Exhibit 23(g)(iii)
SUB-CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of February 2, 1998 among PNC BANK, NATIONAL
ASSOCIATION, a national banking association ("PNC Bank"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as custodian ("Custodian"), XXXXXX
SQUARE MANAGEMENT CORPORATION, a Delaware corporation ("RSMC") and THE XXXXXX
SQUARE FUND, a Massachusetts business trust (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Custodian serves as custodian for the Fund pursuant to a
custody agreement with the Fund; and
WHEREAS, Custodian, with the consent of the Fund, wishes to retain PNC
Bank to provide sub-custodian services, and PNC Bank wishes to furnish
sub-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, the
Custodian and any
other person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PNC Bank. An Authorized Person's scope
of authority may be limited by the Fund by setting forth such limitation in the
Authorized Persons Appendix.
(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 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 PNC
Bank from an Authorized Person or from a person reasonably believed by PNC Bank
to be an Authorized Person.
(g) "PNC BANK" means PNC Bank, National Association or a
subsidiary or affiliate of PNC Bank, National Association.
(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 PNC Bank or which PNC Bank may
from time to time hold for the Fund;
2
(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 PNC Bank from time to
time, from or on behalf of the Fund.
(l) "WRITTEN INSTRUCTIONS" mean written instructions signed by
one Authorized Person and received by PNC Bank. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. APPOINTMENT. Custodian, with the consent of the Fund, hereby
appoints PNC Bank to provide sub-custodian services to the Fund, on behalf of
each of its investment portfolios (each, a "Portfolio"), and PNC Bank accepts
such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable,
will provide PNC Bank with the following:
(a) certified or authenticated copies of the resolutions
of the Fund's Board of Trustees, approving the
appointment of PNC Bank or its affiliates to provide
services;
(b) a copy of the Fund's most recent effective
registration statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution agreement with respect to
each class of Shares;
(e) a copy of each Portfolio's administration agreement if
PNC Bank is not providing the Portfolio with such
services;
(f) copies of any shareholder servicing agreements made in
respect of the Fund
3
or a Portfolio; and
4
(g) certified or authenticated copies of any and all
amendments or supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
PNC Bank 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 PNC Bank
hereunder. Except as specifically set forth herein, PNC Bank assumes no
responsibility for such compliance by the Fund or any Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PNC Bank shall
act only upon Oral Instructions and Written Instructions.
(b) PNC Bank shall be entitled to rely upon any Oral Instructions
and Written Instructions it receives from an Authorized Person (or from a person
reasonably believed by PNC Bank to be an Authorized Person) pursuant to this
Agreement. PNC Bank may assume that any Oral 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 Trustees or of the Fund's shareholders, unless
and until PNC Bank receives Written Instructions to the contrary.
(c) Custodian and the Fund, as applicable, agree to forward to
PNC Bank Written Instructions confirming Oral Instructions (except where such
Oral Instructions are given by PNC Bank or its affiliates) so that PNC Bank
receives the Written Instructions by the close of business on the same day that
such Oral Instructions are received. The fact that such confirming Written
5
Instructions are not received by PNC Bank shall in no way invalidate the
transactions or enforceability of the transactions authorized by the Oral
Instructions. Where Oral Instructions or Written Instructions reasonably appear
to have been received from an Authorized Person, PNC Bank shall incur no
liability to the Fund in acting upon such Oral Instructions or Written
Instructions provided that PNC Bank's actions comply with the other provisions
of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PNC Bank is in doubt as to any action
it should or should not take, PNC Bank may request directions or advice,
including Oral Instructions or Written Instructions, from Custodian or the Fund,
as applicable.
(b) ADVICE OF COUNSEL. If PNC Bank shall be in doubt as to any
question of law pertaining to any action it should or should not take, PNC Bank
may request advice at its own cost from such counsel of its own choosing (who
may be counsel for Custodian, the Fund, the Fund's investment adviser or PNC
Bank, at the option of PNC Bank).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral Instructions or Written Instructions PNC Bank
receives from the Fund or WTC, and the advice it receives from counsel, PNC Bank
shall be entitled to rely upon and, after notice to Custodian and the Fund, to
follow the advice of counsel. In the event PNC Bank so relies on the advice of
counsel, PNC Bank remains liable for any action or omission on the part of PNC
Bank which constitutes willful misfeasance, bad faith, negligence or reckless
disregard by PNC Bank of any duties, obligations or responsibilities set forth
in this Agreement.
6
(d) PROTECTION OF PNC BANK. PNC Bank shall be protected in any
action it takes or does not take in reliance upon Oral Instructions or Written
Instructions it receives from the Fund or directions or advice from counsel and
which PNC Bank believes, in good faith, to be consistent with those directions,
advice or Oral Instructions or Written Instructions. Nothing in this section
shall be construed so as to impose an obligation upon PNC Bank (i) to seek such
directions, advice or Oral Instructions or Written Instructions, or (ii) to act
in accordance with such directions, advice or Oral Instructions or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PNC Bank's properly taking or not taking such action.
Nothing in this subsection shall excuse PNC Bank when an action or omission on
the part of PNC Bank constitutes willful misfeasance, bad faith, negligence or
reckless disregard by PNC Bank of any duties, obligations or responsibilities
set forth in this Agreement.
7. RECORDS; VISITS. The books and records pertaining to Custodian, the
Fund and any Portfolio, which are in the possession or under the control of PNC
Bank, shall be the property of Custodian and the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. Custodian, the Fund and
Authorized Persons shall have access to such books and records at all times
during PNC Bank's normal business hours. Upon the reasonable request of the
Custodian or the Fund, copies of any such books and records shall be provided by
PNC Bank to Custodian, the Fund or to an authorized representative of either, at
the Fund's expense.
8. CONFIDENTIALITY. PNC Bank agrees to keep confidential all records of
Custodian, the Fund and information relating to Custodian, the Fund and its
shareholders, unless the release of such
7
records or information is otherwise consented to, in writing, by Custodian or
the Fund, as the case may be. The Fund and Custodian agree that such consent
shall not be unreasonably withheld and may not be withheld where PNC Bank may be
exposed to civil or criminal contempt proceedings or when required to divulge
such information or records to duly constituted authorities, unless PNC Bank is
indemnified by Custodian or the Fund, as the case may be.
9. COOPERATION WITH ACCOUNTANTS. PNC Bank shall cooperate with
Custodian's and the Fund's independent public accountants and shall take all
reasonable action in the performance of its obligations under this Agreement to
ensure that the necessary information is made available to such accountants for
the expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PNC Bank shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PNC Bank shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PNC Bank shall have no liability with respect to
the loss of data or service interruptions caused by equipment failure provided
such loss or interruption is not caused by PNC Bank's own willful misfeasance,
bad faith, negligence or reckless disregard of its duties or obligations under
this Agreement.
11. COMPENSATION. As compensation for sub-custody services rendered by
PNC Bank during the term of this Agreement, RSMC, on behalf of the Fund and each
of the Portfolios, will pay to PNC Bank a fee or fees as may be agreed to in
writing from time to time by RSMC, the Fund and PNC Bank.
8
12. INDEMNIFICATION. The Fund and Custodian, on behalf of each
Portfolio, agree to indemnify and hold harmless PNC Bank and its affiliates from
all taxes, charges, expenses, assessments, claims and liabilities (including,
without limitation, liabilities arising under the Securities Laws and any state
and foreign securities and blue sky laws, and amendments thereto, and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or omission to act which PNC Bank takes
(i) at the request or on the direction of or in reliance on the advice of the
Fund or Custodian or (ii) upon Oral Instructions or Written Instructions. The
Custodian's indemnification of PNC Bank is subject to the Fund's indemnification
of Custodian. Neither PNC Bank, nor any of its affiliates, shall be indemnified
against any liability (or any expenses incident to such liability) arising out
of PNC Bank's or its affiliates' own willful misfeasance, bad faith, negligence
or reckless disregard of its duties under this Agreement.
13. RESPONSIBILITY OF PNC BANK.
(a) PNC Bank shall be under no duty to take any action on behalf
of Custodian or the Fund or any Portfolio except as specifically set forth
herein or as may be specifically agreed to by PNC Bank in writing. PNC Bank
shall be obligated to exercise care and diligence in the performance of its
duties hereunder, to act in good faith and to use its best efforts, within
reasonable limits, in performing services provided for under this Agreement. PNC
Bank shall be liable for any damages arising out of PNC Bank's failure to
perform its duties under this Agreement to the extent such damages arise out of
PNC Bank's willful misfeasance, bad faith, negligence or reckless disregard of
its duties under this Agreement.
9
(b) Without limiting the generality of the foregoing or of any
other provision of this Agreement, (i) PNC Bank shall not be under any duty or
obligation to inquire into and shall not be liable for (A) the validity or
invalidity or authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which PNC Bank reasonably believes to be
genuine; or (B) subject to section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PNC Bank's control, including acts
of civil or military authority, national emergencies, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
(c) Notwithstanding anything in this Agreement to the
contrary, neither PNC Bank nor its affiliates shall be liable to Custodian or
the Fund or to any Portfolio for any consequential, special or indirect losses
or damages which Custodian or the Fund may incur or suffer by or as a
consequence of PNC Bank's or its affiliates' performance of the services
provided hereunder, whether or not the likelihood of such losses or damages was
known by PNC Bank or its affiliates.
(d) Notwithstanding anything to the contrary contained herein,
PNC Bank on behalf of itself and any and all of its affiliates or assignees
hereunder, agrees to indemnify and hold harmless Custodian and its directors,
officers and employees from and against any and all damages, losses, costs,
taxes, charges, expenses, assessments, claims and liabilities, including,
without limitation, attorneys' fees and disbursements (collectively, "Losses"),
arising directly from any action or omission to act by PNC Bank or any of its
affiliates or assignees, as applicable, relating to this Agreement, including
Losses arising out of any threatened, pending or completed claim, action, suit
10
or proceeding, whether civil, criminal, administrative or investigative, except
to the extent such Losses were caused directly by the willful misfeasance, bad
faith, negligence or reckless disregard by Custodian of its duties under this
Agreement.
14. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. Custodian, for the account of the
Fund, will deliver or arrange for delivery to PNC Bank, all the Property owned
by the Portfolios, including cash received as a result of the distribution of
Shares, during the period that is set forth in this Agreement. PNC Bank will not
be responsible for such property until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PNC Bank, acting upon
Written Instructions, shall open and maintain separate accounts in Custodian's
name for the benefit of the Fund using all cash received from or for the account
of the Fund, subject to the terms of this Agreement. In addition, upon Written
Instructions, PNC Bank shall open separate custodial accounts for each separate
series or Portfolio of the Fund (collectively, the "Accounts") and shall hold in
the Accounts all cash received from or for the Accounts of the Fund specifically
designated to each separate series or Portfolio.
PNC Bank shall make cash payments from or for the Accounts of a
Portfolio only for:
(i) purchases of securities in the name of a Portfolio or
PNC Bank or PNC Bank's nominee as provided in
sub-section (j) and for which PNC Bank has received a
copy of the broker's or dealer's confirmation or
payee's invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund delivered
to PNC Bank;
(iii) payment of, subject to Written Instructions, interest,
taxes, administration, accounting, distribution,
advisory, management fees or similar expenses which
are to be borne by a Portfolio;
11
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent for
the shareholders, an amount equal to the amount of
dividends and distributions stated in the Written
Instructions to be distributed in cash by the transfer
agent to shareholders, or, in lieu of paying the
Fund's transfer agent, PNC Bank may arrange for the
direct payment of cash dividends and distributions to
shareholders in accordance with procedures mutually
agreed upon from time to time by and among the Fund,
PNC Bank and the Fund's transfer agent.
(v) payments, upon receipt of Written Instructions, in
connection with the conversion, exchange or surrender
of securities owned or subscribed to by the Fund and
held by or delivered to PNC Bank;
(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) payments, upon Written Instructions, made for other
proper Fund purposes.
PNC Bank is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the Accounts.
(c) RECEIPT OF SECURITIES; SUB-CUSTODIANS.
(i) PNC Bank shall hold all securities received by it for
the Accounts in a separate account that physically
segregates such securities from those of any other
persons, firms or corporations, except for securities
held in a Book-Entry System. All such securities shall
be held or disposed of only upon Written Instructions
of the Fund pursuant to the terms of this Agreement.
PNC Bank shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such
securities or investment, except upon the express
terms of this Agreement and upon Written Instructions,
accompanied by a certified resolution of the Fund's
Board of Trustees, authorizing the transaction. In no
case may any member of the Fund's Board of Trustees,
or any officer, employee or agent of the Fund withdraw
any securities.
12
At PNC Bank's own expense and for its own convenience,
PNC Bank may enter into sub-custodian agreements with
other United States banks or trust companies to
perform duties described in this sub-section (c). Such
bank or trust company shall have an aggregate capital,
surplus and undivided profits, according to its last
published report, of at least one million dollars
($1,000,000), if it is a subsidiary or affiliate of
PNC Bank, or at least twenty million dollars
($20,000,000) if such bank or trust company is not a
subsidiary or affiliate of PNC Bank. In addition, such
bank or trust company must be qualified to act as
custodian and agree to comply with the relevant
provisions of the 1940 Act and other applicable rules
and regulations. Any such arrangement will not be
entered into without prior written notice to the Fund.
PNC Bank shall remain responsible for the performance
of all of its duties as described in this Agreement
and shall hold the Fund and each Portfolio harmless
from its own acts or omissions, under the standards of
care provided for herein, or the acts and omissions of
any sub-custodian chosen by PNC Bank under the terms
of this sub-section (c).
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PNC Bank, directly or
through the use of the Book-Entry System, shall:
(i) deliver any securities held for a Portfolio against
the receipt of payment for the sale of such
securities;
(ii) execute and deliver to such persons as may be
designated in such Oral Instructions or Written
Instructions, proxies, consents, authorizations, and
any other instruments whereby the authority of a
Portfolio as owner of any securities may be exercised;
13
(iii) deliver any securities to the issuer thereof, or its
agent, when such securities are called, redeemed,
retired or otherwise become payable; provided that, in
any such case, the cash or other consideration is to
be delivered to PNC Bank;
(iv) deliver any securities held for a Portfolio against
receipt of other securities or cash issued or paid in
connection with the liquidation, reorganization,
refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise
of any conversion privilege;
(v) deliver any securities held for a Portfolio to any
protective committee, reorganization committee or
other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization
or sale of assets of any corporation, and receive and
hold under the terms of this Agreement such
certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to
evidence such delivery;
(vi) make such transfer or exchanges of the assets of the
Portfolios and take such other steps as shall be
stated in said Oral 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 a Portfolio to any
bank or trust company for the purpose of a pledge or
hypothecation to secure any loan incurred by the Fund
on behalf of that Portfolio; provided, however, that
securities shall be released only upon payment to PNC
Bank of the monies borrowed, except that in cases
where additional collateral is required to secure a
borrowing already made subject to proper prior
authorization, further securities may be released for
that purpose; and repay such loan upon redelivery to
it of the securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing the
loan;
(viii) release and deliver securities owned by a Portfolio in
connection with any repurchase agreement entered into
on behalf of the Fund, but only on receipt of payment
therefor; and pay out moneys of the Fund in connection
with such repurchase agreements, but only upon the
delivery of the securities;
(ix) release and deliver or exchange securities owned by
the Fund in connection with any conversion of such
securities, pursuant to their terms, into other
securities;
14
(x) release and deliver securities owned by the Fund for
the purpose of redeeming in kind shares of the Fund
upon delivery thereof to PNC Bank; and
(xi) release and deliver or exchange securities owned by
the Fund for other corporate purposes.
PNC Bank must also receive a certified resolution
describing the nature of the corporate purpose and the
name and address of the person(s) to whom delivery
shall be made when such action is pursuant to
sub-paragraph d. (xi).
(e) USE OF BOOK-ENTRY SYSTEM. The Fund shall deliver to PNC Bank
certified resolutions of the Fund's Board of Trustees approving, authorizing and
instructing PNC Bank on a continuous basis, to deposit in the Book-Entry System
all securities belonging to the Portfolios eligible for deposit therein and to
utilize the Book-Entry System to the extent possible in connection with
settlements of purchases and sales of securities by the Portfolios, and
deliveries and returns of securities loaned, subject to repurchase agreements or
used as collateral in connection with borrowings. PNC Bank shall continue to
perform such duties until it receives Written Instructions or Oral Instructions
authorizing contrary actions.
PNC Bank shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which are
maintained in the Book-Entry System, the records of
PNC Bank shall identify by Book-Entry or otherwise
those securities belonging to each Portfolio. PNC Bank
shall furnish to the Fund a detailed statement of the
Property held for each Portfolio under this Agreement
at least monthly and from time to time and upon
written request.
(ii) Securities and any cash of each Portfolio deposited in
the Book-Entry System will at all times be segregated
from any assets and cash controlled by PNC Bank in
other than a fiduciary or custodian capacity but may
be commingled with other assets held in such
capacities. PNC Bank and its sub-custodian, if any,
will pay out money only upon receipt of securities and
will deliver securities only upon the receipt of
money.
15
(iii) All books and records maintained by PNC Bank which
relate to the Fund's participation in the Book-Entry
System will at all times during PNC Bank's regular
business hours be open to the inspection of Authorized
Persons, and PNC Bank will furnish to Custodian and
the Fund all information in respect of the services
rendered as it may require.
PNC Bank will also provide Custodian and the Fund with such reports on
its own system of internal control as the Fund may reasonably request from time
to time.
(f) REGISTRATION OF SECURITIES. All Securities held for a
Portfolio which are issued or issuable only in bearer form, except such
securities held in the Book-Entry System, shall be held by PNC Bank in bearer
form; all other securities held for a Portfolio may be registered in the name of
the Fund on behalf of that Portfolio, PNC Bank, the Book-Entry System, a
sub-custodian, or any duly appointed nominees of the Fund, PNC Bank, Book-Entry
System or sub-custodian. The Fund reserves the right to instruct PNC Bank as to
the method of registration and safekeeping of the securities of the Fund. The
Fund agrees to furnish to PNC Bank appropriate instruments to enable PNC Bank to
hold or deliver in proper form for transfer, or to register in the name of its
nominee or in the name of the Book-Entry System, any securities which it may
hold for the Accounts and which may from time to time be registered in the name
of the Fund on behalf of a Portfolio.
(g) VOTING AND OTHER ACTION. Neither PNC Bank nor its nominee
shall vote any of the securities held pursuant to this Agreement by or for the
account of a Portfolio, except in accordance with Written Instructions. PNC
Bank, directly or through the use of the Book-Entry System, shall execute in
blank and promptly deliver all notices, proxies and proxy soliciting
16
materials to the registered holder of such securities. If the registered holder
is not the Fund on behalf of a Portfolio, then PNC Bank shall deliver such
materials timely to the applicable investment adviser for the portfolio or such
other party as may be identified for such purpose in Written Instructions.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of
contrary Written Instructions, PNC Bank is authorized to take the following
actions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of each
Portfolio, all income, dividends, distributions,
coupons, option premiums, other payments and
similar items, included or to be included in the
Property, and, in addition, promptly advise each
Portfolio of such receipt and credit such income,
as collected, to each Portfolio's custodian
account;
(B) endorse and deposit for collection, in the name of
the Fund, checks, drafts, or other orders for the
payment of money;
(C) receive and hold for the account of each Portfolio
all securities received as a distribution on the
Portfolio's 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 a Portfolio and held by PNC Bank
hereunder;
(D) present for payment and collect the amount payable
upon all securities which may mature or be called,
redeemed, or retired, or otherwise become payable
on the date such securities become payable; and
(E) take any action which may be necessary and proper
in connection with the collection and receipt of
such income and other payments and the endorsement
for collection of checks, drafts, and other
negotiable instruments.
17
(ii) MISCELLANEOUS TRANSACTIONS.
(A) deliver or cause to be delivered Property against
payment or other consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or dealer selling
for the account of a Portfolio in accordance
with street delivery custom;
(2) for the exchange of interim receipts or
temporary securities for definitive
securities; and
(3) for transfer of securities into the name of
the Fund on behalf of a Portfolio or PNC Bank
or nominee of either, or for exchange of
securities for a different number of bonds,
certificates, or other evidence, representing
the same aggregate face amount or number of
units bearing the same interest rate,
maturity date and call provisions, if any;
provided that, in any such case, the new
securities are to be delivered to PNC Bank.
(B) Unless and until PNC Bank receives Oral
Instructions or Written Instructions to the
contrary, PNC Bank 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 each Portfolio;
(2) collect interest and cash dividends received,
with notice to the Fund, to the account of
each Portfolio;
(3) hold for the account of each Portfolio all
stock dividends, rights and similar
securities issued with respect to any
securities held by PNC Bank; and
(4) execute as agent on behalf of the Fund all
necessary ownership certificates required by
the Internal Revenue Code or the Income Tax
Regulations of the
18
United States Treasury Department or under
the laws of any state now or hereafter in
effect, inserting the Fund's name, on behalf
of a Portfolio, on such certificate as the
owner of the securities covered thereby, to
the extent it may lawfully do so.
(i) SEGREGATED ACCOUNTS.
(i) PNC Bank shall upon receipt of Written
Instructions or Oral Instructions establish and
maintain segregated accounts on its records for
and on behalf of each Portfolio. Such accounts may
be used to transfer cash and securities, including
securities in the Book-Entry System:
(A) for the purposes of compliance by the Fund
with the procedures required by a securities
or option exchange, providing such procedures
comply with the 1940 Act and any releases of
the SEC relating to the maintenance of
segregated accounts by registered investment
companies; and
(B) upon receipt of Written Instructions, for
other proper corporate purposes.
(ii) PNC Bank shall arrange for the establishment of
XXX custodian accounts for such shareholders
holding Shares through XXX accounts, in accordance
with the Fund's prospectuses, 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 Custodian, the Fund, PNC Bank
and the Fund's transfer agent.
(j) PURCHASES OF SECURITIES. PNC Bank shall settle purchased
securities upon receipt of Oral Instructions or Written Instructions on behalf
of the Fund or its investment advisers that specify:
(i) the name of the issuer and the title of the
securities, including CUSIP number if applicable;
19
(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;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker
through whom the purchase was made. PNC Bank
shall upon receipt of securities purchased by or
for a Portfolio pay out of the moneys held for
the account of the Portfolio the total amount
payable to the person from whom or the broker
through whom the purchase was made, provided
that the same conforms to the total amount
payable as set forth in such Oral Instructions
or Written Instructions.
(k) SALES OF SECURITIES. PNC Bank shall settle sold
securities upon receipt of Oral Instructions or Written Instructions on behalf
of the Fund that specify:
(i) the name of the issuer and the title of the
security, including CUSIP number if applicable;
(ii) the number of shares or principal amount sold,
and accrued interest, if any;
(iii) the date of trade 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; and
20
(viii) the Portfolio involved.
PNC Bank shall deliver the securities upon receipt of the total
amount payable to the Portfolio upon such sale, provided that the total amount
payable is the same as was set forth in the Oral Instructions or Written
Instructions. Subject to the foregoing, PNC Bank may accept payment in such form
as shall be reasonably satisfactory to it, and may deliver securities and
arrange for payment in accordance with the customs prevailing among dealers in
securities.
(l) REPORTS; PROXY MATERIALS.
(i) PNC Bank shall furnish to Custodian and the Fund
the following reports:
(A) such periodic and special reports as
Custodian and/or the Fund may reasonably
request;
(B) a monthly statement summarizing all
transactions and entries for the account of
each Portfolio, listing each Portfolio
securities belonging to each Portfolio with
the adjusted average cost of each issue and
the market value at the end of such month and
stating the cash account of each Portfolio
including disbursements;
(C) the reports required to be furnished to the
Fund pursuant to Rule 17f-4; and
(D) such other information as may be agreed upon
from time to time between Custodian and/or
the Fund and PNC Bank.
(ii) PNC Bank shall transmit promptly to the Fund any
proxy statement, proxy material, notice of a call
or conversion or similar communication received by
it as sub-custodian of the Property and PNC Bank
shall use its best efforts, within reasonable
limits, to
21
transmit promptly to the Fund any class action
notices and tender or exchange offers. PNC Bank
shall be under no other obligation to inform the
Fund as to such actions or events.
(m) COLLECTIONS. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PNC Bank) shall be at the sole risk of the Fund. If
payment is not received by PNC Bank within a reasonable time after proper
demands have been made, PNC Bank shall notify the Fund in writing, including
copies of all demand letters, any written responses, memoranda of all oral
responses and shall await instructions from the Fund. PNC Bank shall not be
obliged to take legal action for collection unless and until reasonably
indemnified to its satisfaction. PNC Bank shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not collected in due
course and shall provide the Fund with periodic status reports of such income
collected after a reasonable time.
15. DURATION AND TERMINATION. This Agreement shall be effective on the
date first written above and shall continue for a period of five (5) years (the
"Initial Term"). Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year ("Renewal Terms") each
provided that it may be terminated by the Fund, Custodian or PFPC without
penalty during a Renewal Term upon written notice given at least sixty (60) days
prior to termination. During either the Initial Term or the Renewal Terms, this
Agreement may also be terminated on an earlier date by the Fund, Custodian or
PFPC for cause.
With respect to the Fund, cause shall mean PFPC's material breach of
this Agreement causing it to fail to substantially perform its duties under this
Agreement. In order for such material
22
breach to constitute "cause" under this Paragraph, PFPC must receive written
notice from the Fund specifying the material breach and PFPC shall not have
corrected such breach within a 30-day period. Custodian may terminate this
Agreement for cause immediately in the event of the appointment of a conservator
or receiver for PNC Bank or any assignee or successor hereunder by the
applicable regulator or upon the happening of a like event at the direction of
an appropriate regulatory agency or court of competent jurisdiction. With
respect to PFPC, cause includes, but is not limited to, the failure of RSMC, on
behalf of the Fund and each of the Portfolios, to pay the compensation set forth
in writing pursuant to Paragraph 11 of this Agreement after it has received
written notice from PFPC specifying the amount due and RSMC shall not have paid
that amount within a 30-day period. A constructive termination of this Agreement
will result where a substantial percentage of the Fund's assets are transferred,
merged or are otherwise removed from the Fund to another fund(s) that is not
serviced by PFPC.
Any notice of termination for cause shall be effective sixty (60) days
from the date of any such notice. Upon the termination hereof, RSMC shall pay to
PFPC such compensation as may be due for the period prior to the date of such
termination. Any termination effected shall not affect the rights and
obligations of the parties under Paragraphs 12 and 13 hereof.
In the event this Agreement is terminated (pending appointment of a
successor to PNC Bank or vote of the shareholders of the Fund to dissolve or to
function without a custodian of its cash, securities or other property), PNC
Bank shall not deliver cash, securities or other property of the Portfolios to
the Fund. If a successor to PNC Bank is not appointed by Custodian or the Fund
within such sixty (60) day period, PNC Bank may deliver them to a bank or trust
company of PNC
23
Bank's 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 the terms of this
Agreement. PNC Bank shall not be required to make any such delivery or payment
until full payment shall have been made to PNC Bank of all of its fees,
compensation, costs and expenses. PNC Bank shall have a security interest in and
shall have a right of setoff against the Property as security for the payment of
such fees, compensation, costs and expenses.
16. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notice shall be addressed (a) if to PNC Bank at
Airport Business Center, International Court 2, 000 Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxx 00000, marked for the attention of the Custodian Services
Department (or its successor) (b) if to Custodian, 0000 Xxxxx Xxxxxx Xx.,
Xxxxxxxxxx, DE., Attn: Corporate Custody (c) if to the Fund, c/o Wilmington
Trust Company, 0000 Xxxxx Xxxxxx Xx., Xxxxxxxxxx, DE., Attn: Asset Management
Department or (d) if to none 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.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver
24
is sought.
18. DELEGATION; ASSIGNMENT. Subject to the provision of Section 14(c)
hereof, PNC Bank may assign its rights and delegate its duties hereunder to any
wholly-owned direct or indirect subsidiary of PNC Bank, National Association or
PNC Bank Corp., provided that (i) PNC Bank gives the Fund thirty (30) days'
prior written notice; (ii) the delegate (or assignee) agrees with PNC Bank and
the Fund to comply with all relevant provisions of the 1940 Act; and (iii) PNC
Bank and such delegate (or assignee) promptly provide such information as the
Fund may request, and respond to such questions as the Fund may ask, relative to
the delegation (or assignment), including (without limitation) the capabilities
of the delegate (or assignee).
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. MISCELLANEOUS.
(a) 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 and Oral Instructions.
(b) 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.
25
(c) 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.
(d) 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.
(e) 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.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party
to this Agreement shall constitute the valid and binding execution hereof by
such party.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By:_____________________________
Title:__________________________
WILMINGTON TRUST COMPANY
By:_____________________________
Title:__________________________
XXXXXX SQUARE MANAGEMENT CORPORATION
By:_____________________________
Title:__________________________
ACKNOWLEDGED AND AGREED TO:
THE XXXXXX SQUARE FUND
By:_____________________
Title:__________________
27
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
