EXHIBIT (j)(1)
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of August 26, 2003 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and XXXXXXXX & XXXXXXXX/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 XXX
custodian accounts for such shareholders holding Shares
through XXX 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 0000 Xxxxxxx
Xxxxxxxxx, Xxxxx 000, 0xx Xxxxx, Xxxxxxxxxxxx, XX 00000 (b) if to the
Fund, at 000 X. Xxxxxxxx Xxxx., Xxxxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxxxx; 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
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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
/s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
XXXXXXXX & XXXXXXXX/CLAYMORE
TOTAL RETURN FUND INCORPORATED
/s/ Xxxxxx X. Xxxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
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