CUSTODY AGREEMENT
THIS AGREEMENT dated as of the ____ day of July, 1996, is made by and
between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the
laws of the state of Missouri, having its trust office located at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Custodian"), and PILGRIM AMERICA PRIME
RATE TRUST, a Massachusetts business trust, having its principal office and
place of business at Two Renaissance Square, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian of the Fund; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints Custodian as
custodian of the Assets (as defined below) at any time owned by the Fund.
For purposes of this Agreement, the term "Assets" shall mean investment
securities, interests in loans and other non-cash investment property, and
cash.
2. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Except as permitted by the Investment Company Act of 1940,
Fund will deliver or cause to be delivered to Custodian all
Assets acquired and owned by it during the time this Agreement
shall continue in effect, including all documentation required
by Fund to be delivered to Custodian relating to or evidencing
the interests in loans acquired by the Fund. Custodian shall
have no responsibility or liability whatsoever for or on
account of Assets or loan documents not so delivered. All
Assets so delivered to Custodian (other than bearer
securities) shall be registered in the name of Fund or its
nominee, or of a nominee of Custodian, or shall be properly
endorsed and in form for transfer satisfactory to Custodian.
B. Delivery of Accounts and Records
Fund shall turn over to Custodian all of the Fund's relevant
accounts and records previously maintained by it. Custodian
shall be entitled to rely conclusively on the completeness and
correctness of the accounts and records turned over to it by
Fund, and Fund shall indemnify and hold Custodian harmless of
and from any and all expenses, damages and losses whatsoever
arising out of or in connection with any error, omission,
inaccuracy or other deficiency of such accounts and records or
in the failure of Fund to provide any portion of such or to
provide in a timely manner any other information needed by the
Custodian knowledgeably to perform its function hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the Assets
of Fund delivered to it from time to time segregated in a
separate account. Custodian will not deliver, assign, pledge
or hypothecate any such Assets to any person except as
permitted by the provisions of this Agreement or any agreement
executed by it according to the terms of Section 2.S. of this
Agreement. Upon delivery of any such Assets to a subcustodian
pursuant to Section 2.S. of this agreement, Custodian will
create and maintain records identifying those Assets which
have been delivered to the subcustodian as belonging to the
Fund. The Custodian is responsible for the securities and
monies of Fund only until they have been transmitted to and
received by other persons as permitted under the terms of this
Agreement, except for securities and monies transmitted to
subcustodians appointed under Section 2.S. of this Agreement,
for which Custodian remains responsible to the extent provided
in Section 2.S. of this Agreement. Custodian may participate
directly or indirectly through a subcustodian in the
Depository Trust Company, Treasury/Federal Reserve Book Entry
System or Participant Trust Company (PTC) or other depository
approved by the Fund (as such entities are defined at 17 CFR
Section 270.17f-4(b)) (each a "Depository" and collectively
the "Depositories").
D. Registration of Securities
The Custodian shall at all times hold registered securities of
the Fund in the name of the Custodian, the Fund, or a nominee
of either of them, unless specifically directed by
instructions to hold such registered securities in so-called
"street name," provided that, in any event, all such
securities and other Assets shall be held in an account of the
Custodian containing only Assets of the Fund, or only Assets
held by the Custodian as a fiduciary or custodian for
customers, and provided further, that the records of the
Custodian at all times shall indicate the Fund or other
customer for which such securities and other Assets are held
in such account and the respective interests therein. If,
however, the Fund directs the Custodian to maintain securities
in "street name", notwithstanding anything contained herein to
the contrary, the Custodian shall be obligated only to utilize
its best efforts to timely collect income due the Fund on such
securities and to notify the Fund of relevant corporate
actions including, without limitation, pendency of calls,
maturities, tender or exchange offers. All Assets, and the
ownership thereof by Fund, which are held by Custodian
hereunder, however, shall at all times be identifiable on the
records of the Custodian. The Fund agrees to hold Custodian
and its nominee harmless for any liability as a record holder
of securities held in custody.
E. Exchange of Assets
Upon receipt of instructions as defined herein in Section 3.A,
Custodian will exchange, or cause to be exchanged, Assets held
by it for the account of Fund for other Assets issued or paid
in connection with any reorganization, recapitalization,
merger, consolidation, split-up of shares, change of par
value, conversion, refinancing or otherwise, and will deposit
any such Assets in accordance with the terms of any
reorganization or protective plan. Without instructions,
Custodian is authorized to exchange securities held by it in
temporary form for securities in definitive form, to effect an
exchange of shares when the par value of the stock is changed,
and upon receiving payment therefor, to surrender Assets held
by it at maturity or when advised of earlier call for
redemption, except that Custodian shall receive instructions
prior to surrendering any convertible security.
F. Purchases of Investments of the Fund
Fund will, on each business day on which a purchase of Assets
shall be made by it, deliver to Custodian instructions which
shall specify with respect to each such purchase:
1. The name of the issuer and description of the Asset;
2. The number of shares or the principal amount purchased,
and accrued interest, if any;
3. The trade date;
4. The settlement date;
5. The purchase price per unit and the brokerage
commission, taxes and other expenses payable in
connection with the purchase;
6. The total amount payable upon such purchase; and
7. The name of the person from whom or the broker or
dealer through whom the purchase was made.
In accordance with such instructions, Custodian will pay for
out of monies held for the account of Fund, but only insofar
as monies are available therein for such purpose, and receive
the Assets so purchased by or for the account of Fund except
that Custodian may in its sole discretion advance funds to the
Fund which may result in an overdraft because the monies held
by the Custodian on behalf of the Fund are insufficient to pay
the total amount payable upon such purchase. Except as
otherwise instructed by Fund, such payment shall be made by
the Custodian only upon receipt of Assets: (a) by the
Custodian; (b) by a clearing corporation of a national
exchange of which the Custodian is a member; or (c) by a
Depository. Notwithstanding the foregoing, (i) in the case of
a repurchase agreement, the Custodian may release funds to a
Depository prior to the receipt of advice from the Depository
that the securities underlying such repurchase agreement have
been transferred by book-entry into the account maintained
with such Depository by the Custodian, on behalf of its
customers, provided that the Custodian's instructions to the
Depository require that the Depository make payment of such
funds only upon transfer by book-entry of the securities
underlying the repurchase agreement in such account; (ii) in
the case of time deposits, call account deposits, currency
deposits and other deposits, foreign exchange transactions,
futures contracts or options, the Custodian may make payment
therefor before receipt of an advice or confirmation
evidencing said deposit or entry into such transaction; (iii)
in the case of the purchase of securities, the settlement of
which occurs outside of the United States of America, the
Custodian may make, or cause a subcustodian appointed pursuant
to Section 2.S.2. of this Agreement to make, payment therefor
in accordance with generally accepted local custom and market
practice; and (iv) in the case of interests in loans,
Custodian shall make payment therefor and additional advances
relating thereto at such times and to such parties as
instructed by Fund without regard to the time of delivery to
Custodian of documentation evidencing the Fund's interest in
the loan or the additional advance, as applicable.
G. Sales and Deliveries of Investments of the Fund - Other than
Options and Futures
Fund will, on each business day on which a sale of Assets of
Fund has been made, deliver to Custodian instructions
specifying with respect to each such sale:
1. The name of the issuer and description of the Assets;
2. The number of shares or principal amount sold, and
accrued interest, if any;
3. The date on which the Assets sold were purchased or
other information identifying the Assets sold and to be
delivered;
4. The trade date;
5. The settlement date;
6. The sale price per unit and the brokerage commission,
taxes or other expenses payable in connection with such
sale;
7. The total amount to be received by Fund upon such sale;
and
8. The name and address of the broker or dealer through
whom or person to whom the sale was made.
In accordance with such instructions, Custodian will deliver
or cause to be delivered the Assets thus designated as sold
for the account of Fund to the broker or other person
specified in the instructions relating to such sale. Except as
otherwise instructed by Fund, such delivery shall be made upon
receipt of payment therefor: (a) in such form as is
satisfactory to the Custodian; (b) credit to the account of
the Custodian with a clearing corporation of a national
securities exchange of which the Custodian is a member; or (c)
credit to the account of the Custodian, on behalf of its
customers, with a Depository. Notwithstanding the foregoing:
(i) in the case of securities held in physical form, such
securities shall be delivered in accordance with "street
delivery custom" to a broker or its clearing agent; (ii) in
the case of the sale of securities, the settlement of which
occurs outside of the United States of America, the Custodian
may make, or cause a subcustodian appointed pursuant to
Section 2.S.2. of this Agreement to make, payment therefor in
accordance with generally accepted local custom and market
practice; and (iii) in the case of the sale of an interest in
a loan, the Custodian shall receive the purchase price for the
account of Fund and deliver the loan documents relating to the
interest sold as instructed by Fund.
H. Purchases or Sales of Security Options, Options on Indices
and Security Index Futures Contracts
Fund will, on each business day on which a purchase or sale of
the following options and/or futures shall be made by it,
deliver to Custodian instructions which shall specify with
respect to each such purchase or sale:
1. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom
the sale or purchase was made.
2. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through
whom the sale or purchase was made, or other applicable
settlement instructions.
3. Security Index Futures Contracts
a. The last trading date specified in the contract and,
when available, the closing level, thereof;
b. The index level on the date the contract is entered
into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition
to instructions, and if not already in the possession
of Custodian, Fund shall deliver a substantially
complete and executed custodial safekeeping account and
procedural agreement which shall be incorporated by
reference into this Custody Agreement); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
4. Option on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of Fund:
1. Upon receipt of instructions, Custodian will release
or cause to be released securities held in custody to
the pledgee designated in such instructions by way of
pledge or hypothecation to secure any loan incurred
by Fund; provided, however, that the securities shall
be released only upon payment to Custodian of the
monies borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made, further securities may be
released or caused to be released for that purpose
upon receipt of instructions. Upon receipt of
instructions, Custodian will pay, but only from funds
available for such purpose, any such loan upon
redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note
or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated
in such instructions; provided, however, that the
securities will be released only upon deposit with
Custodian of full cash collateral as specified in
such instructions, and that Fund will retain the
right to any dividends, interest or distribution on
such loaned securities. Upon receipt of instructions
and the loaned securities, Custodian will release the
cash collateral to the borrower.
J. Routine Matters
Custodian will, in general, attend to all routine and
mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with
Assets of Fund except as may be otherwise provided in this
Agreement or directed from time to time by the Fund in
writing.
K. Deposit Account
Custodian will open and maintain one or more special purpose
deposit accounts in the name of Custodian ("Accounts"),
subject only to draft or order by Custodian upon receipt of
instructions. All monies received by Custodian from or for the
account of Fund shall be deposited in said Accounts. Barring
events not in the control of the Custodian such as strikes,
lockouts or labor disputes, riots, war or equipment or
transmission failure or damage, fire, flood, earthquake or
other natural disaster, action or inaction of governmental
authority or other causes beyond its control, at 9:00 a.m.,
Kansas City time, on the second business day after deposit of
any check into Fund's Account, Custodian agrees to make Fed
Funds available to the Fund in the amount of the check.
Deposits made by Federal Reserve wire will be available to the
Fund immediately and ACH wires will be available to the Fund
on the next business day. Income earned on the Assets will be
credited to Fund based on the schedule attached as Exhibit A.
The Custodian will be entitled to reverse any credited amounts
where credits have been made and monies are not finally
collected. If monies are collected after such reversal, the
Custodian will credit Fund in that amount. Custodian may open
and maintain Accounts in such banks or trust companies as may
be designated by it or by properly authorized resolution of
the governing Board of the Fund, such Accounts, however, to be
in the name of Custodian and subject only to its draft or
order.
L. Income and other Payments to Fund
Custodian will:
1. Collect, claim and receive and deposit for the account of
Fund all income and other payments which become due and
payable on or after the effective date of this Agreement
with respect to the Assets held under this Agreement, and
credit the account of Fund in accordance with the schedule
attached hereto as Exhibit A. If for any reason, the Fund is
credited with income that is not subsequently collected,
Custodian may reverse that credited amount;
2. Execute ownership and other certificates and affidavits for
all federal, state and local tax purposes in connection with
the collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
a. the collection, receipt and deposit of such income and
other payments, including but not limited to the
presentation for payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge, or
should reasonably be expected to have knowledge; and
b. the endorsement for collection, in the name of Fund, of
all checks, drafts or other negotiable instruments.
Custodian, however, will not be required to institute
suit or take other extraordinary action to enforce
collection except upon receipt of instructions and upon
being indemnified to its satisfaction against the costs
and expenses of such suit or other actions. Custodian
will receive, claim and collect all stock dividends,
rights and other similar items and will deal with the
same pursuant to instructions.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on
the shares of the Fund ("Fund Shares") by the governing Board
of the Fund, Fund shall deliver to Custodian instructions with
respect thereto. On the date specified in such instructions
for the payment of such dividend or other distribution,
Custodian will pay out of the monies held for the account of
Fund, insofar as the same shall be available for such
purposes, and credit to the account of the Dividend Disbursing
Agent for Fund, such amount as may be specified in such
instructions.
N. Shares of Fund Purchased by Fund
Whenever any Fund Shares are repurchased or redeemed by Fund,
Fund or its agent shall advise Custodian of the aggregate
dollar amount to be paid for such shares and shall confirm
such advice in writing. Upon receipt of such advice, Custodian
shall charge such aggregate dollar amount to the account of
Fund and either deposit the same in the account maintained for
the purpose of paying for the repurchase or redemption of Fund
Shares or deliver the same in accordance with such advice.
Custodian shall not have any duty or responsibility to
determine that Fund Shares have been removed from the proper
shareholder account or accounts or that the proper number of
such shares have been cancelled and removed from the
shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Fund Shares are purchased from Fund, Fund will
deposit or cause to be deposited with Custodian the amount
received for such shares. Custodian shall not have any duty or
responsibility to determine that Fund Shares purchased from
Fund have been added to the proper shareholder account or
accounts or that the proper number of such shares have been
added to the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or
mailed to Fund all proxies properly signed, all notices of
meetings, all proxy statements, all payment and rate notices
and other notices, requests or announcements affecting or
relating to Assets held by Custodian for Fund and will, upon
receipt of instructions, execute and deliver or cause its
nominee to execute and deliver or mail or have delivered or
mailed such proxies or other authorizations as may be
required. Except as provided by this Agreement or pursuant to
instructions hereafter received by Custodian, neither it nor
its nominee will exercise any power inherent in any Assets,
including any power to vote the same, or execute any proxy,
power of attorney, or other similar instrument voting any of
Assets, or give any consent, approval or waiver with respect
thereto, or take any other similar action.
Q. Disbursements
Custodian will pay or cause to be paid insofar as funds are
available for the purpose, bills, statements and other
obligations of Fund (including but not limited to obligations
in connection with the conversion, exchange or surrender of
Assets owned by Fund, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal
fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting
forth the name of the person to whom payment is to be made,
the amount of the payment, and the purpose of the payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund as of
the close of business on each day, a detailed statement of the
amounts received or paid and of Assets received or delivered
for the account of Fund during said day. Custodian will, from
time to time, upon request by Fund, render a detailed
statement of the Assets held for Fund under this Agreement,
and Custodian will maintain such books and records as are
necessary to enable it to do so and will permit such persons
as are authorized by Fund, including Fund's independent public
accountants, access to such records or confirmation of the
contents of such records; and if demanded, will permit federal
and state regulatory agencies to examine the securities, books
and records. Upon the written instructions of Fund or as
demanded by federal or state regulatory agencies, Custodian
will instruct any subcustodian to give such persons as are
authorized by Fund, including Fund's independent public
accountants, access to such records or confirmation of the
contents of such records; and if demanded, to permit federal
and state regulatory agencies to examine the books, records
and securities held by subcustodian which relate to Fund.
S. Appointment of Subcustodians
1. Notwithstanding any other provisions of this Agreement,
all or any of the Assets of Fund may be held in
Custodian's own custody or in the custody of one or
more other banks or trust companies selected by
Custodian. Any such subcustodian must have the
qualifications required for custodian under the
Investment Company Act of 1940, as amended. Any such
subcustodians may participate directly or indirectly in
any Depository. Custodian shall be responsible to the
Fund for any loss, damage or expense suffered or
incurred by the Fund resulting from the actions or
omissions of any subcustodian selected and appointed by
Custodian (except subcustodians appointed at the
request of Fund and as provided in Subsection 2 below)
to the same extent Custodian would be responsible to
the Fund under Section 4 of this Agreement if it
committed the act or omission itself. Custodian is not
responsible for Depositories except to the extent such
entities are responsible to Custodian. Upon request of
the Fund, Custodian shall be willing to contract with
other subcustodians reasonably acceptable to the
Custodian for purposes of (i) effecting third-party
repurchase transactions with banks, brokers, dealers,
or other entities through the use of a common custodian
or subcustodian, or (ii) providing depository and
clearing agency services with respect to certain
variable rate demand note securities, or (iii) for
other reasonable purposes specified by Fund; provided,
however, that the Custodian shall be responsible to the
Fund for any loss, damage or expense suffered or
incurred by the Fund resulting from the actions or
omissions of any such subcustodian only to the same
extent such subcustodian is responsible to the
Custodian. The Fund shall be entitled to review the
Custodian's contracts with any such subcustodians
appointed at the request of Fund.
2. Notwithstanding any other provisions of this Agreement,
Fund's foreign securities (as defined in Rule
17f-5(c)(1) under the Investment Company Act of 1940)
and Fund's cash or cash equivalents, in amounts deemed
by the Fund to be reasonably necessary to effect Fund's
foreign securities transactions, may be held in the
custody of one or more banks or trust companies acting
as subcustodians, according to Section 2.S.1; and
thereafter, pursuant to a written contract or contracts
as approved by Fund's governing Board, may be
transferred to an account maintained by such
subcustodian with an eligible foreign custodian, as
defined in Rule 17f-5(c)(2), provided that any such
arrangement involving a foreign custodian shall be in
accordance with the provisions of Rule 17f-5 under the
Investment Company Act of 1940 as that Rule may be
amended from time to time. The Custodian shall be
responsible for the monies and securities of Fund held
by eligible foreign subcustodians to the extent the
eligible foreign subcustodians are liable to the
domestic subcustodian with which the Custodian
contracts for foreign subcustody purposes.
T. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as
they agree upon, and Custodian may conclusively assume that no
procedure approved by Fund, or directed by Fund, conflicts
with or violates any requirements of its prospectus,
declaration of trust, bylaws, or any rule or regulation of any
regulatory body or governmental agency. Fund will be
responsible to notify Custodian of any changes in statutes,
regulations, rules or policies which might necessitate changes
in Custodian's responsibilities or procedures.
U. Overdrafts
In the event Custodian or any subcustodian shall, in its sole
discretion, advance cash or securities for any purpose
(including but not limited to loan advances, securities
settlements, purchase or sale of foreign exchange or foreign
exchange contracts and assumed settlement) for the benefit of
Fund, the advance shall be payable by the Fund on demand. Any
such cash advance shall be subject to an overdraft charge at
the rate set forth in the then-current fee schedule from the
date advanced until the date repaid. As security for each such
advance, Fund hereby grants Custodian and such subcustodian a
lien on and security interest in all property at any time held
for the account of Fund, including without limitation all
Assets acquired with the amount advanced. Should the Fund fail
to repay the advance within a reasonable time after written
notice from Custodian, the Custodian and such subcustodian
shall be entitled to utilize available cash and to dispose of
Assets pursuant to applicable law to the extent necessary to
obtain reimbursement of the amount advanced and any related
overdraft charges.
V. Exercise of Rights; Tender Offers
Upon receipt of instructions, the Custodian shall: (a) deliver
warrants, puts, calls, rights or similar securities to the
issuer or trustee thereof, or to the agent of such issuer or
trustee, for the purpose of exercise or sale, provided that
the new securities, cash or other assets, if any, are to be
delivered to the Custodian; and (b) deposit securities upon
invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered
to the Custodian or the tendered securities are to be returned
to the Custodian.
W. Review and Reporting on Loan Documents
Upon receipt of the loan documents for a purchased interest in
a commercial loan, Custodian shall verify that the face dollar
amount of the Fund's interest in the loan as set forth on such
loan documents is equal to the face dollar amount of such
interest as set forth on the Fund's instructions to Custodian
with respect to such purchase. Custodian shall notify the Fund
of any discrepancies and the Fund shall be responsible for
resolving the discrepancies. Custodian shall maintain a record
of all loan documents in its possession and will provide a
report thereof to the Fund monthly, or upon the Fund's
request.
3. INSTRUCTIONS.
A. The term "instructions", as used herein, means written (including
telecopied) or oral instructions to Custodian which Custodian
reasonably believes were given by a designated representative of Fund.
Fund shall provide Custodian, as often as necessary, written
instructions naming one or more designated representatives to give
instructions in the name and on behalf of Fund, which instructions may
be received and accepted from time to time by Custodian as conclusive
evidence of the authority of any designated representative to act for
Fund and may be considered to be in full force and effect (and
Custodian will be fully protected in acting in reliance thereon) until
receipt by Custodian of notice to the contrary. Unless such written
instructions delegating authority to any person to give instructions
specifically limit such authority or require that the approval of
anyone else will first have been obtained, Custodian will be under no
obligation to inquire into the right of the person giving such
instructions to do so. Notwithstanding any of the foregoing provisions
of this Section 3 no authorizations or instructions received by
Custodian from Fund, will be deemed to authorize or permit any
director, trustee, officer, employee, or agent of Fund to withdraw any
of the Assets of Fund upon the mere receipt of such authorization or
instructions from such director, trustee, officer, employee or agent.
Notwithstanding any other provision of this Agreement, Custodian, upon
receipt (and acknowledgment if required at the discretion of
Custodian) of the instructions of a designated representative of Fund
will undertake to deliver for Fund's account monies (provided such
monies are on hand or available) in connection with Fund's
transactions and to wire transfer such monies to such broker, dealer,
subcustodian, bank or other agent specified in such instructions by a
designated representative of Fund.
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may record
on tape, or otherwise, any oral instruction whether given in person or
via telephone, each such recording identifying the date and the time
of the beginning and ending of such oral instruction.
C. If Custodian shall provide Fund direct access to any computerized
recordkeeping and reporting system used hereunder or if Custodian and
Fund shall agree to utilize any electronic system of communication,
Fund shall be fully responsible for any and all consequences of the
use or misuse of the terminal device, passwords, access instructions
and other means of access to such system(s) which are utilized by,
assigned to or otherwise made available to the Fund. Fund agrees to
implement and enforce appropriate security policies and procedures to
prevent unauthorized or improper access to or use of such system(s).
Custodian shall be fully protected in acting hereunder upon any
instructions, communications, data or other information received by
Custodian by such means as fully and to the same effect as if
delivered to Custodian by written instrument signed by the requisite
authorized representative(s) of Fund. Fund shall indemnify and hold
Custodian harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability which
may be suffered or incurred by Custodian as a result of the use or
misuse, whether authorized or unauthorized, of any such system(s) by
Fund or by any person who acquires access to such system(s) through
the terminal device, passwords, access instructions or other means of
access to such system(s) which are utilized by, assigned to or
otherwise made available to the Fund, except to the extent
attributable to any negligence or willful misconduct by Custodian.
4. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall at all times use reasonable care and due diligence and
act in good faith in performing its duties under this Agreement.
Custodian shall hold harmless and indemnify Fund from and against any
loss or liability arising out of Custodian's negligence, willful
misconduct, or bad faith. Custodian shall not be responsible for, and
the Fund shall indemnify and hold Custodian harmless from and against,
any loss or liability arising out of actions taken by Custodian
pursuant to this Agreement or any instructions provided to it
hereunder, provided that Custodian has acted in good faith and with
due diligence and reasonable care. Neither party shall be liable to
the other for consequential, special or punitive damages. Custodian
may request and obtain the advice and opinion of counsel for Fund, or
of its own counsel with respect to questions or matters of law, and it
shall be without liability to Fund for any action taken or omitted by
it in good faith, in conformity with such advice or opinion. If
Custodian reasonably believes that it could not prudently act
according to the instructions of the Fund or the Fund's counsel, it
may in its discretion, with notice to the Fund, not act according to
such instructions.
B. Custodian may rely upon the advice and statements of Fund and Fund's
accountants and other persons believed by, it in good faith, to be
expert in matters upon which they are consulted, and Custodian shall
not be liable for any actions taken, in good faith, upon such advice
and statements.
C. If Fund requests Custodian in any capacity to take, with respect to
any Assets, any action which involves the payment of money by it, or
which in Custodian's opinion might make it or its nominee liable for
payment of monies or in any other way, Custodian, upon notice to Fund
given prior to such actions, shall be and be kept indemnified by Fund
in an amount and form satisfactory to Custodian against any liability
on account of such action; provided, however, that nothing herein
shall obligate Custodian to take any such action except in its sole
discretion.
D. Custodian shall be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for such cash disbursements, costs
and expenses as may be agreed upon from time to time by Custodian and
Fund.
E. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other
instrument or paper reasonably appearing to it to be genuine and to
have been properly executed and shall, unless otherwise specifically
provided herein, be entitled to receive as conclusive proof of any
fact or matter required to be ascertained from Fund hereunder,
instructions or a certificate signed by the Fund's President, or other
authorized officer.
F. Without limiting the generality of the foregoing, Custodian shall be
under no duty or obligation to inquire into, and shall not be liable
for:
1. The validity of the issue of any Assets purchased by or for Fund,
the legality of the purchase thereof, the validity, completeness,
correctness or sufficiency of any loan documents required by Fund
to be received by Custodian, the sufficiency of the evidence of
ownership of Assets required by Fund to be received by Custodian,
or the propriety of the decision to purchase or amount paid for
any Assets;
2. The legality of the sale of any Assets by or for Fund, or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any Fund Shares,
or the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any
dividend.
G. Custodian shall not be liable for, or considered to be
Custodian of, any money represented by any check, draft, wire
transfer, clearing house funds, uncollected funds, or
instrument for the payment of money to be received by it on
behalf of Fund, until Custodian actually receives such money,
provided only that it shall advise Fund promptly if it fails
to receive any such money in the ordinary course of business,
and use its best efforts and cooperate with Fund toward the
end that such money shall be received.
H. Except for any subcustodians or eligible foreign custodians
appointed under Section 2.S. to the extent provided therein,
Custodian shall not be responsible for loss occasioned by the
acts, neglects, defaults or insolvency of any broker, bank,
trust company, or any other person with whom Custodian may
deal in the absence of negligence or bad faith on the part of
Custodian.
I. Notwithstanding anything herein to the contrary, Custodian
may, and with respect to any foreign subcustodian appointed
under Section 2.S.2 must, provide Fund for its approval,
agreements with banks or trust companies which will act as
subcustodians for Fund pursuant to Section 2.S of this
Agreement.
J. Custodian shall not be responsible or liable for the failure
or delay in performance of its obligations under this
Agreement, or those of any entity for which it is responsible
hereunder, arising out of or caused, directly or indirectly,
by circumstances beyond the affected entity's reasonable
control, including, without limitation: any interruption, loss
or malfunction of any utility, transportation, computer
(hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a
delay in mails; governmental or exchange action, statute,
ordinance, rulings, regulations or direction; war, strike,
riot, emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornados,
acts of God or public enemy, revolutions, or insurrection.
5. COMPENSATION.
Fund will pay to Custodian such compensation as is stated in the Fee
Schedule from time to time agreed to in writing by Custodian and Fund.
Custodian may charge such compensation against monies held by it for
the account of Fund. Custodian will also be entitled, notwithstanding
the provisions of Sections 4.C. or 4.D. hereof, to charge against any
monies held by it for the account of Fund the amount of any loss,
damage, liability, advance, or expense for which it shall be entitled
to reimbursement under the provisions of this Agreement including fees
or expenses due to Custodian for other services provided to the Fund by
the Custodian. Custodian will not be entitled to reimbursement by Fund
for any loss or expenses of any subcustodian, except to the extent
Custodian would be entitled to reimbursement hereunder if it incurred
the loss or expense itself directly.
6. TERMINATION.
This Agreement shall continue in effect until terminated by either
party by notice in writing received by the other party not less than
ninety (90) days prior to the date upon which such termination shall
take effect. Upon termination of this Agreement, Fund will pay to
Custodian such compensation for its reimbursable disbursements, costs
and expenses paid or incurred to such date. The governing Board of Fund
will, forthwith upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian a qualified bank or trust
company. Custodian will, upon termination of this Agreement, deliver to
the successor custodian so appointed, at Custodian's office, all
securities then held by Custodian hereunder, duly endorsed and in form
for transfer, all funds, loan documents and other properties of Fund
deposited with or held by Custodian hereunder, or will co-operate in
effecting changes in book-entries at the Depositories. In the event no
written order designating a successor custodian has been delivered to
Custodian on or before the date when such termination becomes
effective, then Custodian may deliver the securities, funds and
properties of Fund to a bank or trust company at the selection of
Custodian and meeting the qualifications for custodian, if any, set
forth in the governing documents of the Fund and having not less that
Two Million Dollars ($2,000,000) aggregate capital, surplus and
undivided profits, as shown by its last published report. Upon delivery
to a successor custodian, Custodian will have no further obligations or
liabilities under this Agreement. Thereafter such bank or trust company
will be the successor custodian under this Agreement and will be
entitled to reasonable compensation for its services. In the event that
no such successor custodian can be found, Fund will submit to its
shareholders, before permitting delivery of the cash and securities
owned by Fund to anyone other than a successor custodian, the question
of whether Fund will be liquidated or function without a custodian.
Notwithstanding the foregoing requirement as to delivery upon
termination of this Agreement, Custodian may make any other delivery of
the securities, funds, loan documents and property of Fund which is
permitted by the Investment Company Act of 1940, Fund's governing
documents then in effect or apply to a court of competent jurisdiction
for the appointment of a successor custodian.
7. NOTICES.
Notices, requests, instructions and other writings received by Fund at
Two Renaissance Square, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as Fund may have designated to
Custodian in writing, will be deemed to have been properly given to
Fund hereunder; and notices, requests, instructions and other writings
received by Custodian at its offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to such other address as it may
have designated to Fund in writing, will be deemed to have been
properly given to Custodian hereunder.
8. LIMITATION OF LIABILITY.
Notice is hereby given that a copy of Fund's trust agreement and all
amendments thereto is on file with the Secretary of State of the state
of its organization; that this Agreement has been executed on behalf
of Fund by the undersigned duly authorized representative of Fund in
his/her capacity as such and not individually; and that the
obligations of this Agreement shall only be binding upon the assets
and property of Fund and shall not be binding upon any trustee,
officer or shareholder of Fund individually.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of Missouri
and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties
hereto and their respective successors and permitted assigns.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement may be executed in two or more counterparts, each
of which will be deemed an original but all of which together
will constitute one and the same instrument.
F. If any part, term or provision of this Agreement is determined to
be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and
not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not
contain the particular part, term or provision held to be illegal
or invalid.
G. Custodian will not release the identity of Fund to an issuer
which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and Fund unless the Fund
directs the Custodian otherwise.
H. This Agreement may not be assigned by either party without prior
written consent of the other party.
I. If any provision of the Agreement, either in its present form or
as amended from time to time, limits, qualifies, or conflicts
with the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder, such statues, rules and
regulations shall be deemed to control and supersede such
provision without nullifying or terminating the remainder of the
provisions of this Agreement.
J. The representations and warranties and the indemnification
extended hereunder are intended to and shall continue after and
survive the expiration, termination or cancellation of this
Agreement.
K. The Custody Agreement between Custodian and Fund dated as of
November 1, 1989, is hereby cancelled and superseded effective as
of the date hereof, except that all rights, duties and
liabilities which may have arisen under such Custody Agreement
prior to the effectiveness hereof shall continue and survive.
Otherwise, this Agreement does not in any way affect any other
agreements entered into between the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
Title:
PILGRIM AMERICA PRIME RATE TRUST
By:
Title:
EXHIBIT A
INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE
TRANSACTION DTC PHYSICAL FED
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
Calls Puts As Received C or F* As Received C or F*
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
Tender Reorgs. As Received C As Received C N/A
Dividends Paydate C Paydate C N/A
Floating Rate Int. Paydate C Paydate C N/A
Floating Rate Int. (No N/A As Rate Received C N/A
Rate)
Mtg. Backed P&I Paydate C Paydate + 1 Bus. Day C Paydate F
Fixed Rate Int. Paydate C Paydate C Paydate F
Euroclear N/A C Paydate C
Legend
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
TRANSACTION CREDIT DATE FUNDS TYPE
Loan Payments As Received F