EXHIBIT (j)(1)
FORM OF CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of ______________, 2003 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇/CLAYMORE TOTAL RETURN FUND INCORPORATED,
a Maryland corporation (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as a closed-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and 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 and any other person
authorized by the Fund to give Oral or Written Instructions on behalf
of the Fund. 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) "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
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registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC Trust from
an Authorized Person or from a person reasonably believed by PFPC
Trust to be an Authorized Person. PFPC Trust may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic mail
as Oral Instructions.
(g) "PFPC TRUST" means PFPC Trust Company.
(h) "SEC" means the Securities and Exchange Commission.
(i) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(j) "SHARES" mean the shares of beneficial interest of any series or class
of the Fund.
(k) "PROPERTY" means:
(i) any and all securities and other investment items which the
Fund may from time to time deposit, or cause to be
deposited, with PFPC Trust or which PFPC Trust may from time
to time hold for the Fund;
(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,
which are received by PFPC Trust from time to time, from or
on behalf of the Fund.
(l) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by two
Authorized Persons and received by PFPC Trust or (ii) trade
instructions transmitted by means of an electronic transaction
reporting system which requires the use of a password or other
authorized identifier in order to gain access. The instructions may be
delivered electronically or by hand, mail, tested telegram, cable,
telex or facsimile sending device.
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2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund and PFPC Trust accepts such appointment and agrees to
furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC Trust with the following:
(a) at PFPC Trust's request, certified or authenticated copies of the
resolutions of the Fund's Board of Directors, approving the
appointment of PFPC Trust to provide services;
(b) a copy of the Fund's most recent effective registration statement;
(c) a copy of the Fund's advisory agreement;
(d) a copy of the Fund's administration agreement;
(e) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
PFPC Trust undertakes to comply with all 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 Trust hereunder. Except as specifically set forth herein, PFPC
Trust assumes no responsibility for such compliance by the Fund or any
other entity.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC Trust 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 Trust to be an Authorized Person)
pursuant to this Agreement.
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PFPC Trust may assume that any Oral Instructions or Written
Instructions received hereunder are not in any way inconsistent with
the provisions of organizational documents of the Fund or of any vote,
resolution or proceeding of the Fund's Board of Directors or of the
Fund's shareholders, unless and until PFPC Trust receives Written
Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions (except where such Oral Instructions are
given by PFPC Trust or its affiliates) so that PFPC Trust 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 Trust 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 Trust ability to rely upon such Oral Instructions. Where Oral
Instructions or Written Instructions reasonably appear to have been
received from an Authorized Person, PFPC Trust shall incur no
liability to the Fund in acting upon such Oral Instructions or Written
Instructions provided that PFPC Trust actions comply with the other
provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC Trust may request directions or
advice, including Oral Instructions or Written Instructions, from the
Fund.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any question
of law pertaining to any action it should or should not take, PFPC
Trust may request
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advice from counsel of its own choosing (who may be counsel for the
Fund, the Fund's investment adviser or PFPC Trust , at the option of
PFPC Trust ).
(c) CONFLICTING ADVICE. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel, PFPC
Trust shall be entitled to rely upon and follow the advice of counsel.
(d) PROTECTION OF PFPC TRUST . PFPC Trust shall be protected in any action
it takes or does not take in reliance upon directions or advice or
Oral Instructions or Written Instructions it receives from the Fund or
from counsel and which PFPC Trust believes, in good faith, to be
consistent with those directions or advice or Oral Instructions or
Written Instructions. The preceding sentence shall not excuse PFPC
Trust when an action performed by PFPC Trust following receipt of
directions or advice or Oral or Written Instructions is performed by
PFPC Trust in bad faith or in a manner that is negligent, reckless or
willfully misfeasant. Nothing in this section shall be construed so as
to impose an obligation upon PFPC Trust (i) to seek such directions or
advice or Oral Instructions or Written Instructions, or (ii) to act in
accordance with such directions 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 Trust properly taking
or not taking such action.
7. RECORDS; VISITS. The books and records pertaining to the Fund, which are in
the possession or under the control of PFPC Trust , shall be the property
of the Fund. Such books and records shall be prepared and maintained as
required by the 1940 Act and
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other applicable securities laws, rules and regulations. The Fund and
Authorized Persons shall have access to such books and records at all times
during PFPC Trust normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by PFPC Trust
to the Fund or to an authorized representative of the Fund, at the Fund's
expense.
8. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer
profiles, customer lists, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Fund or PFPC Trust, their respective subsidiaries and
affiliated companies and the customers, clients and suppliers of any of
them; (b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and secret
in the sense that its confidentiality affords the Fund or PFPC Trust a
competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential. Notwithstanding
the foregoing, information shall not be subject to such confidentiality
obligations if it: (a) is already known to the receiving party at the time
it is obtained; (b) is or becomes publicly known or available through no
wrongful act of the receiving party; (c) is rightfully received from a
third party who, to
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the best of the receiving party's knowledge, is not under a duty of
confidentiality; (d) is released by the protected party to a third party
without restriction; (e) is required to be disclosed by the receiving party
pursuant to a requirement of a court order, subpoena, governmental or
regulatory agency or law (provided the receiving party will provide the
other party written notice of such requirement, to the extent such notice
is permitted); (f) is relevant to the defense of any claim or cause of
action asserted against the receiving party; (g) has been or is
independently developed or obtained by the receiving party; or (h) is
necessary or desirable for PFPC Trust to release such information in
connection with the provision of services under this Agreement.
9. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the Fund's
independent public accountants and shall take all reasonable action to make
any requested information available to such accountants as reasonably
requested by the Fund.
10. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC Trust in
connection with the services provided by PFPC Trust to the Fund.
11. DISASTER RECOVERY. PFPC Trust 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 Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by
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equipment failure provided such loss or interruption is not caused by PFPC
Trust own willful misfeasance, bad faith, negligence or reckless disregard
of its duties or obligations under this Agreement.
12. COMPENSATION. As compensation for custody services rendered by PFPC Trust
during the term of this Agreement, the Fund will pay to PFPC Trust a fee or
fees as may be agreed to in writing from time to time by the Fund and PFPC
Trust. The Fund acknowledges that PFPC Trust may receive float benefits in
connection with maintaining certain accounts required to provide services
under this Agreement.
13. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless PFPC Trust
and its affiliates from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, attorneys' fees and
disbursements and liabilities arising under the Securities Laws and any
state and foreign securities and blue sky laws) arising directly or
indirectly from any action or omission to act which PFPC Trust takes in
connection with the provision of services to the Fund. Neither PFPC Trust,
nor any of its affiliates, shall be indemnified against any liability (or
any expenses incident to such liability) caused by PFPC Trust or its
affiliates' own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement.
Notwithstanding anything in this Agreement to the contrary, the Fund shall
not be required to indemnify or hold harmless either PFPC Trust or its
affiliates for any consequential, special or indirect losses or damages,
whether or not the likelihood of such losses or damages was known by the
Fund.
14. RESPONSIBILITY OF PFPC TRUST .
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the
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Fund except as specifically set forth herein or as may be specifically
agreed to by PFPC Trust and the Fund in a written amendment hereto.
PFPC Trust shall be obligated to exercise care and diligence in the
performance of its duties hereunder and to act in good faith in
performing services provided for under this Agreement. PFPC Trust
shall be liable only for any damages arising out of PFPC Trust failure
to perform its duties under this Agreement to the extent such damages
arise out of PFPC Trust willful misfeasance, bad faith, negligence or
reckless disregard of its duties under this Agreement.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC Trust shall not be liable for
losses beyond its control, including without limitation (subject to
Section 11), delays or errors or loss of data occurring by reason of
circumstances beyond PFPC Trust control, provided that PFPC Trust has
acted in accordance with the standard set forth in Section 14(a)
above; and (ii) PFPC Trust shall not be under any duty or obligation
to inquire into and shall not be liable for the validity or invalidity
or authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which PFPC Trust reasonably
believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC Trust nor its affiliates shall be liable for any consequential,
special or indirect losses or damages, whether or not the likelihood
of such losses or damages was known by PFPC Trust or its affiliates.
(d) No party may assert a cause of action against PFPC Trust or any of its
affiliates more than 12 months after the date facts are known (or
should have been known)
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to the Fund that should have alerted it that a basis for such cause of
action might exist.
(e) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(f) Notwithstanding anything in this Agreement to the contrary (other than
as specifically provided in Section 15(h)(ii)(B)(4) and Section
15(h)(iii)(A) of this Agreement), the Fund shall be responsible for
all filings, tax returns and reports on any transactions undertaken
pursuant to this Agreement, or in respect of the Property or any
collections undertaken pursuant to this Agreement, which may be
requested by any relevant authority. In addition, the Fund shall be
responsible for the payment of all taxes and similar items (including
without limitation penalties and interest related thereto).
15. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Fund will deliver or arrange for
delivery to PFPC Trust , all the Property owned by the Fund, including
cash received as a result of the distribution of Shares, during the
term of this Agreement. PFPC Trust will not be responsible for such
property until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust shall open and maintain
a separate custodial account for the Fund (the "Account"). PFPC Trust
shall make cash payments from or for the Account only for:
(i) purchases of securities in the name the Fund, PFPC Trust,
PFPC Trust nominee or a sub-custodian or nominee thereof as
provided in sub-section (j) and for which PFPC Trust has
received a copy of the broker's or dealer's confirmation or
payee's invoice, as appropriate;
(ii) purchase of Shares of the Fund delivered to PFPC Trust;
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(iii) payment of, subject to Written Instructions, interest, taxes
(provided that tax which PFPC Trust considers is required to
be deducted or withheld "at source" will be governed by
Section 15(h)(iii)(B) of this Agreement), administration,
accounting, distribution, advisory, management fees or
similar expenses which are to be borne by the Fund;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, of 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, PFPC Trust 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, PFPC Trust 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 and held by or
delivered to PFPC Trust ;
(vi) payments of the amounts of dividends received with respect
to securities sold short;
(vii) payments made to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(viii) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the
Account.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
PFPC Trust shall hold all securities and other investment items
received by it for the Account in a separate account that
physically segregates such securities and other investment items
from those of any other persons, firms or corporations, except
for securities held in a Book-Entry System or through a
sub-custodian or depository. All such securities and other
investment items shall be held or disposed of only upon Written
Instructions of the Fund or otherwise pursuant to the terms of
this Agreement. PFPC Trust shall have no power or authority to
assign, hypothecate, pledge or otherwise dispose of any such
securities or investments, except upon the express terms of this
Agreement or upon Written Instructions authorizing the
transaction. In no case may any member of the Fund's Board of
Directors, or any officer, employee or
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agent of the Fund withdraw any securities.
At PFPC Trust own expense and for its own convenience, PFPC Trust
may enter into sub-custodian agreements with other banks or trust
companies to perform duties described in this sub-section (c)
with respect to domestic assets. 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 ($1,000,000), if it is a subsidiary or affiliate of PFPC
Trust , or at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or affiliate of PFPC
Trust . In addition, such bank or trust company must be qualified
to act as custodian and agree to comply with the relevant
provisions of applicable rules and regulations. Any such
arrangement will not be entered into without prior written notice
to the Fund and as otherwise provided in the 1940 Act.
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign assets.
Any such arrangement will not be entered into without prior
written notice to the Fund and as otherwise provided in the 1940
Act.
PFPC Trust shall remain responsible for the performance of all of
its duties as described in this Agreement and shall hold the Fund
harmless, under the standards of care provided for herein, from
its own acts or omissions, or the acts and omissions of any
sub-custodian chosen by PFPC Trust under the terms of this
sub-section (c).
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral Instructions
or Written Instructions and not otherwise, PFPC Trust shall:
(i) deliver any securities held for the Fund against the receipt
of payment for the sale of such securities or otherwise in
accordance with standard market practice;
(ii) execute and deliver to such persons as may be designated in
such Oral Instructions or Written Instructions, proxies,
consents, authorizations, and any other instruments whereby
the authority of the Fund as owner of any securities may be
exercised;
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(iii) deliver any securities to the issuer thereof, or its agent,
when such securities are called, redeemed, retired or
otherwise become payable at the option of the holder;
provided that, in any such case, the cash or other
consideration is to be delivered to PFPC Trust ;
(iv) deliver any securities held for the Fund 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 the Fund 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 Fund
and take such other steps as shall be stated in said Oral
Instructions or Written Instructions to 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 the Fund to any bank or
trust company for the purpose of a pledge or hypothecation
to secure any loan incurred by the Fund; provided, however,
that securities shall be released only upon payment to PFPC
Trust 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 the Fund 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 to a broker in connection
with the broker's custody of margin collateral relating to
futures and options transactions;
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(xi) release and deliver securities owned by the Fund for the
purpose of redeeming in kind shares of the Fund upon
delivery thereof to PFPC Trust ; and
(xii) release and deliver or exchange securities owned by the Fund
for other purposes.
PFPC Trust 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(xii).
(e) USE OF BOOK-ENTRY SYSTEM OR OTHER DEPOSITORY. PFPC Trust will deposit
in the Book-Entry System and other depositories all securities
belonging to the Fund eligible for deposit therein and will utilize
the Book-Entry System and other depositories to the extent possible in
connection with settlements of purchases and sales of securities by
the Fund, and deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with
borrowings. PFPC Trust shall continue to perform such duties until it
receives Written Instructions or Oral Instructions authorizing
contrary actions.
PFPC Trust shall administer the Book-Entry System or other depository as
follows:
(i) With respect to securities of the Fund which are maintained
in the Book-Entry System or another depository, the records
of PFPC Trust shall identify by book-entry or otherwise
those securities belonging to the Fund.
(ii) Assets of the Fund deposited in the Book-Entry System or
another depository will (to the extent consistent with
applicable law and standard practice) at all times be
segregated from any assets and cash controlled by PFPC Trust
in other than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities.
PFPC Trust will 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 the Fund which are
issued or
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issuable only in bearer form, except such securities held in the
Book-Entry System or in another depository, shall be held by PFPC
Trust in bearer form; all other securities held for the Fund may be
registered in the name of the Fund, PFPC Trust, the Book-Entry System,
another depository, a sub-custodian, or any duly appointed nominee of
the Fund, PFPC Trust, Book-Entry System, depository. The Fund reserves
the right to instruct PFPC Trust as to the method of registration and
safekeeping of the securities of the Fund. The Fund agrees to furnish
to PFPC Trust appropriate instruments to enable PFPC Trust to hold or
deliver in proper form for transfer, or to register in the name of its
nominee or in the name of the Book-Entry System or in the name of
another appropriate entity, any securities which it may hold for the
Account and which may from time to time be registered in the name of
the Fund.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall vote
any of the securities held pursuant to this Agreement by or for the
account of the Fund, except in accordance with Written Instructions.
PFPC Trust , directly or through the use of another entity, shall
execute in blank and promptly deliver all notices, proxies and proxy
soliciting materials received by PFPC Trust as custodian of the
Property to the registered holder of such securities. If the
registered holder is not the Fund, then Written Instructions or Oral
Instructions must designate the person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, PFPC Trust is authorized to take the following
actions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
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(A) collect and receive for the account of the Fund, 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 the Fund of such receipt and credit
such income to the Fund'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 the Fund all
securities received as a distribution on the Fund's
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
securities belonging to the Fund and held by PFPC Trust
hereunder;
(D) present for payment and collect the amount payable upon
all securities which may mature or be, on a mandatory
basis, 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) PFPC Trust 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 the Fund in accordance
with street delivery custom;
(2) for the exchange of interim receipts or
temporary securities for definitive
securities; and
(3) for transfer of securities into the name of
the Fund or PFPC Trust or a sub-custodian or
a nominee of one of the foregoing, 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
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securities are to be delivered to PFPC Trust.
(B) unless and until PFPC Trust receives Oral Instructions
or Written Instructions to the contrary, PFPC Trust
shall:
(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 the Fund;
(2) collect interest and cash dividends received,
with notice to the Fund, to the account of
the Fund;
(3) hold for the account of the Fund all stock
dividends, rights and similar securities
issued with respect to any securities held by
PFPC Trust ; and
(4) subject to receipt of such documentation and
information as PFPC Trust may request,
execute as agent on behalf of the Fund all
necessary ownership certificates required by
a national governmental taxing authority or
under the laws of any U.S. state now or
hereafter in effect, inserting the Fund's
name on such certificate as the owner of the
securities covered thereby, to the extent it
may lawfully do so.
(iii) OTHER MATTERS.
(A) subject to receipt of such documentation and
information as PFPC Trust may request, PFPC Trust will,
in such jurisdictions as PFPC Trust may agree from time
to time, seek to reclaim or obtain a reduction with
respect to any withholdings or other taxes relating to
assets maintained hereunder (provided that PFPC Trust
will not be liable for failure to obtain any particular
relief in a particular jurisdiction);
(B) PFPC Trust is authorized to deduct or withhold any sum
in respect of tax which PFPC Trust considers is
required to be deducted or withheld "at source" by any
relevant law or practice.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or
Oral Instructions establish and maintain segregated accounts
on its records for and on behalf of the Fund. Such accounts
may be used to transfer cash and securities, including
securities in the Book-Entry System:
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(A) for the purposes of compliance by the Fund with
the procedures required by a securities, option or
futures 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
purposes.
(ii) PFPC Trust shall arrange for the establishment of ▇▇▇
custodian accounts for such shareholders holding Shares
through ▇▇▇ accounts, in accordance with the Fund's
prospectus, the Internal Revenue Code of 1986, as amended
(including regulations promulgated thereunder), and with
such other procedures as are mutually agreed upon from time
to time by and among the Fund, PFPC Trust and the Fund's
transfer agent.
(j) PURCHASES OF SECURITIES. PFPC Trust shall settle purchased securities
upon receipt of Oral Instructions or Written Instructions 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. PFPC Trust shall upon receipt of
securities purchased by or for the Fund (or otherwise in
accordance with standard market practice) pay out of the
moneys held for the account of the Fund 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
Instructions or Written Instructions.
(k) SALES OF SECURITIES. PFPC Trust shall settle sold securities upon
receipt of Oral Instructions or Written Instructions that specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
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(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(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.
PFPC Trust shall deliver the securities upon receipt of the total amount
payable to the Fund upon such sale, provided that the total amount payable
is the same as was set forth in the Oral Instructions or Written
Instructions. Notwithstanding any other provisions of this Agreement to the
contrary, PFPC Trust may accept payment in such form as is consistent with
standard industry practice, and may deliver securities and arrange for
payment in accordance with the customs prevailing among dealers in
securities.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to 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 the Fund, listing each
portfolio security belonging to the Fund with the
adjusted average cost of each issue and the market
value at the end of such month and stating the cash
account of the Fund including disbursements;
(C) the reports required to be furnished to the Fund
pursuant to Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time
to time between the Fund and PFPC Trust .
(ii) PFPC Trust shall transmit promptly to the Fund any proxy
statement,
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proxy material, notice of a call or conversion or similar
communication received by it as custodian of the Property.
PFPC Trust shall be under no other obligation to inform the
Fund as to such actions or events.
(m) CREDITING OF ACCOUNTS. If PFPC Trust in its sole discretion credits an
Account with respect to (a) income, dividends, distributions, coupons,
option premiums, other payments or similar items on a contractual
payment date or otherwise in advance of PFPC Trust actual receipt of
the amount due, (b) the proceeds of any sale or other disposition of
assets on the contractual settlement date or otherwise in advance of
PFPC Trust actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is subsequently
unable to collect full and final payment for the amounts so credited
within a reasonable time period using reasonable efforts or (ii)
pursuant to standard industry practice, law or regulation PFPC Trust
is required to repay to a third party such amounts so credited, or if
any Property has been incorrectly credited, PFPC Trust shall have the
absolute right in its sole discretion without demand to reverse any
such credit or payment, to debit or deduct the amount of such credit
or payment from the Account, and to otherwise pursue recovery of any
such amounts so credited from the Fund. Nothing herein or otherwise
shall require PFPC Trust to make any advances or to credit any amounts
until PFPC Trust actual receipt thereof. The Fund hereby grants a
first priority contractual possessory security interest in and a right
of setoff against the assets maintained in an Account hereunder in the
amount necessary to secure the return and payment to PFPC Trust of any
advance or credit made by PFPC Trust (including charges related
thereto) to such Account.
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(n) 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 PFPC Trust ) shall be at the sole risk of the
Fund. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Fund in writing, including copies of all demand letters, any written
responses and memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to take
legal action for collection unless and until reasonably indemnified to
its satisfaction. PFPC Trust shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Fund with periodic
status reports of such income collected after a reasonable time.
(o) FOREIGN EXCHANGE. PFPC Trust and/or sub-custodians may enter into or
arrange foreign exchange transactions (at such rates as they may
consider appropriate) in order to facilitate transactions under this
Agreement, and such entities and/or their affiliates may receive
compensation in connection with such foreign exchange transactions.
Provided PFPC Trust is not a principal to the foreign exchange
transaction, PFPC Trust will not be responsible for any principal to
the foreign exchange transaction, regardless of whether such principal
serves as a sub-custodian under this Agreement.
16. DURATION AND TERMINATION. This Agreement shall continue until terminated by
the Fund or PFPC Trust on sixty (60) days' prior written notice to the
other party. In the event this Agreement is terminated (pending appointment
by the Fund of a successor to PFPC Trust or vote of the shareholders of the
Fund to dissolve or to function without a
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custodian of its cash, securities or other property), PFPC Trust shall not
deliver cash, securities or other property to the Fund, although it may
deliver them to a bank or trust company of PFPC Trust choice, 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. PFPC Trust shall not be required to make any delivery or payment
of assets upon termination until full payment shall have been made to PFPC
Trust of all of its fees, compensation, costs and expenses (such expenses
include, without limitation, expenses associated with movement (or
duplication) of records and materials and conversion thereof to a successor
service provider, or to a bank or trust company pending appointment of such
successor, and all trailing expenses incurred by PFPC Trust). PFPC Trust
shall have a security interest in and shall have a right of setoff against
the Property as security for the payment of such fees, compensation, costs
and expenses.
17. NOTICES. Notices shall be addressed (a) if to PFPC Trust at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (b) if to the Fund,
at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇; 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 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.
18. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a
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written amendment, signed by the party against whom enforcement of such
change or waiver is sought.
19. ASSIGNMENT. PFPC Trust may assign this Agreement to any affiliate of PFPC
Trust or of The PNC Financial Services Group, Inc., provided that PFPC
Trust gives the Fund 60 days' prior written notice of such assignment and
the assignee agrees to be bound by the same terms of this Agreement that
previously applied to PFPC Trust .
20. 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.
21. FURTHER ACTIONS. Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
22. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties.
(b) NO REPRESENTATIONS OR WARRANTIES. Except as expressly provided in this
Agreement, PFPC Trust hereby disclaims all representations and
warranties, express or implied, made to the Fund or 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
23
services provided under this Agreement. PFPC Trust disclaims any
warranty of title or non-infringement except as otherwise set forth in
this Agreement.
(c) CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(d) GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(e) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(g) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By:
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Title:
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▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇/CLAYMORE
TOTAL RETURN FUND INCORPORATED
By:
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Title:
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