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FORM OF
CUSTODY SERVICES AGREEMENT
This Agreement is made as of ______________________________________,
by and between,_______________________________________ a corporation (the
"Fund") and PNC BANK, NATIONAL ASSOCIATION, a national banking association
("PNC Bank").
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund wishes
to retain PNC Bank to provide custodian services and PNC Bank wishes to furnish
such services, either directly or through an affiliate or affiliates, as more
fully described herein. In consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Definitions.
(a) "Authorized Person". The term "Authorized Person" shall
mean any officer of the Fund and any other person, who is duly authorized by
the Fund's Governing Board, to give Oral and Written Instructions on behalf of
the Fund. Such persons are listed in the Certificate attached hereto as the
Authorized Persons Appendix.
(b) "Book-Entry System". The term "Book-Entry System" means
Federal Reserve Treasury book-entry system for United States and federal agency
securities, its successor or successors, and its nominee or nominees and any
book-entry system maintained by an exchange registered with the SEC under the
1934 Act.
(c) "CFTC". The term "CFTC" shall mean the Commodities
Futures Trading Commission.
(d) "Governing Board". The term "Governing Board" shall mean
the Fund's Board of Directors if the Fund is a corporation or the Fund's Board
of Trustees if the Fund is a trust, or, where duly authorized, a competent
committee thereof.
(e) "Oral Instructions". The term "Oral Instructions" shall
mean oral instructions received by PNC Bank from an Authorized Person or from a
person reasonably believed by PNC Bank to be an Authorized Person.
(f) "SEC". The term "SEC" shall mean the Securities and
Exchange Commission.
(g) "Securities and Commodities Laws". The term "Securities
and Commodities Laws" shall mean the "1933 Act" which shall mean the Securities
Act of 1933, the "1934 Act" which shall mean the Securities Exchange Act of
1934, the "1940 Act" which shall mean the Investment Company Act of 1940, as
amended, and the "CEA" which shall mean the Commodities Exchange Act, as
amended.
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(h) "Shares". The term "Shares" shall mean the shares of
stock of any series or class of the Fund, or, where appropriate, units of
beneficial interest in a trust where the Fund is organized as a Trust.
(i) "Property". The term "Property" shall mean:
(i) any and all securities and other investment
items which the Fund on behalf of the
Portfolios may from time to time deposit, or
cause to be deposited, with PNC Bank or which
PNC Bank may from time to time hold for the
Fund on behalf of the Portfolios;
(ii) All income in respect of any of such
securities or other investment items;
(iii) all proceeds of the sale of any of such
securities or investment items; and
(iv) all proceeds of the sale of securities issued
by the Fund on behalf of the Portfolios,
which are received by PNC Bank from time to
time, from or on behalf of the Fund.
(j) "Written Instructions". The term "Written Instructions"
shall mean written instructions signed by one Authorized Person and received by
PNC Bank. The instructions may be delivered by hand, mail, tested telegram,
cable, telex or facsimile sending device.
2. Appointment. The Fund hereby appoints PNC Bank to provide
custodian services to each of the Portfolios, and PNC Bank accepts such
appointment and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where
applicable, will provide PNC Bank with the following:
(a) certified or authenticated copies of the resolutions of
the Fund's Governing Board, approving the appointment of PNC Bank or its
affiliates to provide services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreement or
agreements;
(d) a copy of each Portfolio's distribution agreement or
agreements;
(e) a copy of each Portfolio's administration agreements if
PNC Bank is not providing the Fund with such services;
(f) copies of any shareholder servicing agreements made in
respect of the Fund or a Portfolio; and
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(g) certified or authenticated copies of any and all
amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations. PNC Bank
undertakes to comply with all applicable requirements of the Securities and
Commodities Laws and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to all duties to be performed by
PNC Bank hereunder. Except as specifically set forth herein, PNC Bank assumes
no responsibility for such compliance by the Fund or any Portfolio.
5. Instructions. Unless otherwise provided in this Agreement,
PNC Bank shall act only upon Oral and Written Instructions. PNC Bank shall be
entitled to rely upon any Oral and Written Instructions it receives from an
Authorized Persons (or from a person reasonably believed by PNC Bank to be an
Authorized Person) pursuant to this Agreement. PNC Bank may assume that any
Oral or Written Instructions received hereunder are 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 Governing Board or of the Fund's
shareholders.
The Fund agrees to forward to PNC Bank Written Instructions confirming
Oral Instructions so that PNC Bank 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 PNC Bank
shall in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions.
The Fund further agrees that PNC Bank shall incur no liability to the
Fund in acting upon Oral or Written Instructions provided such instructions
reasonably appear to have been received from an Authorized Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If PNC Bank is in doubt as to any
action it should or should not take, PNC Bank may request directions or advice,
including Oral or Written Instructions, from the Fund.
(b) Advice of Counsel. If PNC Bank shall be in doubt as to
any questions of law pertaining to any action it should or should not take, PNC
Bank may request advice at its own cost from such counsel of its own choosing
(who may be counsel for the Fund, the Fund's advisor or PNC Bank, at the option
of PNC Bank).
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral or Written Instructions PNC Bank receives from the
Fund, and the advice it receives from counsel, PNC Bank shall be entitled to
rely upon and follow the advice of counsel.
(d) Protection of PNC Bank. PNC Bank shall be protected in
any action it takes or does not take in reliance upon directions, advice or
Oral or Written Instructions it receives from
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the Fund or from counsel and which PNC Bank believes, in good faith, to be
consistent with those directions, advice or Oral or Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PNC Bank (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
Agreement, the same is a condition of PNC Bank's properly taking or not taking
such action.
7. Records. The books and records pertaining to the Fund and any
Portfolio, which are in the possession of PNC Bank, shall be the property of
the Fund. Such books and records shall be prepared and maintained as required
by the 1940 Act and other applicable securities laws, rules and regulations.
The Fund, or the Fund's Authorized Persons, shall have access to such books and
records at all time during PNC Bank's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be
provided by PNC Bank to the Fund or to an Authorized Person of the Fund, at the
Fund's expense.
8. Confidentiality. PNC Bank agrees to keep confidential all
records of the Fund and information relative to the Fund and its shareholders
(past, present and potential), unless the release of such records or
information is otherwise consented to, in writing, by the Fund. The Fund
agrees that such consent shall not be unreasonably withheld. The Fund further
agrees that, should PNC Bank be required to provide such information or records
to duly constituted authorities (who may institute civil or criminal contempt
proceedings for failure to comply), PNC Bank shall not be required to seek the
Fund's consent prior to disclosing such information.
9. Cooperation with Accountants. PNC Bank shall cooperate with
the Fund's independent public accountants and 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 accountants for the expression
of their opinion, as required by the Fund.
10. Disaster Recovery. PNC Bank shall enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provision for emergency use of electronic data processing equipment
to the extent appropriate equipment is available. In the event of equipment
failures, PNC Bank shall, at no additional expense to the Fund, take reasonable
steps to minimize service interruptions but shall have no liability with
respect thereto.
11. Compensation. As compensation for services rendered by PNC
Bank during the term of this Agreement, the Fund, on behalf of each of the
Portfolios, will pay to PNC Bank a fee or fees as may be agreed to in writing
by the Fund and PNC Bank.
12. Indemnification. The Fund, on behalf of each Portfolio,
agrees to indemnify and hold harmless PNC Bank and its nominees from all taxes,
charges, expenses, assessment, claims and liabilities (including, without
limitation, liabilities arising under the Securities and Commodities Laws and
any state and foreign securities and blue sky laws, and amendments thereto, and
expenses, including (without limitation) attorneys' fees and disbursements,
arising
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directly or indirectly from any action which PNC Bank takes or does not take
(i) at the request or on the direction of or in reliance on the advice of the
Fund or (ii) upon Oral or Written Instructions. Neither PNC Bank, nor any of
its nominees, shall be indemnified against any liability to the Fund or to its
shareholders (or any expenses incident to such liability) arising out of PNC
Bank's own willful misfeasance, bad faith, negligence or reckless disregard of
its duties and obligations under this Agreement.
13. Responsibility of PNC Bank. PNC Bank shall be under no duty
to take any action on behalf of the Fund or any Portfolio except as
specifically set forth herein or as may be specifically agreed to by PNC Bank,
in writing. PNC Bank shall be obligated to exercise care and diligence in the
performance of its duties hereunder, to act in good faith and to use its best
effort, within reasonable limits, in performing services provided for under
this Agreement; PNC Bank shall be responsible for its own negligent failure to
perform its duties under this Agreement. Notwithstanding the foregoing, PNC
Bank shall not be responsible for losses beyond its control, provided that PNC
Bank has acted in accordance with the standard of care set forth above; and
provided further that PNC Bank shall only be responsible for that portion of
losses or damages suffered by the Fund or a particular Portfolio that are
attributable to the negligence of PNC Bank.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PNC Bank, in connection with its duties under this
Agreement, shall not be under any duty or obligation to inquire into and shall
not be liable for (a) the validity or invalidity or authority or lack thereof
of any Oral or Written Instruction, notice or other instrument which conforms
to the applicable requirements of this Agreement, and which PNC Bank reasonably
believes to be genuine; or (b) delays or errors or loss of data occurring by
reason of circumstances beyond PNC Bank's control, including acts of civil or
military authority, national emergencies, labor difficulties, fire, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PNC Bank
shall have no liability to the Fund or to any Portfolio for any consequential,
special or indirect losses or damages which the Fund may incur or suffer by or
as a consequence of PNC Bank's performance of the services provided hereunder,
whether or not the likelihood of such losses or damages was known by PNC Bank.
14. Description of Services.
(a) Delivery of the Property. The Fund will deliver or
arrange for delivery to PNC Bank, all the property owned by the Portfolios,
including cash received as a result of the distribution of its shares, during
the period that is set forth in this Agreement. PNC Bank will not be
responsible for such property until actual receipt.
(b) Receipt and Disbursement of Money. PNC Bank, acting
upon Written Instructions, shall open and maintain separate account(s) in the
Fund's name using all cash received from or for the account of the Fund,
subject to the terms of this Agreement. In addition, upon Written
Instructions, PNC Bank shall open separate custodial accounts for each
Portfolio of
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the Fund and shall hold in such account(s) all cash received from or for the
accounts of the Fund specifically designated to each Portfolio. PNC Bank shall
make cash payments from or for the account of a Portfolio only for:
(i) purchases of securities in the name of a
Portfolio or PNC Bank or PNC Bank's nominee
as provided in sub-paragraph j and for which
PNC Bank has received a copy of the broker's
or dealer's confirmation or payee's invoice,
as appropriate;
(ii) purchase or redemption of shares of the Fund
delivered to PNC Bank;
(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting,
distribution, advisory, management fees or
similar expenses which are to be borne by a
Portfolio;
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as
agent for the shareholders, an amount equal
to the amount of dividends and distributions
stated in the Written Instructions to be
distributed in cash by the transfer agent to
shareholders, or, in lieu of paying the
Fund's transfer agent, PNC Bank may arrange
for the direct payment of cash dividends and
distributions to shareholders in accordance
with procedures mutually agreed upon from
time to time by and among the Fund, PNC Bank
and the Fund's transfer agent.
(v) payments, upon receipt of Written
Instructions, in connection with the
conversion, exchange or surrender of
securities owned or subscribed to by the Fund
on behalf of a Portfolio and held by or
delivered to PNC Bank;
(vi) payments of the amounts of dividends received
with respect to securities sold short;
payments made to a sub-custodian pursuant to
provisions in sub-paragraph c of this
Agreement; and
(viii) payments, upon Written Instructions made for
other proper Fund purposes. PNC Bank is
hereby authorized to endorse and collect all
checks, drafts or other orders for the
payment of money received as custodian for
the account of the Fund.
(c) Receipt of Securities.
(i) PNC Bank shall hold all securities received
by it for or for the account of a Portfolio
in a separate account that physically
segregates such securities from those of any
other persons, firms or corporations. All
such securities shall be held or disposed of
only upon Written Instructions of the Fund
pursuant to the terms of this Agreement. PNC
Bank shall have no power or authority to
assign, hypothecate, pledge or otherwise
dispose of any such securities or investment,
except upon the express terms of this
Agreement and upon Written Instructions,
accompanied by a certified resolution of the
Fund's Governing Board, authorizing the
transaction. In no case may any member of
the Fund's Governing Board, or any officer,
employee or agent of the Fund withdraw any
securities.
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At PNC Bank's own expense and for its own
convenience, PNC Bank may enter into
sub-custodian agreements with other banks or
trust companies to perform duties described
in this sub-paragraph c. Such bank or trust
company shall have an aggregate capital,
surplus and undivided profits, according to
its last published report, of at least one
million dollars ($l,000,000), if it is a
subsidiary or affiliate of PNC Bank, or at
least twenty million dollars ($20,000,000) if
such bank or trust company is not a
subsidiary or affiliate of PNC Bank. In
addition, such bank or trust company must
agree to comply with the relevant provisions
of the 1940 Act and other applicable rules
and regulations. PNC Bank shall remain
responsible for the performance of all of its
duties as described in this Agreement and
shall hold the Fund harmless from its own
acts or omissions, under the standards of
care provided for herein, or of any
sub-custodian chosen by PNC Bank under the
terms of this sub-paragraph c.
(d) Transactions Requiring Instructions. Upon receipt of
Oral or Written Instructions and not otherwise, PNC Bank, directly or through
the use of the Book-Entry system, shall:
(i) deliver any Securities held for a Portfolio
against the receipt of payment for the sale
of such securities;
(ii) execute and deliver to such persons as may be
designated in such Oral or Written
Instructions, proxies, consents,
authorizations, and any other instruments
whereby the authority of a Portfolio as owner
of any securities may be exercised;
(iii) deliver any securities to the issuer thereof,
or its agent, when such securities are
called, redeemed, retired or otherwise become
payable; provided that, in any such case, the
cash or other consideration is to be
delivered to PNC Bank;
(iv) deliver any securities held for a Portfolio
against receipt of other securities or cash
issued or paid in connection with the
liquidation, reorganization, refinancing,
tender offer, merger, consolidation or
recapitalization of any corporation, or the
exercise of any conversion privilege;
(v) deliver any securities held for a Portfolio
to any protective committee, reorganization
committee or other person in connection with
the reorganization, refinancing, merger,
consolidation, recapitalization or sale of
assets of any corporation, and receive and
hold under the terms of this Agreement such
certificates of deposit, interim receipts or
other instruments or documents as may be
issued to it to evidence such delivery;
(vi) make such transfer or exchanges of the assets
of the Portfolios and take such other steps
as shall be stated in said Oral or Written
Instructions to
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be for the purpose of effectuating a duly
authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Fund;
(vii) release securities belonging to a Portfolio
to any bank or trust company for the purpose
of a pledge or hypothecation to secure any
loan incurred by the Fund on behalf of that
Portfolio; provided, however, that securities
shall be released only upon payment to PNC
Bank of the monies borrowed, except that in
cases where additional collateral is required
to secure a borrowing already made subject to
proper prior authorization, further
securities may be released for that purpose;
and repay such loan upon redelivery to it of
the securities pledged or hypothecated
therefor and upon surrender of the note or
notes evidencing the loan;
(viii) release and deliver securities owned by a
Portfolio in connection with any repurchase
agreement entered into on behalf of the Fund,
but only on receipt of payment therefor; and
pay out moneys of the Fund in connection with
such repurchase agreements, but only upon the
delivery of the securities;
(ix) release and deliver or exchange securities
owned by the Fund in connection with any
conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities owned by the
Fund on behalf of a Portfolio for the purpose
of redeeming in kind shares of the Fund upon
delivery thereof to PNC Bank; and
(xi) release and deliver or exchange securities
owned by the Fund on behalf of a Portfolio
for other corporate purposes. PNC Bank must
also receive a certified resolution
describing the nature of the corporate
purpose and the name and address of the
person(s) to whom delivery shall be made when
such action is pursuant to sub-paragraph d.
above.
(e) Use of Book-entry System. The Fund shall deliver to PNC
Bank certified resolutions of the Fund's Governing Board approving, authorizing
and instructing PNC Bank on a continuous and on-going basis, to deposit in the
Book-Entry System all securities belonging to the Portfolios eligible for
deposit therein and to utilize the Book-Entry System to the extent possible in
connection with settlements of purchases and sales of securities by the
Portfolios, and deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with borrowings. PNC
Bank shall continue to perform such duties until it receives Written or Oral
Instructions authorizing contrary actions(s).
To administer the Book-Entry System properly, the following provisions
shall apply:
(i) With respect to securities of each Portfolio
which are maintained in the Book-Entry
system, established pursuant to this
sub-paragraph e hereof, the records of PNC
Bank shall identify by Book-Entry or
otherwise those securities belonging to each
Portfolio. PNC Bank shall furnish the Fund a
detailed statement of the Property held for
each Portfolio under this
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Agreement at least monthly and from time to
time and upon written request.
(ii) Securities and any cash of each Portfolio
deposited in the Book-Entry System will at
all times be segregated from any assets and
cash controlled by PNC Bank in other than a
fiduciary or custodian capacity but may be
commingled with other assets held in such
capacities. PNC Bank and its sub-custodian,
if any, will pay out money only upon receipt
of securities and will deliver securities
only upon the receipt of money.
(iii) All books and records maintained by PNC Bank
which relate to the Fund's participation in
the Book-Entry System will at all times
during PNC Bank's regular business hours be
open to the inspection of the Fund's duly
authorized employees or agents, and the Fund
will be furnished with all information in
respect of the services rendered to it as it
may require.
(iv) PNC Bank will provide the Fund with copies of
any report obtained by PNC Bank on the system
of internal accounting control of the
Book-Entry System promptly after receipt of
such a report by PNC Bank. PNC Bank will
also provide the Fund with such reports on
its own system of internal control as the
Fund may reasonably request from time to
time.
(f) Registration of Securities. All Securities held for a
Portfolio which are issued or issuable only in bearer form, except such
securities held in the Book-Entry System, shall be held by PNC Bank in bearer
form; all other securities held for a Portfolio may be registered in the name
of the Fund on behalf of that Portfolio; PNC Bank; the Book-Entry System; a
sub-custodian; or any duly appointed nominee(s) of the Fund, PNC Bank,
Book-Entry system or sub-custodian. The Fund reserves the right to instruct
PNC Bank as to the method of registration and safekeeping of the securities of
the Fund. The Fund agrees to furnish to PNC Bank appropriate instruments to
enable PNC Bank to hold or deliver in proper form for transfer, or to register
its registered nominee or in the name of the Book-Entry System, any securities
which it may hold for the account of a Portfolio and which may from time to
time be registered in the name of the Fund on behalf of a Portfolio. PNC Bank
shall hold all such securities which are not held in the Book-Entry System in a
separate account for a Portfolio in the name of the Fund on behalf of a
Portfolio physically segregated at all times from those of any other person or
persons.
(g) Voting and Other Action. Neither PNC Bank nor its
nominee shall vote any of the securities held pursuant to this Agreement by or
for the account of a Portfolio, except in accordance with Written Instructions.
PNC Bank, directly or through the use of the Book-Entry System, shall execute
in blank and promptly deliver all notice, proxies, and proxy soliciting
materials to the registered holder of such securities. If the registered
holder is not the Fund on behalf of a Portfolio then. Written or Oral
Instructions must designate the person(s) who owns such securities.
(h) Transactions Not Requiring Instructions. In the absence
of contrary Written Instructions, PNC Bank is authorized to take the following
actions:
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(i) Collection of Income and Other Payments.
(A) collect and receive for the account
of each Portfolio, all income,
dividends, distributions, coupons,
option premiums, other payments and
similar items, included or to be
included in the Property, and, in
addition, promptly advise each
Portfolio of such receipt and credit
such income, as collected, to each
Portfolio's custodian account;
(B) endorse and deposit for collection,
in the name of the Fund, checks,
drafts, or other orders for the
payment of money;
(C) receive and hold for the account of
each Portfolio all securities
received as a distribution on the
Portfolio's portfolio securities as
a result of a stock dividend, share
split-up or reorganization,
recapitalization, readjustment or
other rearrangement or distribution
of rights or similar securities
issued with respect to any portfolio
securities belonging to a Portfolio
held by PNC Bank hereunder;
(D) present for payment and collect the
amount payable upon all securities
which may mature or be called,
redeemed, or retired, or otherwise
become payable on the date such
securities become payable; and
(E) take any action which may be
necessary and proper in connection
with the collection and receipt of
such income and other payments and
the endorsement for collection of
checks, drafts, and other negotiable
instruments.
(ii) Miscellaneous Transactions.
(A) PNC Bank is authorized to deliver or
cause to be delivered Property
against payment or other
consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or
dealer selling for the account
of a Portfolio in accordance
with street delivery custom;
(2) for the exchange Or interim
receipts or temporary
securities for definitive
securities; and
(3) for transfer of securities into
the name of the Fund on behalf
of a Portfolio or PNC Bank or
nominee of either, or for
exchange of securities for a
different number of bonds,
certificates, or other
evidence, representing the same
aggregate face amount or number
of units bearing the same
interest rate, maturity date
and call provisions, if any;
provided that, in any such
case, the new securities are to
be delivered to PNC Bank.
(B) Unless and until PNC Bank receives
Oral or Written Instructions to the
contrary, PNC Bank shall:
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(1) pay all income items held by it
which call for payment upon
presentation and hold the cash
received by it upon such
payment for the account of each
Portfolio;
(2) collect interest and cash
dividends received, with notice
to the Fund, to the account of
each Portfolio;
(3) hold for the account of each
Portfolio all stock dividends,
rights and similar securities
issued with respect to any
securities held by us; and
(4) execute as agent on behalf of
the Fund all necessary
ownership certificates required
by the Internal Revenue Code or
the Income Tax Regulations of
the United States Treasury
Department or under the laws of
any State now or hereafter in
effect, inserting the Fund's
name, on behalf of a Portfolio,
on such certificate as the
owner of the securities covered
thereby, to the extent it may
lawfully do so.
(i) Segregated Accounts.
(i) PNC Bank shall upon receipt of Written or
Oral Instructions establish and maintain
segregated accounts(s) on its records for and
on behalf of each Portfolio. Such account(s)
may be used to transfer cash and securities,
including securities in the Book-Entry
System:
(A) for the purposes of compliance by
the Fund with the procedures
required by a securities or option
exchange, providing such procedures
comply with the 1940 Act and any
releases of the SEC relating to the
maintenance of segregated accounts
by registered investment companies;
and
(B) Upon receipt of Written Instructions,
for other proper corporate purposes.
(ii) PNC Bank may enter into separate custodial
agreements with various futures commission
merchants ("FCMs") that the Fund uses ("FCM
Agreement"). Pursuant to an FCM Agreement, a
Portfolio's margin deposits in any
transactions involving futures contracts and
options on futures contracts will be held by
PNC Bank in accounts ("FCM Account") subject
to the disposition by the FCM involved in
such contracts and in accordance with the
customer contract between FCM and the Fund on
behalf of the Portfolio ("FCM Contract"), SEC
rules and the rules of the applicable
commodities exchange. Such FCM
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Agreements shall only be entered into upon
receipt of Written Instructions from the Fund
which state that:
(A) a customer agreement between the FCM
and the Fund on behalf of a
Portfolio has been entered into; and
(B) the Fund is in compliance with all
the rules and regulations of the
CFTC. Transfers of initial margin
shall be made into a FCM Account
only upon Written Instructions;
transfers of premium and variation
margin may be made into a FCM
Account pursuant to Oral
Instructions. Transfers of funds
from a FCM Account to the FCM for
which PNC Bank holds such an account
may only occur upon certification by
the FCM to PNC Bank that pursuant to
the FCM Agreement and the FCM
Contract, all conditions precedent
to its right to give PNC Bank such
instructions have been satisfied.
(iii) PNC Bank shall arrange for the establishment
of ▇▇▇ custodian accounts for such
shareholders holding shares through ▇▇▇
accounts, in accordance with the Portfolios'
prospectuses, the Internal Revenue Code
(including regulations), and with such other
procedures as are mutually agreed upon from
time to time by and among the Fund, PNC Bank
and the Fund's transfer agent.
(j) Purchases of Securities. PNC Bank shall settle purchased
securities upon receipt of Oral or Written Instructions from the fund or its
investment advisor(s) that specify:
(i) the name of the issuer and the title of the
securities, including CUSIP number if
applicable;
(ii) the number of shares or the principal amount
purchased and accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
and
(vi) the name of the person from whom or the
broker through whom the purchase was made.
PNC Bank shall upon receipt of securities
purchased by or for a Portfolio pay out of
the moneys held for the account of the
Portfolio the total amount payable to the
person from whom or the broker through whom
the purchase was made, provided that the same
conforms to the total amount payable as set
forth in such Oral or Written Instructions.
(k) Sales of Securities. PNC Bank shall sell securities upon
receipt of Oral Instructions from the Fund that specify:
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(i) the name of the issuer and the title of the
security, including CUSIP number if
applicable;
(ii) the number of shares or principal amount
sold, and accrued interest, if any;
(iii) the date of trade, settlement and sale;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon
such sale;
(vi) the name of the broker through whom or the
person to whom the sale was made; and
(vii) the location to which the security must be
delivered and delivery deadline, if any. PNC
Bank shall deliver the securities upon
receipt of the total amount payable to the
Portfolio upon such sale, provided that the
total amount payable is the same as was set
forth in the Oral or Written Instructions.
Subject to the foregoing, PNC Bank may accept
payment in such form as shall be satisfactory
to it, and may deliver securities and arrange
for payment in accordance with the customs
prevailing among dealers in securities.
(l) Reports.
(i) PNC Bank shall furnish the Fund the following
reports:
(A) such periodic and special reports as
the Fund may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the
account of each Portfolio, listing
the portfolio securities belonging
to each Portfolio with the adjusted
average cost of each issue and the
market value at the end of such
month, and stating the cash account
of each Portfolio including
disbursement;
(C) the reports to be furnished to the
Fund pursuant to Rule 17f-4; and
(D) such other information as may be
agreed upon from time to time
between the Fund and PNC Bank.
(ii) PNC Bank shall transmit promptly to the Fund
any proxy statement, proxy material, notice
of a call or conversion or similar
communication received by it as custodian of
the Property. PNC Bank shall be under no
other obligation to inform the Fund as to
such actions or events.
(m) Collections. All collections of monies or other
property, in respect, or which are to become part of the Property (but not the
Safekeeping thereof upon receipt by PNC Bank) shall be at the sole risk of the
Fund. If payment is not received by PNC Bank within a reasonable time after
proper demands have been made, PNC Bank shall notify the Fund in writing,
including copies of all demand letters, any written responses, memoranda of all
oral responses and to
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telephonic demands thereto, and await instructions from the Fund. PNC Bank
shall not be obliged to take legal action for collection unless and until
reasonably indemnified to its satisfaction. PNC Bank shall also notify the
Fund as soon as reasonably practicable whenever income due on securities is not
collected in due course.
15. Duration and Termination. This Agreement shall continue until
terminated by the Fund or by PNC Bank on sixty (60) days prior written notice
to the other party. In the event this Agreement is terminated (pending
appointment of a successor to PNC Bank or vote of the shareholders of the Fund
to dissolve or to function without a custodian of its cash, securities or other
property), PNC Bank shall not deliver cash, securities or other property of the
Portfolios to the Fund. It may deliver them to a bank or trust company of PNC
Bank's, having an aggregate capital, surplus and undivided profits, as shown by
its last published report, of not less than twenty million dollars
($20,000,000), as a custodian for the Fund to be held under terms similar to
those of this Agreement. PNC Bank shall not be required to make any such
delivery or payment until full payment shall have been made to PNC Bank of all
of its fees, compensation, costs and expenses. PNC Bank shall have a security
interest in and shall have a right of setoff against Property in the Fund's
possession as security for the payment of such fees, compensation, costs and
expenses.
16. Notices. All notices and other communications, including
Written Instructions, shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notice shall be addressed (a) if to PNC Bank
at PNC Bank's address, Airport Business Center, International Court 2, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, marked for the attention of the
Custodian Services Department (or its successor) (b) if to the Fund, at the
address of the Fund; or (c) if to neither of the foregoing, at such other
address as shall have been notified to the sender of any such Notice or other
communication. 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
five days after it has been mailed. If notice is sent by messenger, it shall
be deemed to have been given on the day it is delivered.
17. Amendments. This Agreement, or any term hereof, may be
changed or waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
18. Delegation. PNC Bank may assign its rights and delegate its
duties hereunder to any wholly-owned direct or indirect subsidiary of PNC Bank,
National Association or PNC Bank Corp., provided that (i) PNC Bank gives the
Fund thirty (30) days prior written notice; (ii) the delegate agrees with PNC
Bank to comply with all relevant provisions of the 1940 Act; and (iii) PNC Bank
and such delegate promptly provide such information as the Fund may request,
and respond to such questions as the Fund may ask, relative to the delegation,
including (without limitation) the capabilities of the delegate.
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.
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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. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one more separate documents their agreement, if any, with respect
to delegated and/or Oral Instructions. 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.
This Agreement shall be deemed to be a contract made in Pennsylvania
and governed by Pennsylvania law. 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 and shall inure to the benefit of the parties hereto and their
respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PNC BANK, NATIONAL ASSOCIATION
CAPITAL APPRECIATION FUND
CASH INCOME TRUST
HIGH YIELD BOND TRUST
MANAGED ASSETS TRUST
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