CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of August 27, 2003 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and FIRST TRUST VALUE LINE(R) DIVIDEND FUND, a Massachusetts
business trust (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:
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(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.
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(d) "Book-Entry System" means the 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 registered with the SEC
under the 1934 Act.
(e) "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.
(f) "PFPC Trust" means PFPC Trust Company or a subsidiary or
affiliate of PFPC Trust Company.
(g) "SEC" means the Securities and Exchange Commission.
(h) "Securities Laws" mean the 1933 Act, the 1934 Act and the 1940
Act.
(i) "Shares" mean the shares of beneficial interest of any series
or class of the Fund.
(j) "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.
(k) "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 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 or its affiliates to provide
services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreements;
(d) a copy of the distribution/underwriting agreement with respect
to each class of Shares;
(e) a copy of the Fund's administration agreement;
(f) copies of any distribution and/or shareholder servicing plans
and agreements made in respect of the Fund; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. Compliance with Laws.
PFPC Trust undertakes to comply with material applicable requirements
of the Securities Laws and material 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.
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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. 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's ability to rely upon such Oral
Instructions.
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.
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(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 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 indemnified by
the Fund and without liability for any action PFPC Trust takes
or does not take in reliance upon directions or advice or Oral
Instructions or Written Instructions PFPC Trust receives from
or on behalf of 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. 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.
7. Records; Visits.
(a) 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 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's normal business
hours. Upon the reasonable request of the Fund, copies of any
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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.
(b) PFPC Trust shall keep the following records:
(i) all books and records as are customarily maintained
by the custodian for a registered investment company.
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: (a) it is already known to the receiving party at the time it is
obtained; (b) it is or becomes publicly known or available through no
wrongful act of the receiving party; (c) it is rightfully received from
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a third party who, to the best of the receiving party's knowledge, is
not under a duty of confidentiality; (d) it is released by the
protected party to a third party without restriction; (e) it 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) it is relevant to the defense of any claim or cause of
action asserted against the receiving party; or (g) it has been or is
independently developed or obtained by the receiving party.
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 equipment failure provided such loss or
interruption is not caused by PFPC Trust's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties or obligations
under this Agreement.
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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.
(a) The Fund agrees to indemnify, defend and hold harmless PFPC
Trust and its affiliates, including their respective officers,
directors, agents and employees from all taxes, charges,
expenses, assessments, claims and liabilities (including,
without limitation, reasonable attorneys' fees and
disbursements and liabilities arising under the Securities
Laws and any state and foreign securities and blue sky laws)
("Claims") 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's or its affiliates' own willful misfeasance, bad faith,
negligence or reckless disregard in the performance of PFPC
Trust's activities under this Agreement. The provisions of
this Section 13 shall survive termination of this Agreement.
(b) Indemnification of the Fund. PFPC agrees to defend, indemnify
and hold the Fund and its officers, directors and employees
harmless from any and all Claims arising directly or
indirectly from the negligence, bad faith or willful
misfeasance of PFPC in the performance of its duties
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hereunder. Notwithstanding the foregoing, the Fund shall not
be indemnified against any Claim caused by the Fund's or the
Fund's other service providers' willful misfeasance, bad faith
or negligence.
(c) Indemnification Procedure.
(i) Notice of the Action. A party that seeks
indemnification under this Agreement must promptly
give the other party notice of any legal action;
provided, however, that a delay in notice does not
relieve an indemnifying party of any liability to an
indemnified party, except to the extent the
indemnifying party shows that the delay prejudiced
the defense of the action.
(ii) Participating in or Assuming the Defense. The
indemnifying party may participate in the defense at
any time or it may assume the defense by giving
notice to the other party. After assuming the
defense, the indemnifying party:
(1) must select an attorney that is satisfactory to
the other party;
(2) is not liable to the other party for any later
attorney's fees or for any other later expenses that
the other party incurs, except for reasonable
investigation costs;
(3) must not compromise or settle the action without
the other party's consent (but the other party must
not unreasonably withhold its consent); and
(4) is not liable for any compromise or settlement
made without its consent.
(iii) Failing to Assume the Defense. If the indemnifying
party fails to participate in or assume the defense
within 15 days after receiving notice of the action,
the indemnifying party is bound by any determination
made in the action or by any compromise or settlement
made by the other party.
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14. Responsibility of PFPC Trust.
(a) PFPC Trust shall be under no duty to take any action hereunder
on behalf of the 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's
failure to perform its duties under this Agreement to the
extent such damages arise out of PFPC Trust's willful
misfeasance, bad faith, negligence or reckless disregard of
its duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
(i) PFPC Trust shall not be liable for losses, delays,
failure, errors, interruption or loss of data occurring
directly or indirectly by reason of circumstances beyond its
reasonable control, including without limitation acts of God;
action or inaction of civil or military authority; public
enemy; war; terrorism; riot; fire; flood; sabotage; epidemics;
labor disputes; civil commotion; interruption, loss or
malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature;
or non-performance by a third party; 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, authority or
lack thereof, or truthfulness or accuracy or lack thereof, of
any instruction, direction, notice, instrument or other
information which PFPC Trust reasonably believes to be
genuine.
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(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) Each party shall have a duty to mitigate damages for which the
other party may become responsible.
(e) 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).
(f) The provisions of this Section 14 shall survive termination of
this Agreement.
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.
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(b) Receipt and Disbursement of Money. PFPC Trust, acting upon
Written Instructions, shall open and maintain separate
accounts in the Fund's name using all cash received from or
for the account of the Fund, subject to the terms of this
Agreement.
PFPC Trust shall make cash payments from or for the Account of
the Fund only for:
(i) purchases of securities in the name of the Fund, PFPC
Trust, PFPC Trust's 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 or redemption of Shares of the Fund
delivered to PFPC Trust;
(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, license and management fees
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 to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(ix) 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.
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(c) Receipt of Securities; Subcustodians.
(i) PFPC Trust shall hold all securities received by it
for the Account 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 or through a
sub-custodian or depository. All such securities
shall be held or disposed of only upon Written
Instructions of the Fund 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 investment, 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 agent of the
Fund withdraw any securities.
At PFPC Trust's 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 (or 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 (or as otherwise provided in the 1940 Act).
PFPC Trust shall remain responsible for the acts and
omissions of any sub-custodian chosen by PFPC Trust
under the terms of this sub-section (c) to the same
extent that PFPC Trust is responsible for its own
acts and omissions under this Agreement.
(d) Transactions Requiring Instructions. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC
Trust shall:
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(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;
(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
by the Fund, but only on receipt of payment therefor;
and pay out monies of the Fund in connection with
such repurchase agreements, but only upon the
delivery of the securities;
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(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;
(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 is
authorized and instructed, on a continuous basis, to deposit
in Book-Entry Systems and other depositories all securities
belonging to the Fund eligible for deposit therein and to
utilize Book-Entry Systems 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. Notwithstanding anything in this Agreement to the
contrary, PFPC Trust's use of a Book-Entry System shall comply
with the requirements of Rule 17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other
depository as follows:
(i) With respect to securities of the Fund which are
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maintained in a 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 a 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 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, a Book-Entry System, another
depository, a sub-custodian, or any duly appointed nominee of
the Fund, PFPC Trust, Book-Entry System, depository or
sub-custodian. 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.
(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
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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.
(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 called, redeemed, retired or otherwise
become payable (on a mandatory basis) 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:
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(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 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
Page 18
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); and
(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 a
Book-Entry System or other depository:
(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 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 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
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;
Page 19
(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 monies 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;
(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 the other provisions thereof,
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.
Page 20
(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
corresponding security identification
number) held at the end of such month and
stating the cash balance of the Fund at the
end of such month.
(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, 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. For clarification, upon
termination of this Agreement PFPC Trust shall have
no responsibility to transmit such material or to
inform the Fund or any other person of such actions
or events.
(m) Crediting of Accounts. PFPC Trust may in its sole discretion
credit an Account with respect to income, dividends,
distributions, coupons, option premiums, other payments or
similar items prior to PFPC Trust's actual receipt thereof,
and in addition PFPC Trust may in its sole discretion credit
or debit the assets in an Account on a contractual settlement
date with respect to any sale, exchange or purchase applicable
to the Account; provided that nothing herein or otherwise
shall require PFPC Trust to make any advances or to credit any
Page 21
amounts until PFPC Trust's actual receipt thereof. 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's 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's 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. 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.
(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
Page 22
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.
16. Duration and Termination.
(a) This Agreement shall be effective on the date first written
above and shall continue for a period of five (5) years (the
"Initial Term").
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or PFPC provides
written notice to the other of its intent not to renew. Such
notice must be received not less than ninety (90) days prior
to the expiration of the Initial Term or the then current
Renewal Term.
(c) If a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party")
the other party (the "Non-Defaulting Party") may give written
notice thereof to the Defaulting Party, and if such material
Page 23
breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting
Party may terminate this Agreement by giving thirty (30) days
written notice of such termination to the Defaulting Party. In
all cases, termination by the Non-Defaulting Party shall not
constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against
the Defaulting Party.
In the event this Agreement is terminated (pending appointment
of a successor to PFPC Trust or vote of the shareholders of
the Fund to dissolve or to function without a custodian of its
cash, securities or other property), PFPC Trust shall not
deliver cash, securities or other property of the Fund to the
Fund. It may deliver them to a bank or trust company of PFPC
Trust'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 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.
Page 24
17. Notices. Notices shall be addressed (a) if to PFPC Trust at 0000
Xxxxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000,
Attention: Xxx Xxxxxxxx; (b) if to the Fund, at 0000 Xxxxxxxxxxx Xxxx,
Xxxxx, XX 00000, Attention: W. Xxxxx Xxxxxxx; 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 electronic, hand 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 written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
19. Delegation; Assignment. PFPC Trust may assign its rights and delegate
its duties hereunder to any affiliate of PFPC Trust or of The PNC
Financial Services Group, Inc., provided that PFPC Trust gives the Fund
30 days' prior written notice of such assignment or delegation.
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. 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.
Page 25
(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
services provided under this Agreement. PFPC Trust disclaims
any warranty of title or non-infringement except as otherwise
set forth in this Agreement.
(c) No Changes that Materially Affect Obligations. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees
not to make any modifications to its registration statement or
adopt any policies which would affect materially the
obligations or responsibilities of PFPC Trust hereunder
without the prior written approval of PFPC Trust, which
approval shall not be unreasonably withheld or delayed.
(d) 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.
(e) 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.
Page 26
(f) 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.
(g) 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.
(h) Facsimile Signatures. The facsimile signature of any party to
this Agreement shall constitute the valid and binding
execution hereof by such party.
(i) The Fund and PFPC Trust agree that the obligations of the Fund
under the Agreement shall not be binding upon any of the
directors, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Fund
individually, but are binding only upon the assets and
property of the Fund (or applicable series thereof), as
provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the
directors of the Fund, and signed by an authorized officer of
the Fund, acting as such, and neither such authorization by
such directors nor such execution and delivery by such officer
shall be deemed to have been made by any of them or any
shareholder of the Fund individually or to impose any
liability on any of them or any shareholder of the Fund
personally, but shall bind only the assets and property of the
Fund (or applicable series thereof), as provided in the
Articles of Incorporation or Declaration of Trust.
Page 27
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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FIRST TRUST VALUE LINE(R) DIVIDEND FUND
By:
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Title:
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