EXHIBIT (k)(3)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of October 18, 2004 by and between HIGHLAND
FLOATING RATE ADVANTAGE FUND, a Massachusetts business trust (the "Fund"), and
PFPC INC., a Massachusetts corporation ("PFPC").
W I T N E S S E T H :
WHEREAS, the Fund is registered as a closed-end, non-diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund wishes to retain PFPC to provide certain accounting
services provided for herein, 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, and
the rules and regulations of the SEC promulgated thereunder.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
(c) "1940 ACT" has the meaning set forth in the recitals hereof
and includes the rules and regulations of the SEC promulgated
thereunder.
(d) "AUTHORIZED PERSON" means any officer of the Fund and any
other person duly authorized by the Fund's Board of Trustees
to give Oral Instructions or Written Instructions on behalf of
the Fund and listed on the Authorized Persons Appendix
attached hereto and made a part hereof or any amendment
thereto as may be received by PFPC. An Authorized Person's
scope of authority may be limited by the Fund by setting forth
such limitation in the Authorized Persons Appendix.
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(e) "BOARD OF TRUSTEES" AND "SHAREHOLDERS" shall have the same
meanings as used in the Fund's Amended and Restated Agreement
and Declaration of Trust.
(f) "DECLARATION" means the Fund's Amended and Restated Agreement
and Declaration of Trust, as amended from time to time.
(g) "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.
(h) "SEC" means the Securities and Exchange Commission.
(i) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act and the 1940
Act.
(j) "SHARES" means the Fund's shares of beneficial interest.
(k) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by
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 by hand, mail, tested telegram,
cable, telex or facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide accounting
services to the Fund, in accordance with the terms set forth in this
Agreement. PFPC accepts such appointment and agrees to furnish such
services.
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3. COMPLIANCE WITH RULES AND REGULATIONS.
PFPC agrees to comply 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 hereunder. Except as specifically set forth herein,
PFPC assumes no responsibility for such compliance by the Fund.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act
only upon Oral Instructions or Written Instructions, including
standing Written Instructions related to ongoing instructions
received electronically.
(b) PFPC shall be entitled to rely upon any Oral Instructions or
Written Instructions 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 or this Agreement or of any vote,
resolution or proceeding of the Fund's Board of Trustees or
the Fund's Shareholders, unless and until PFPC receives
Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions (except where such Oral
Instructions are given by PFPC or its affiliates) and shall
endeavor to ensure that PFPC receives the Written Instructions
by the close of business on the same day that such Oral
Instructions are received. The fact that such confirming
Written Instructions are not received by PFPC shall in no way
invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions. Where Oral
Instructions or Written Instructions reasonably appear to have
been received from an Authorized Person, PFPC shall incur no
liability to the Fund in acting upon such Oral Instructions or
Written Instructions provided that PFPC's actions comply with
the other provisions of this Agreement.
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5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or
advice, including Oral Instructions or Written Instructions,
from the Fund.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any
question of law pertaining to any action it should or should
not take, PFPC may request advice at its own cost from such
counsel of its own choosing (who may be counsel for the Fund,
the Fund's investment adviser or PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral Instructions or Written
Instructions PFPC receives from the Fund, and the advice it
receives from counsel, PFPC shall be entitled to rely upon and
follow the advice of counsel, provided that such counsel is
selected with reasonable care. PFPC shall promptly inform the
Fund of such conflict and PFPC shall refrain from acting in
the event of a conflict unless counsel advises PFPC that a
failure to take action is likely to result in additional loss,
liability or expense. In the event PFPC relies on the advice
of counsel, PFPC remains liable for any action or omission on
the part of PFPC which constitutes willful misfeasance, bad
faith, gross negligence or reckless disregard by PFPC of any
duties, obligations or responsibilities set forth in this
Agreement.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it
takes or does not take in reliance upon directions, advice or
Oral Instructions or Written Instructions it receives from the
Fund or (to the extent permitted under clause (c) above) from
counsel and which PFPC believes, in good faith, to be
consistent with those directions, advice or Oral Instructions
or Written Instructions. Nothing in this section shall be
construed so as to impose an obligation upon PFPC (i) to seek
such directions, advice or Oral Instructions or Written
Instructions, or (ii) to act in accordance with such
directions, advice or Oral Instructions or Written
Instructions unless, under the terms of other provisions of
this Agreement, the same is a condition of PFPC's properly
taking or not taking such action. Nothing in this subsection
shall excuse PFPC when an action or omission on the part of
PFPC constitutes willful misfeasance, bad faith, negligence or
reckless disregard by PFPC of any duties, obligations or
responsibilities set forth in this Agreement.
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6. RECORDS; VISITS.
(a) The books and records pertaining to the Fund, which are in the
possession or under the control of PFPC, shall be the property
of the Fund. Such books and records shall be prepared,
preserved and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund
and its duly authorized officers, employees and agents and the
staff of the SEC shall have access to such books and records
at all times during PFPC's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by PFPC to the Fund or to an
Authorized Person, at the Fund's expense. Any such books and
records may be maintained in the form of electronic media and
stored on any magnetic disk or tape or similar recording
method. No records will be destroyed without the Fund's
written consent.
(b) PFPC shall keep the following records:
(i) all books and records with respect to the Fund's books of
account; and
(ii) records of the Fund's securities transactions.
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7. CONFIDENTIALITY.
Each party shall keep confidential any information relating to the
other party's business ("Confidential Information"). Confidential
Information shall include (a) 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, and
internal performance results relating to the past, present or future
business activities of the Fund or PFPC, their respective subsidiaries
and affiliated companies and the customers, clients and suppliers of
any of them; (b) 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 or PFPC a competitive advantage over its competitors; (c) 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; and (d) anything designated as
confidential. Notwithstanding the foregoing, information shall not be
subject to such confidentiality obligations if it: (a) is already known
to the receiving party at the time it is obtained; (b) is or becomes
publicly known or available through no wrongful act of the receiving
party; (c) is rightfully received from a third party who, to the best
of the receiving party's knowledge, is not under a duty of
confidentiality; (d) is released by the protected party to a third
party without restriction; (e) is required to be disclosed by the
receiving party pursuant to a requirement of a court order, subpoena,
governmental or regulatory agency or law (provided the receiving party
will provide the other party written notice of such requirement, to the
extent such notice is permitted); (f) is relevant to the defense of any
claim or cause of action asserted against the receiving party; or (g)
has been or is independently developed or obtained by the receiving
party.
8. 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 the Fund. PFPC shall take all reasonable action in the performance
of its obligations under this Agreement to ensure that the necessary
information is made available to such independent public accountants as
reasonably requested by the Fund.
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9. PFPC SYSTEM. PFPC shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions,
discoveries, patentable or copyrightable matters, concepts, expertise,
patents, copyrights, trade secrets, and other related legal rights
utilized by PFPC in connection with the services provided by PFPC to
the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment.
In the event of equipment failures, PFPC shall, at no additional
expense to the Fund, take reasonable steps to minimize service
interruptions. PFPC shall have no liability with respect to the loss of
data or service interruptions caused by equipment failure, provided
such loss or interruption is not caused by PFPC's own willful
misfeasance, bad faith, negligence or reckless disregard of its duties
or obligations under this Agreement.
11. COMPENSATION. As compensation for services rendered by PFPC during the
term of this Agreement, the Fund will pay to PFPC a fee or fees as may
be agreed to from time to time in writing by the Fund and PFPC.
12. INDEMNIFICATION.
(a) The Fund agrees to indemnify and hold harmless PFPC and its
affiliates from all taxes, charges, expenses, assessments,
claims and liabilities (including without limitation
reasonable attorneys' fees and disbursements and liabilities
arising under the Securities Laws and any state and foreign
securities and blue sky laws) (collectively, "Losses") arising
directly or indirectly from any action or omission to act
which PFPC takes (i) at the request or on the direction of or
in reliance on the advice of the Fund or (ii) upon Oral
Instructions or Written Instructions; PROVIDED, HOWEVER,
neither PFPC nor any of its affiliates, shall be indemnified
against any liability (or any expenses incident to such
liability) arising out of PFPC's or its affiliates' own
willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement.
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(b) Notwithstanding anything in this Agreement to the contrary,
the Fund shall not be liable to PFPC or its affiliates for any
consequential, special or indirect losses or damages which
PFPC or its affiliates may incur or suffer as a consequence of
this Agreement, whether or not the likelihood of such damages
or losses was known by the Fund.
13. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of
the Fund except as necessary to fulfill its duties and
obligations as specifically set forth herein or as may be
specifically agreed to by PFPC in writing. PFPC shall be
obligated to exercise care and diligence in the performance of
its duties hereunder and to act in good faith and to use its
best efforts, within reasonable limits, in performing services
provided for under this Agreement. PFPC agrees to indemnify
and hold harmless the Fund from Losses arising out of PFPC's
failure to perform its duties under this Agreement to the
extent such damages arise out of PFPC's willful misfeasance,
bad faith, negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any
other provision of this Agreement, (i) PFPC shall not be
liable for losses beyond its control, provided that PFPC has
acted in accordance with the standard of care set forth above;
and (ii) PFPC shall not be liable for (A) the validity or
invalidity or authority or lack thereof of any Oral
Instruction or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this
Agreement and which PFPC reasonably believes to be genuine; or
(B) subject to Section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control,
including acts of civil or military authority, national
emergencies, labor difficulties, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
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(c) Notwithstanding anything in this Agreement to the contrary,
the Fund shall not be liable to PFPC or its affiliates for any
consequential, special or indirect losses or damages which
PFPC or its affiliates may incur or suffer as a consequence of
this Agreement, whether or not the likelihood of such damages
or losses was known by the Fund.
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following accounting services:
(i) Journalize investment, capital and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received
from the investment adviser (the "Adviser");
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Record and reconcile corporate action activity and all
other capital changes;
(vi) Reconcile cash and investment balances with the Fund's
custodian(s), and provide the Adviser with the
beginning cash balance available for investment
purposes;
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(vii) Update the cash availability throughout the day as
required by the Adviser;
(viii) Calculate contractual expenses, including management
fees, as applicable, in accordance with the Fund's
prospectus;
(ix) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations in U.S.
dollar terms;
(x) Monitor the expense accruals and notify an officer of
the Fund of any proposed adjustments;
(xi) Control all disbursements and authorize such
disbursements from the Fund's account with the
custodian(s) upon Written Instructions;
(xii) Calculate capital gains and losses;
(xiii) Determine net income;
(xiv) Determine applicable foreign exchange gains and losses
on payables and receivables;
(xv) Obtain daily security market quotes and currency
exchange rates from independent pricing sources
approved by the Adviser, or if such quotes are
unavailable, then obtain such prices from the Adviser,
and in either case calculate the market value of the
Fund's investments in accordance with the applicable
valuation policies or guidelines provided by the Fund
to PFPC and acceptable to PFPC;
(xvi) Transmit a copy of the daily portfolio valuation to
the Adviser;
(xvii) Compute net asset value; and
(xviii) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar weighted maturity.
15. DURATION AND TERMINATION. This Agreement shall continue until
terminated by the Fund or by PFPC on sixty (60) days' prior written
notice to the other party. In the event the Fund gives notice of
termination, all expenses associated with movement (or duplication) of
records and materials and conversion thereof to a successor accounting
services agent (and any other service provider(s)), and all trailing
expenses incurred by PFPC, will be borne by the Fund.
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16. NOTICES. Notices shall be addressed (a) if to PFPC, at 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President; (b) if to
the Fund, at 00000 Xxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000,
Attention: Secretary of the foregoing, at such other address as shall
have been given by like notice to the sender of any such notice 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 a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
18. DELEGATION; ASSIGNMENT; SUB-CONTRACTING. This Agreement and the rights
and duties of the parties herein may not be assigned or delegated by
any party without the written consent of each party.
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) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to
delegated duties and Oral Instructions.
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(b) CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect.
(c) GOVERNING LAW. This Agreement shall be deemed to be a contract
made in Delaware and governed by Delaware law, without regard
to principles of conflicts of law.
(d) PARTIAL INVALIDITY. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be
affected thereby.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party to
this Agreement shall constitute the valid and binding
execution hereof by such party.
(g) The Fund will provide such information and documentation as
PFPC may reasonably request in connection with services
provided by PFPC to the Fund.
(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 and certain of its affiliates are
financial institutions, and PFPC may, as a matter of policy,
request (or may have already requested) the Fund'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.
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(i) It is expressly agreed that the obligations of the Fund under
this Agreement shall not be binding upon any past, present or
future trustee, nominee, officer, shareholder, employee or
agent of the Fund individually, and shall only be binding upon
the Fund and its assets, as provided in the Fund's Amended and
Restated Agreement and Declaration of Trust, a copy of which
is on file at the office of the Secretary of the Commonwealth
of Massachusetts and at the principal offices of the Fund.
This Agreement was executed on behalf of the Fund by an
officer of the Fund in such capacity, and shall not be deemed
to have been executed by such officer individually or to
impose any liability on such officer, or the shareholders of
the Fund, personally, but shall bind only the assets and
property of the Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: ______________________
Title: _____________________
HIGHLAND FLOATING RATE ADVANTAGE FUND
By: ______________________
Title: ______________________
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AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
Xxxxx Xxxxxxx _______________________
Xxxxx Xx Xxxxxx _______________________
Xxxx Paris _______________________
Xxxx Xxxxxxx _______________________
Xxxxxxx Xxxxxxxx _______________________
Xxxx X. Xxxxx _______________________
M. Xxxxx Xxxxxxxxx _______________________
R. Xxxxxx Xxxxxxxxx _______________________
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