to
reasonably cooperate with the other parties to effect an orderly
transition.
B. DISENGAGEMENT REQUIRED INFORMATION. The requisite information for the
termination assistance services are as follows:
(1) Contact information for key transition personnel from each of the
parties (e.g., PFPC, HCM, successor provider) that are involved with
transition;
(2) Tax lot files for each Portfolio;
(3) Trial balances and subsidiary ledgers that relate to each Portfolio;
(4) Supporting offline workpapers, if any;
(5) Expense information for each Portfolio;
(6) Prospectus and statement of additional information for the Fund;
(7) Annual Financial Statements for the Fund for the most recently
completed fiscal year;
(8) Historical data including NAVs, distributions and the tax character
of such distributions necessary to calculate performance information
for each of the Portfolios;
(9) Examples of reports distributed nightly and associated distribution
lists;
(10) Examples of reports distributed monthly and associated distribution
lists; and
(11) Fiscal year-to-date reporting information up to the date of
termination of the Agreement.
(12) Any additional information, as the parties mutually agree is needed
for the timely and complete conversion of the data.
Page 42 of 51
C. DE-CONVERSION PLAN-PRE PARALLEL & PARALLEL. At such point as Pre-Parallel
and Parallel De-conversion Plans become necessary or desirable in
connection with the transition of the Services from PFPC to the successor
provider, the parties agree to negotiate in good faith the elements of
such plans and use commercially reasonable efforts to complete them in
sufficient time for such plans to be appropriately implemented.
Page 43 of 51
EXHIBIT F
THIS EXHIBIT F, dated as of December 3, 2007 is a part of that certain
Sub-Administration and Accounting Services Agreement dated as of December 3,
2007 between PFPC Inc. and HighMark Capital Management, Inc.
Additional Contract Provisions
I. PROPERTY RIGHTS
(a) Except as otherwise provided by law or otherwise stated herein (including
without limitation at Section 8), any intellectual property created by PFPC, its
employees or agents during the term of the Agreement and as part of its duties
under this Agreement are the property of HCM; except that the following property
shall be excluded: (i) computer or systems code, software, systems, manuals,
procedures and similar property, (ii) policies, procedures or processes
developed by PFPC with the intention that such property be applicable to other
clients as well as to HCM, and any property reflecting same, and (iii) ideas,
concepts, rights of copyright, patent or trade secrets related to any of the
foregoing. PFPC hereby assigns to HCM all proprietary rights in any HCM-owned
property, including rights of copyright, patent or trade secrets, and PFPC
agrees to take any other action reasonably necessary to confirm HCM's ownership
of such HCM-owned property at HCM's expense. PFPC hereby grants HCM a
non-exclusive license to use any property described in item (ii) above to the
extent it constitutes books and records of the Fund or spreadsheet format after
the termination
Page 44 of 51
or expiration of this Agreement, but only in connection with the
administration of the Fund.
(b) PFPC shall not acquire any intellectual property rights in any property
transferred by HCM to PFPC in connection with this Agreement. HCM shall not
acquire any intellectual property rights in any PFPC intellectual property
whether or not created in connection with this Agreement.
(c) PFPC hereby warrants during the term of this Agreement that to PFPC's
knowledge, HCM's use of any PFPC intellectual property furnished to HCM in
connection with this Agreement shall not infringe any copyright, trade secret,
trademark, or trade dress right and that such property is not subject to any
security interest held by any third party.
II. INSURANCE.
Without limiting PFPC's liability to HCM or third parties hereunder, PFPC
agrees to maintain the following insurance coverages with insurance carriers
with A.M. Best rating of at least A- VII, or lower if acceptable to HCM, in
HCM's sole discretion:
(A) REQUIRED COVERAGE.
(i) All insurance coverages required by federal and state law
and statute having jurisdiction over PFPC, including Worker's
Compensation Insurance and Employers' Liability Insurance. The
Employers' Liability Insurance shall have a minimum coverage
of at least $500,000 for each person;
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(ii) Comprehensive or Commercial General Liability Insurance,
including coverage for Products and Completed Operations, and
Blanket Contractual Liability for obligation undertaken by
PFPC to HCM under this Agreement. Such Comprehensive General
Liability Insurance shall provide for minimum Combined Bodily
Injury and Property Damage Coverage Limits of at least
$3,000,000, per occurrence, and name HCM as Additional
Insured;
(iii) Comprehensive Automobile Liability Insurance including
coverage for Hired & Non-Owned Automobile Liability, with
Combined bodily Injury and Property Damage Coverage Limits,
per occurrence, of at least $1,000,000, naming HCM as
Additional Insured; and
(iv) Comprehensive Crime Policy (CCP) including Employees
Dishonest/Fidelity Coverage for all PFPC's employees, officers
and agents, and On-Premises (Loss Inside the Premises) and
In-Transit (Loss Outside the Premises). The CCP shall have a
minimum of at least $2,500,000, per occurrence.
(v) Professional Liability Coverage (Errors and Omissions) for
a minimum coverage of at least $2,500,000 per occurrence.
(B) PRIMARY & NON-CONTRIBUTING ENDORSEMENT. All insurance must
include a Primary & Non-Contributing Endorsement.
(C) CERTIFICATES OF INSURANCE. Prior to performance of any services
or commencement of any work under this Agreement, PFPC shall furnish
to HCM Certificates of Insurance evidencing such required insurance
coverages and
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naming HCM as Additional Insured (for coverages required by items
(ii) and (iii) above). Said Certificates will include a provision
whereby the Insurance Carrier is required to provide, directly to
HCM, thirty (30) days advance written notice before termination,
change or cancellation of coverage takes effect for such policies
evidenced on such Certificate, regardless of whether canceled by
PFPC, the Insured, or the Insurance Carrier.
(D) PFPC may maintain the coverages set forth above through its
affiliates. A deductible provision may be included in each coverage
above in an amount determined in the sole discretion of PFPC's
affiliates. PFPC may elect at any time, subject to thirty (30) days
advance written notice to HCM during this Agreement, terminate any
of the above non-statutory coverage to self-insure on the basis of
the financial strength of PFPC and its affiliates without it
constituting a breach or violation of this Agreement.
Notwithstanding the foregoing, PFPC shall not take any action under
this sub-section II(d) that will materially diminish the protection
afforded to HCM by the coverages otherwise required in this Section
II.
III. RIGHT TO AUDIT:
During the term of this Agreement, HCM and HCM's federal and state
governmental regulators shall have the right, upon reasonable notice, and
at times mutually agreeable to HCM and PFPC:
(a) to receive from PFPC copies of PFPC's SAS 70 reports (which include
any management responses) for the purpose of determining the adequacy of
PFPC's
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systems, controls, security, integrity, fees, and confidentiality, all
solely with respect to the services that are subject of this Agreement;
(b) to enter PFPC's premises or such other premises where PFPC's data is
stored, within site security guidelines, for the sole purpose of verifying
data security access procedures and operational processes; provided that
any such visits shall be made in coordination with PFPC, and such visits
shall be performed in a manner designed not to unreasonably interrupt or
unreasonable disrupt PFPC's business.
(c) to review, participate in, and test in PFPC's contingency planning for
the sole purpose of determining that the services that are subject of this
Agreement can be restored within an acceptable timeframe. PFPC shall have:
a) documented contingency plan; b) the ability to recover at a location
separate from its normal production center; c) conducted an exercise of
the plan within the last 12 months; d) updated the plan within the last 12
months, recuringly; and e) the ability to recover critical services within
timeframes congruent to PFPC's current Business Resiliency Program
requirements.
IV. BACKGROUND CHECKS
PFPC warrants that all newly hired employees of PFPC are fingerprinted, and
their prints are sent to the FBI for processing to determine if they have ever
been convicted of, plead guilty or nolo contendere to, or entered a pre-trial
disposition program (after November 28, 1999) with regard to a crime involving
dishonesty, breach of trust or money laundering (as those terms are defined in
the FDIC's current Statement of Policy). Any employee found as a result to have
committed any such crime (other than
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one that is considered de minimus under the FDIC's Statement of Policy) will not
be permitted to perform work for HCM.
V. TRAVEL POLICY
HCM will reimburse PFPC for all preapproved travel and out-of-pocket expenses
related to travel solely in connection with services provided under this
Agreement. HCM's written consent shall not be unreasonably withheld.
Notwithstanding the foregoing, HCM may require as a condition of its consent
that any PFPC travel and out-of-pocket expenses must materially comply with the
provisions of HCM's travel policy or expense reimbursement policy as
communicated to PFPC from time to time.
VI. CFO SERVICES
PFPC, as sub-administrator, shall provide the following additional service with
respect to the Fund or, if appropriate, each Portfolio:
1. PFPC shall cause any PFPC employee who holds of the office of Chief
Financial Officer of the Fund ("PFPC Designated CFO") to sign (a) the
certifications required by the Xxxxxxxx-Xxxxx Act of 2002 and the
regulations promulgated thereunder in effect on the date hereof which are
required to be signed by the Fund's principal financial officer with
respect to the Fund's Form N-CSR and Form N-Q, and (b) such other
documents that are customarily signed by a principal financial officer in
the normal course of business (collectively with the certifications, the
"Documents," and each individually a "Document"); provided that (i) the
PFPC Designated CFO is an employee of PFPC and is the Fund's Chief
Financial Officer on the date the Document is to be provided, (ii) PFPC
has
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been able to perform, and the Fund and HCM have cooperated fully with PFPC
(and have caused third parties identified by PFPC to also cooperate fully
with PFPC) in performing any preparations and investigations that PFPC may
deem necessary or appropriate to be in a position to cause the PFPC
Designated CFO to sign the Document, (iii) PFPC and the PFPC Designated
CFO shall be entitled to rely on the completeness and accuracy of any
statements or other information provided by HCM, the Fund, or other
entities with respect to such Document, and PFPC shall have no liability
to HCM to the extent such statements or other information are incomplete
or inaccurate, and (iv) the PFPC Designated CFO shall have no liability to
HCM with respect to such certification.
2. Notwithstanding item 1 above, if the due diligence and investigation
conducted by PFPC reveals issues that could render the PFPC Designated
CFO, in PFPC's reasonable discretion, unable to sign a Document, PFPC may
cause the PFPC Designated CFO to resign as the Fund's principal financial
officer and neither the PFPC Designated CFO nor any other PFPC employee
shall be required to sign such Document; provided that, PFPC shall have
given HCM reasonable notice of such issues and shall have used reasonable
efforts to work with HCM to resolve such issues so as to be in a position
to cause the Document to be signed in a timely manner.
3. Without in any way limiting the other protections afforded herein to the
PFPC Designated CFO, in providing any such Document, the PFPC Designated
CFO shall be considered to be acting in his or her capacity as an officer
of the Fund, and HCM shall ensure that the PFPC Designated CFO is covered
by the Fund's
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D&O / E&O insurance with respect to providing such certification to the
same extent that other Fund officers are covered by such insurance.
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