Exhibit (h)(6)
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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as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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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as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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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as of December 3, 2007 between
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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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as of December 3, 2007 between
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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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as of December 3, 2007 between
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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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as of December 3, 2007 between
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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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as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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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as of December 3, 2007 between
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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
Sub-Administration and Accounting Services Agreement Page 20 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
(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.
Sub-Administration and Accounting Services Agreement Page 21 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
(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
Sub-Administration and Accounting Services Agreement Page 22 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 23 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 24 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 25 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 26 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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)
Sub-Administration and Accounting Services Agreement Page 27 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 28 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 29 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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:
------------------------------------
Name:
Title:
HIGHMARK CAPITAL MANAGEMENT, INC.
By:
------------------------------------
Name: Xxxxx X. Xxxx XX
Title: Chief Executive Officer
Sub-Administration and Accounting Services Agreement Page 30 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 31 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 32 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 33 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
EXHIBIT C
(intentionally omitted)
Sub-Administration and Accounting Services Agreement Page 34 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 35 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 36 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 37 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 38 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 39 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 40 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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]
Sub-Administration and Accounting Services Agreement Page 41 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 42 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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.
Sub-Administration and Accounting Services Agreement Page 43 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 44 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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;
Sub-Administration and Accounting Services Agreement Page 45 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
(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
Sub-Administration and Accounting Services Agreement Page 46 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 47 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 48 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 49 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
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
Sub-Administration and Accounting Services Agreement Page 50 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
D&O / E&O insurance with respect to providing such certification to the
same extent that other Fund officers are covered by such insurance.
Sub-Administration and Accounting Services Agreement Page 51 of 51
as of December 3, 2007 between
PFPC, Inc. and HighMark Capital Management, Inc.
