EXHIBIT (k)(3)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of October 18, 2004 by and between HIGHLAND
FLOATING RATE 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
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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.
(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.
3. COMPLIANCE WITH RULES AND REGULATIONS.
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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
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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.
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.
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,
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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
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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.
(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
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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.
(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, as applicable to the
Fund's operations:
(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 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, 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) Obtain daily security market quotes 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;
(xv) Transmit a copy of the daily portfolio valuation to the
Adviser;
(xvi) Compute net asset value; and
(xvii) 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
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embody in one or more separate documents their agreement, if any,
with respect to delegated duties and Oral Instructions.
(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
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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.
(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 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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