EXHIBIT 8(a)
CUSTODY AGREEMENT
AGREEMENT dated as of June 1, 1994, between THE PBHG FUNDS, INC., a
corporation organized under the laws of the State of Maryland, having its
principal office and place of business at 000 Xxxxxxxxxx Xxxx, Xxxxx, XX 00000
(the "Company"), and THE NORTHERN TRUST COMPANY (the "Custodian"), an Illinois
Company with its principal place of business at 00 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000.
WITNESSETH:
That for and in consideration of the mutual promises hereinafter set
forth, the Company and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) The "1940 Act" shall mean the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
(b) "Administrator" shall mean the person which performs the
administration functions for the Company.
(c) "Authorized Person" shall be deemed to include the Chairman of the
Board of Directors, the President, and any Vice President, the
Secretary, the Treasurer or any other person, whether or not any such
person is an officer or employee of the Company, duly authorized by the
Board of Directors to give Oral Instructions and Written Instructions
on behalf of the Company and listed in the certification annexed hereto
as Schedule A or such other certification as may be received by the
Custodian from time to time.
(d) "Board of Directors" shall mean the Board of Directors of the
Company.
(e) "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(f) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Company by any two Authorized Persons or any
two officers thereof.
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(g) "Articles of Incorporation" shall mean the Articles of
Incorporation of the Company dated July 31, 1992, as amended.
(h) "Depository" shall mean The Depository Company, a clearing agency
registered with the Securities and Exchange Commission under Section
17(a) of the Securities Exchange Act of 1934, as amended, its successor
or successors and its nominee or nominees, in which the Custodian is
hereby specifically authorized to make deposits. The term "Depository"
shall further mean and include any other person to be named in a
Certificate authorized to act as a depository under the 1940 Act, its
successor or successors and its nominee or nominees.
(i) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations,
where the purchase or sale of such securities nominally requires
settlement in federal funds on the same day as such purchase or sale,
and repurchase and reverse repurchase agreements with respect to any of
the foregoing types of securities.
(j) "Oral Instructions" shall mean an oral communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(k) "Portfolio" refers to the PBHG International Fund or any such other
separate and distinct investment portfolio as may from time to time be
created and designated by the Company in accordance with the provisions
of the Articles of Incorporation and which the Company and the
Custodian shall have agreed in writing shall be subject to this
Agreement pursuant to the provisions of Section 5(b).
(l) "Prospectus" shall mean the Company's current prospectus and
statement of additional information relating to the registration of the
Company's Shares under the Securities Act of 1933, as amended.
(m) "Shares" refers to the shares of beneficial interest of the
Company.
(n) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodity interests and investments from time to time owned
by the Company.
(o) "Sub-Custodian" shall mean and include (i) any branch of the
Custodian, (ii) any branch of a "qualified U.S. bank," as that term is
defined in Rule 00x-0 xxxxx xxx 0000 Xxx, (xxx) any "eligible foreign
custodian," as that term is defined in Rule 17f-5 under the 1940 Act,
approved by the Board of Directors and having a contract with the
Custodian which contract has been approved by the Board of Directors,
and (iv) any securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States,
which operates the central system for handling of securities
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or equivalent book-entries in that country or a transnational system
for the central handling of securities or equivalent book-entries,
which securities depository or clearing agency has been approved by the
Board of Directors; provided, that the Custodian or a Sub-Custodian has
entered into an agreement with such securities depository or clearing
agency.
(p) "Transfer Agent" shall mean the person which performs as the
transfer agent, dividend disbursing agent and shareholder servicing
agent for the Company.
(q) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system whereby the receiver
of such communication is able to verify through codes or otherwise with
a reasonable degree of certainty the authenticity of the sender of such
communication; however, "Written Instructions" from the Administrator
to the Custodian shall mean an electronic communication transmitted by
fund accountants and their managers (who have been provided an access
code by the Administrator) and actually received by the Custodian.
2. Appointment of Custodian.
(a) The Company hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies owned by or in the
possession of the Company during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
3. Appointment and Removal of Sub-Custodians.
(a) The Custodian may appoint one or more Sub-Custodians to act as
Depository or Depositories or as sub-custodian or sub-custodians of
Securities and moneys at any time owned by any Portfolio, upon terms
and conditions as are specified in this Agreement. The Custodian shall
oversee the maintenance of any Securities or moneys of any Portfolio by
any Sub-Custodian.
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors in connection with this Agreement, the Custodian wishes to
appoint other SubCustodians to hold property of the Portfolios, it will
so notify the Company and provide it with information reasonably
necessary to determine any such new SubCustodian's eligibility under
Rule 17f-5 under the 1940 Act, including a copy of the proposed
agreement with such Sub-Custodian. The Company shall within 30 days
after receipt of such notice and information give a written approval or
disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
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(d) If the Custodian intends to remove any Sub-Custodian previously
approved by the Board of Directors, it shall so notify the Company and
move the property of the Portfolio(s) deposited with such Sub-Custodian
to another SubCustodian previously approved by the Board of Directors.
The Custodian shall take such steps as may be required to remove any
Sub-Custodian that has ceased to meet the requirements of Rule 17f-5
under the 1940 Act.
(e) The Custodian hereby warrants to the Company that in its opinion,
after due inquiry, the established procedures to be followed by each
Sub-Custodian (that is not being used as a foreign securities
depository or clearing agency) holding property of a Portfolio pursuant
to this Agreement afford protection for such property not materially
different from that afforded by the Custodian's established procedures
with respect to similar property held by it (and its securities
depositories) in Chicago, Illinois.
4. Use of Sub-Custodians.
With respect to property of a Portfolio which is maintained by the
Custodian in the physical custody of a Sub-Custodian pursuant to
Section 3:
(a) The Custodian will identify on its books as belonging to the
particular Portfolio any property held by such Sub-Custodian.
(b) In the event that a Sub-Custodian permits any of the Securities
placed in its care to be held in an eligible foreign securities
depository, such Sub-Custodian will be required by its agreement with
the Custodian to identify on its books such Securities as being held
for the account of the Custodian as a custodian for its customers.
(c) Any Securities held by a Sub-Custodian will be subject only to the
instructions of the Custodian or its agents; and any Securities held in
an eligible foreign securities depository for the account of a
Sub-Custodian will be subject only to the instructions of such
Sub-Custodian.
(d) The Custodian will only deposit property of a Portfolio in an
account with a Sub-Custodian which includes exclusively the assets held
by the Custodian for its customers, and will cause such account to be
designated by such Sub-Custodian as a special custody account for the
exclusive benefit of customers of the Custodian.
5. Compensation.
(a) The Company will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule B and incorporated herein for the
existing Portfolios. Such Fee Schedule does not include out-of-pocket
disbursements of the Custodian for which the Custodian shall be
entitled to xxxx separately. Out-of-pocket disbursements may include
only the items specified in Schedule B and which may be modified by the
Custodian if the Company consents in writing to the modification.
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(b) The parties hereto will agree upon the compensation for acting as
Custodian for any Portfolio hereafter established and designated, and
at the time that the Custodian commences serving as such for said
Portfolio, such agreement shall be reflected in a Fee Schedule for that
Portfolio, dated and signed by an officer of each party hereto, which
shall be attached to Schedule B of this Agreement.
(c) Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule B of this Agreement a revised Fee
Schedule, dated and signed by an officer of each party hereto.
(d) The Custodian will xxxx the Company for its services to each
Portfolio hereunder as soon as practicable after the end of each
calendar quarter, and said xxxxxxxx will be detailed in accordance with
the Fee Schedule for the Company. The Company will promptly pay to the
Custodian the amount of such billing. The Custodian shall have a lien
on the property in each Portfolio for any compensation or expense
amount owing to the Custodian in connection with such Portfolio from
time to time under this Agreement.
(e) The Custodian (not the Company) will be responsible for the payment
of the compensation of each Sub-Custodian.
6. Custody of Cash and Securities.
(a) Receipt and Holding of Assets. The Company will deliver or cause to
be delivered to the Custodian and the Sub-Custodians all Securities and
monies owned by the Company at any time during the period of this
Agreement and shall specify the Portfolio to which the Securities and
monies are to be specifically allocated. The Custodian will not be
responsible for such Securities and monies until actually received by
it or by a Sub-Custodian. The Company shall instruct the Custodian from
time to time in its sole discretion, by means of Written instructions,
as to the manner in which and in what amounts Securities, and monies of
a Portfolio are to be deposited on behalf of such Portfolio in the
Book-Entry System or the Depository; provided, however, that prior to
the deposit of Securities of a Portfolio in the Book-Entry System or
the Depository, including a deposit in connection with the settlement
of a purchase or sale, the Custodian shall have received a Certificate
specifically approving such deposits by the Custodian or a
Sub-Custodian in the Book-Entry System of the Depository. Securities
and monies of a Portfolio deposited in the Book-Entry System or the
Depository will be represented in accounts which include only assets
held by the Custodian for its customers.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for each Portfolio and shall credit to the
separate account all monies received by it or a Sub-Custodian for the
account of such Portfolio and shall disburse, or cause a Sub-Custodian
to disburse, the same only:
1. In payment for Securities purchased for the Portfolio, as
provided in Section 7 hereof;
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2. In payment of dividends or distributions with respect to
the Shares of such Portfolio, as provided in Section 9 hereof;
3. In payment of original issue or other taxes with respect to
the Shares of such Portfolio, as provided in Section 10(c)
hereof;
4. In payment for Shares which have been redeemed by such
Portfolio, as provided in Section 10 hereof;
5. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Company, as
provided in Sections 5 and 14(h) hereof;
6. Pursuant to Written Instructions setting forth the name of
the Portfolio and the name and address of the person to whom
the payment is to be made, the amount to be paid and the
purpose for which payment is to be made.
(c) Fail Float. In the event that any payment made for a Portfolio
under this Section 6 exceeds the funds available in that Portfolio's
account, the Custodian or relevant Sub-Custodian, as the case may be,
may, in its discretion, advance the Company on behalf of that Portfolio
an amount equal to such excess and such advance shall be deemed an
overdraft from the Custodian or such Sub-Custodian to that Portfolio
payable on demand, bearing interest at the rate of interest customarily
charged by the Custodian or such Sub-Custodian on similar overdrafts.
(d) Confirmation and Statements. Promptly after the close of business
on each business day, the Custodian shall furnish the Company with
confirmations and a summary of all transfers to or from the account of
each Portfolio during said day. Such summary shall include without
limitation, as to property acquired for a Portfolio, the identity of
the entity having physical possession of such property. Where
securities purchased by a Portfolio are in a fungible bulk of
securities registered in the name of the custodian (or its nominee) or
shown on the Custodian's account on the books of the Depository, the
Book-Entry System or a Sub-Custodian, the Custodian shall by book entry
or otherwise identify the quantity of those securities belonging to
such Portfolio. At least monthly, the Custodian shall furnish the
Company with a detailed statement of the Securities and monies held by
it and all Sub-Custodians for each Portfolio. In the absence of the
filing in writing with the Custodian by the Company of exceptions or
objections to any such statement within 60 days after the date that a
material defect is reasonably discoverable, the Company shall be deemed
to have approved such statement; and in such case or upon written
approval of the Company of any such statement the Custodian shall, to
the extent permitted by law and provided the Custodian has met the
standard of care in Section 14 hereof, be released, relieved and
discharged with respect to all matters and things set forth in such
statement as though such statement had been settled by the decree of a
court of competent jurisdiction in an action in which the Company and
all persons having any equity interest in the Company were parties.
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(e) Registration of Securities and Physical Separation. All Securities
held for a Portfolio which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be
held by the Custodian or a Sub-Custodian in that form; all other
Securities held for a Portfolio may be registered in the name of that
Portfolio, in the name of any duly appointed registered nominee of the
Custodian of a Sub-Custodian as the Custodian or such Sub-Custodian may
from time to time determine, or in the name of the Book-Entry System or
the Depository or their successor or successors, or their nominee or
nominees. The Company reserves the right to instruct the Custodian as
to the method of registration and safekeeping of the Securities. The
Company agrees to furnish to the Custodian appropriate instruments to
enable the Custodian or any Sub-Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System or the Depository, any
Securities which the Custodian or a Sub-Custodian may hold for the
account of a Portfolio and which may from time to time be registered in
the name of a Portfolio. The Custodian shall hold all such Securities
specifically allocated to a Portfolio which are not held in the
Book-Entry System or the Depository in a separate account for such
Portfolio in the name of such Portfolio physically segregated at all
times from those of any other person or persons.
(f) Segregated Accounts. Upon receipt of a Written Instruction, the
Custodian will establish segregated accounts on behalf of a Portfolio
to hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such
Segregated Accounts only as it shall be directed by subsequent Written
Instruction.
(g) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian, by itself or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall, or
shall instruct the relevant Sub-Custodian to:
1. Collect all income due or payable with respect to
Securities held for a Portfolio in accordance with this
Agreement;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired,
or otherwise become payable;
3. Surrender Securities in temporary form for derivative
Securities;
4. Execute any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for
the account of each Portfolio all rights and similar
Securities issued with respect to any Securities held by the
Custodian or relevant Sub-Custodian for each Portfolio.
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If the Custodian or any Sub-Custodian causes the
account of a Portfolio to be credited on the payable date for
interest, dividends or redemptions, the particular Portfolio
involved will promptly return to the Custodian any such amount
or property so credited upon oral or written notification that
neither the custodian nor the relevant Sub-Custodian can
collect such amount or property in the ordinary course of
business. The Custodian or such Sub-Custodian, as the case may
be, shall have no duty or obligation to institute legal
proceedings, file a claim or proof of claim in any insolvency
proceeding or take any other action with respect to the
collection of such amount or property beyond its ordinary
collection procedures.
(h) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written instruction and not otherwise, except for subparagraphs 5, 6,
7, and 8 of this section 6(h) which may be effected by Oral or Written
instructions, the Custodian, directly or through the use of the
Book-Entry System or the Depository, shall, or shall instruct the
relevant Sub-Custodian to:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written
Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Company as owner of
any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for a
Portfolio in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for a
Portfolio to any protective committee, reorganization
committee or other person in connection with the
reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement in the
separate account for each such Portfolio certificates of
deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of a
Portfolio and take such other steps as shall be stated in
Written Instructions to be for the purpose of effectuating any
duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Company;
5. Deliver Securities upon sale of such Securities for the
account of a Portfolio pursuant to Section 7;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such
Securities entered into by a Portfolio;
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7. Deliver Securities owned by a Portfolio to the issuer
thereof or its agent when such Securities are called,
redeemed, retired or otherwise become payable; provided,
however, that in any such case the cash or other consideration
is to be delivered to the Custodian or Sub-Custodian, as the
case may be;
8. Deliver Securities for delivery in connection with any
loans of securities made by a Portfolio but only against
receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Company which may be in the form
of cash or obligations issued by the United States Government,
its agencies or instrumentalities;
9. Deliver Securities for delivery as security in connection
with any borrowings by a Portfolio requiring a pledge of
Portfolio assets, but only against receipt of the amounts
borrowed;
10. Deliver Securities to the Transfer Agent or to the holders
of Shares in connection with distributions in kind, as may be
described from time to time in the Prospectus, in satisfaction
of requests by holders of Shares for repurchase or redemption;
11. Deliver Securities owned by any Portfolio as collateral in
connection with short sales by such Portfolio of common stock
for which such Portfolio owns the stock or owns preferred
stocks or debt securities convertible or exchangeable, without
payment of further consideration, into shares of the common
stock sold short;
12. Deliver Securities owned by any Portfolio for any purpose
expressly permitted by and in accordance with procedures
described in the Prospectus; and
13. Deliver Securities owned by any Portfolio for any other
proper business purpose, but only upon receipt of, in addition
to Written Instructions, a certified copy of a resolution of
the Board of Directors signed by an Authorized Person and
certified by the Secretary of the Company, specifying the
Securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper business purpose, and naming the person or persons
to whom delivery of such Securities shall be made.
(i) Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account of a
Portfolio.
7. Purchase and Sale of Investments of a Portfolio.
(a) Promptly after each purchase of Securities for a Portfolio, the
Company shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a Written
Instruction and (ii) with respect to each purchase of
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Money Market Securities, either a Written Instruction or Oral
Instruction, in either case specifying with respect to each purchase:
(1) the name of the Portfolio to which such Securities are to be
specifically allocate; (2) the name of the issuer and the title of the
Securities; (3) the number of shares or the principal amount purchased
and accrued interest, if any; (4) the date of purchase and settlement;
(5) the purchase price per unit; (6) the total amount payable upon such
purchase; (7) the name of the person from whom or the broker through
whom the purchase was made, if any; (8) whether or not such purchase is
to be settled through the Book-Entry System or the Depository; and (9)
the Sub-Custodian to hold such Securities (if not the Custodian) or
whether the Securities purchased are to be deposited in the Book-Entry
System or the Depository. The Custodian or specified Sub-Custodian
shall receive the Securities purchased by or for a Portfolio and upon
receipt thereof shall pay to the broker or other person designated by
the Company out of the monies held for the account of such Portfolio
the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Written or
Oral Instruction.
(b) Promptly after each sale of Securities of a Portfolio, the Company
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Written
Instruction, and (ii) with respect to each sale of Money Market
Securities, either Written Instructions or Oral Instructions, in either
case specifying with respect to such sale: (1) the name of the
Portfolio to which the Securities sold were specifically allocated; (2)
the name of the issuer and the title of the Securities; (3) the number
of shares or principal amount sold, and accrued interest, if any; (4)
the date of sale; (5) the sale price per unit; (6) the total amount
payable to the Portfolio upon such sale; (7) the name of the broker
through whom or the person to whom the sale was made; and (8) whether
or not such sale is to be settled through the Book-Entry System or the
Depository. The Custodian or relevant Sub-Custodian shall deliver or
cause to be delivered the Securities to the broker or other person
designated by the Company upon receipt of the total amount payable to
such Portfolio upon such sale, provided that the same conforms to the
total amount payable to such Portfolio as set forth in such Written or
Oral Instruction. Subject to the foregoing, the Custodian or relevant
Sub-Custodian may accept payment in such form as shall be satisfactory
to it, and may deliver Securities and arrange for payment in accordance
with the customs prevailing among dealers in Securities.
8. Lending of Securities.
If any Portfolio is permitted by the terms of the Articles of
Incorporation and the Prospectus to lend Securities, then the Board of
Directors may approve a separate written agreement between the Company
and the Custodian authorizing the Custodian to lend such Securities.
Such agreement may provide for the payment of additional reasonable
compensation to the Custodian.
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9. Payment of Dividends or Distributions.
(a) The Company shall furnish to the Custodian the vote of the Board of
Directors or the Dividend Committee thereof, as the case may be,
certified by the Secretary of the Company (i) authorizing the
declaration of distributions with respect to a Portfolio on a specified
periodic basis and authorizing the Custodian to rely on Oral or Written
Instructions specifying the date of the declaration of such
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per Share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the payment date,
or (ii) setting forth the date of declaration of any distribution by a
Portfolio, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such vote, Oral Instructions, or
Written Instructions, as the case may be, the Custodian shall pay the
total amount payable to the Transfer Agent out of the monies
specifically allocated to and held for the account of the appropriate
Portfolio.
10. Sale and Redemption of Shares of the Company.
(a) Whenever the Company shall sell any Shares of a Portfolio, the
Company shall deliver or cause to be delivered to the Custodian a
Written Instruction duly specifying:
1. The name of the Portfolio whose Shares were sold;
2. The number of Shares sold, trade date, and price; and
3. The amount of money to be received by the Custodian for the sale
of such Shares.
The Custodian understands and agrees that Written Instructions
may be furnished subsequent to the purchase of Shares of a Portfolio
and that the information contained therein will be derived from the
sales of Shares as reported to the Company by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Portfolio
specified in (a)(l) above.
(c) Upon issuance of any Shares of a Portfolio in accordance with the
foregoing provisions of this Section 10, the Custodian shall pay all
original issue or other taxes required to be paid in connection with
such issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
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(d) Except as provided hereafter, whenever any Shares of a Portfolio
are redeemed, the Company shall cause the Transfer Agent to promptly
furnish to the Custodian Written Instructions specifying:
1. The name of the Portfolio whose Shares were redeemed;
2. The number of Shares redeemed; and
3. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained in
such Written Instructions will be derived from the redemption of Shares as
reported to the Company by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting of Shares of
a Portfolio being redeemed pursuant to valid instructions described in
the Prospectus, the Custodian shall make payment Agent out of the
monies specifically allocated to and held for the Portfolio specified
in (d)(1) above of the total amount specified Instruction issued
pursuant to paragraph (d) of this Section 10.
11. Indebtedness.
(a) The Company will cause to be delivered to the Custodian
(excluding the Custodian) from which the Company borrows money
Securities as collateral, a notice or undertaking in the form current!
any such bank setting forth the amount which such bank will loan the
Company against delivery of a stated amount of collateral. The Ca
promptly deliver to the Custodian Written Instructions stating with
such borrowing: (1) the name of the Portfolio for which the borrow
made; (2) the name of the bank; (3) the amount and terms of the bc
which may be set forth by incorporating by reference an attached p
note, duly endorsed by the Company, or other loan agreement; (4) date,
if known, on which the loan is to be entered into (the "borrowing
date"); (5) the date, if known, on which the loan becomes due and
payable; (6) the total a to the Company for the separate account of the
Portfolio on the borrow date; (7) the market value of Securities to be
delivered as collateral for s including the name of the issuer, the
title and the number of shares principal amount of any particular
Securities; (8) whether the Custodian is to deliver such collateral
through the Book-Entry System or the Depository; and (9) a statement
that such loan is in conformance with the 1940 Act and Prospectus.
(b) Upon receipt of the Written Instruction referred to in paragraph
(a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set
forth in the Written Instruction. The Custodian may, at the option of
the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver as additional collateral in the manner directed by the
Company
12
from time to time such Securities specifically allocated to such
Portfolio as may be specified in Written Instruction to collateralize
further any transaction described in this Section 11. The Company shall
cause all Securities released from collateral status to be returned
directly to the Custodian, and the Custodian shall receive from time to
time such return of collateral as may be tendered to it. In the event
that the Company fails to specify in Written Instruction all of the
information required by this Section 11, the Custodian shall not be
under any obligation to deliver any Securities. Collateral returned to
the Custodian shall be held hereunder as it was prior to being used as
collateral.
12. Corporate Action.
Whenever the Custodian or any Sub-Custodian (other than a foreign
securities depository or clearing agency) receives information
concerning Securities held for a Portfolio which requires discretionary
action by the beneficial owner of the Securities (other than a proxy),
such as subscription rights, bond issues, stock repurchase plans and
rights offerings, or legal notices or other material intended to be
transmitted to Securities holders ("Corporate Actions"), the Custodian
will give the Company notice of such Corporate Actions to the extent
that the Custodian's central corporate actions department has actual
knowledge of a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action
is received which bears an expiration date, the Custodian will endeavor
to obtain Written or Oral Instructions from the Company, but if such
Instructions are not received in time for the Custodian to take timely
action, or actual notice of such Corporate Action was received too late
to seek such Instructions, the Custodian is authorized to sell, or
cause a Sub-Custodian to sell, such rights entitlement or fractional
interest and to credit the applicable account with the proceeds and to
take any other action it deems, in good faith, to be appropriate, in
which case, provided it has met the standard of care in Section 14
hereof, it shall be held harmless by the particular Portfolio involved
for any such action.
The Custodian will deliver proxies to the Company or its designated
agent pursuant to special arrangements which may have been agreed to in
writing between the parties hereto. Such proxies shall be executed in
the appropriate nominee name relating to Securities registered in the
name of such nominee but without indicating the manner in which such
proxies are to be voted; and where bearer Securities are involved,
proxies will be delivered in accordance with Written or Oral
Instructions from Authorized Persons.
13. Persons Having Access of the Portfolios.
(a) No Company or agent of the Company, and no officer, director,
employee or agent of the Company's investment adviser, of any
sub-investment adviser of the Company, or of the Administrator, shall
have physical access to the assets of the Company held by the Custodian
or any Sub-Custodian or be authorized or permitted to withdraw any
investments of the Company, nor shall the Custodian or any
Sub-Custodian
13
deliver any assets of the Company to any such person. No officer,
director, employee or agent of the Custodian who holds any similar
position with the Company's investment adviser, with any subinvestment
adviser of the Company or with the Administrator shall have access to
the assets of the Company.
(b) Nothing in this Section 13 shall prohibit any officer, employee or
agent of the Company, or any officer, director, employee or agent of
the investment adviser, of any sub investment adviser of the Company or
of the Administrator, from giving Oral Instructions or Written
Instructions to the Custodian or executing a Certificate so long as it
does not result in delivery of or access to assets of the Company
prohibited by paragraph (a) of this Section 13.
(c) The Custodian represents that it maintains a system that is
reasonably designed to prevent unauthorized persons from having access
to the assets that it holds (by any means) for its customers.
14. Concerning the Custodian.
(a) Scope of Services. The Custodian shall be obligated to perform only
such services as are set forth in this Agreement or expressly contained
in a Certificate, Written Instructions or Oral Instructions given to
the Custodian which are not contrary to the provisions of this
Agreement.
(b) Standard of Care.
1. The Custodian will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
property of the Portfolios. The Custodian shall be liable to
the Company for any loss which shall occur as the result of
the failure of the Custodian or a Sub-Custodian (other than a
foreign securities depository or clearing agency) to exercise
reasonable care with respect to the safekeeping of such
property. The determination of whether the Custodian or
Sub-Custodian has exercised reasonable care shall be made in
light of prevailing standards applicable to professional
custodians in the jurisdiction in which such custodial
services are performed. In the event of any loss to the
Company by reason of the failure of the Custodian or a
Sub-Custodian (other than a foreign securities depository or
clearing agency) to exercise reasonable care, the Custodian
shall be liable to the Company only to the extent of the
Company's direct damages and expenses, which damages, for
purposes of property only, shall be determined based on the
market value of the property which is the subject of the loss
at the date of discovery of such loss and without reference to
any special condition or circumstances.
2. The Custodian will not be responsible for any act,
omission, default or for the solvency of any foreign
securities depository or clearing agency approved by the Board
of Directors pursuant to Section (l)(n) or Section 3 hereof.
14
3. The Custodian will not be responsible for any act,
omission, default or for the solvency of any broker or agent
(not referred to in paragraph (b)(2) above) which it or a
Sub-Custodian appoints and uses unless such appointment and
use is made or done negligently or in bad faith. In the event
such an appointment and use is made or done negligently or in
bad faith, the Custodian shall be liable to the Company only
for direct damages and expenses (determined in the manner
described in paragraph (b)(l) above) resulting from such
appointment and use and, in the case of any loss due to an
act, omission or default of such agent or broker, only to the
extent that such loss occurs as a result of the failure of the
agent or broker to exercise reasonable care.
4. The Custodian shall be entitled to rely, and may act upon
the advice of counsel (who may be counsel for the Company) on
all matters and shall be without liability for any action
reasonably taken or omitted in good faith and without
negligence pursuant to such advice.
5. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be
genuine and to be signed by two officers of the Company. The
Custodian shall be entitled to rely upon any Written
Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this
Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorize Person. The Company
agrees to forward to the Custodian Written Instructions from
an Authorized Person confirming such Oral Instruction in such
manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by
the close of business on the same day that such Oral
Instructions are given to the Custodian. The Company agrees
that the fact that such confirming instructions are not
received by the Custodian shall in no way affect the validity
of the transactions or enforceability of the transactions
hereby authorized by the Company. The Company agrees that the
Custodian shall incur no liability to the Company in (i)
acting upon Oral Instructions given to the Custodian hereunder
concerning such transactions provided such instructions
reasonably appear to have been received from a duly Authorized
Person or (ii) deciding not to act solely upon Oral
Instructions, provided that the Custodian shall be required to
contact the giver of such Oral Instructions and request
written confirmation immediately following any such decision
not to act.
6. The Custodian shall supply the Administrator with such
daily information regarding the cash and securities positions
and activity of each Portfolio as the Custodian and the
Administrator shall from time to time agree. It is understood
that such information will not be audited by Custodian and
Custodian represents that such information will be the best
information then available to the Custodian. The Custodian
shall have no responsibility whatsoever for the pricing of
Portfolio Securities or for the failure of the Administrator
to reconcile differences between the information supplied by
the Custodian and information obtained by the
15
Administrator from other sources, including but not limited to
pricing vendors and the Company's investment adviser. Subject
to the foregoing, to the extent that any miscalculation by the
Administrator of a Portfolio's net asset value is attributable
to the willful misfeasance, bad faith or negligence of the
Custodian (including any Sub-Custodian other than a foreign
securities depository or clearing agency) in supplying or
omitting to supply the Administrator with information as
aforesaid, the Custodian shall be liable to the Company for
any resulting loss (subject to such de minimis rule of change
in value as the Board of Directors may from time to time
adopt).
(c) Limit of Duties. Without limiting the generality of the foregoing,
the Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any Securities purchased by
any Portfolio, the legality of the purchase thereof, or the
propriety of the amount specified by the Company for payment
therefor;
2. The legality of the sale of any Securities by any Portfolio
or the propriety of the amount of consideration for which the
same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of any Portfolio or;
6. The legality of any borrowing.
(d) The Custodian need not maintain any insurance for the exclusive
benefit of the Company, but hereby warrants that as of the date of this
Agreement it is maintaining a bankers Blanket Bond and hereby agrees to
notify the Company in the event that such bond is cancelled or
otherwise lapses.
(e) Consistent with and without limiting the language contained in
Section 14(b), it is specifically acknowledged that the Custodian shall
have no duty or responsibility to:
1. Question Written Instructions or Oral Instructions or make
any suggestions to the Company or an Authorized Person
regarding such Instructions:
2. Supervise or make recommendations with respect to
investments or the retention of Securities;
16
3. Subject to Section 14(b)(3) hereof, evaluate or report to
the Company or an Authorized Person regarding the financial
condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this
Agreement; or
4. Review or reconcile trade confirmations received from
brokers.
(f) Amounts Due for Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any
amount due to any Portfolio from the Transfer Agent nor to take any
action to effect payment or distribution by the Transfer Agent of any
amount paid by the Custodian to the Transfer Agent in accordance with
this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Company and specifically allocated
to a Portfolio are such as may properly be held by the Company under
the provisions of the Articles of Incorporation and the Prospectus.
(h) Indemnification. The Company agrees to indemnify and hold the
Custodian harmless from all loss, cost, taxes, charges, assessments,
claims, and liabilities (including, without limitation, liabilities
arising under the Securities Act of 1933, the Securities Exchange Act
of 1934 and the 1940 Act and state or foreign securities laws) and
expenses (including reasonable attorneys fees and disbursements)
arising directly or indirectly from any action taken or omitted by the
Custodian (i) at the request or on the direction of or in reliance on
the advice of the Company or in reasonable reliance upon the Prospectus
or (ii) upon a Certificate or Oral or Written Instructions; provided,
that the aforegoing indemnity shall not apply to any loss, cost, tax,
charge, assessment, claim, liability or expense to the extent the same
is attributable to the Custodian's or any Sub-Custodian's (other than a
foreign securities depository or clearing agency) negligence, willful
misconduct, bad faith or reckless disregard of duties and obligations
under this Agreement or any other agreement relating to the custody of
Company property.
(i) The Company on behalf of the particular Portfolio involved agrees
to hold the Custodian harmless from any liability or loss resulting
from the imposition or assessment of any taxes or other governmental
charges on a Portfolio.
(j) Without limiting the foregoing, the Custodian shall not be liable
for any lo.cs which result from:
1. the general risk of investing, or
2. subject to Section 14(b) hereof, investing or holding
property in a particular country including, but not limited
to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or
securities industry; currency restrictions, devaluations or
17
fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of
property held pursuant to this Agreement.
(k) No party shall be liable to the other for any loss due to forces
beyond their control including but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of God.
(1) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Company and by the appropriate
employees of the Securities and Exchange Commission.
(m) Accounting Control Reports. The Custodian shall provide the Company
with any report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Depository and with
such reports on its own systems of internal accounting control as the
Company may reasonably request from time to time.
15. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter as
the parties may mutually agree.
(b) Either of the parties hereto may terminate this Agreement with
respect to any Portfolio by giving to the other party a notice in
writing specifying the date of such termination, which, in case the
Company is the terminating party, shall be not less than 60 days after
the date of receipt of such notice or, in case the Custodian is the
terminating party, shall be not less than 90 days after the date of
receipt of such notice. In the event such notice is given by the
Company, it shall be accompanied by a certified vote of the Board of
Directors, electing to terminate this Agreement with respect to any
Portfolio and designating a successor custodian or custodians, which
shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the
Company shall, on or before the termination date, deliver to the
Custodian a certified vote of the Board of Directors, designating a
successor custodian or custodians. In the absence of such designation
by the Company, the Custodian may designate a successor custodian,
which shall be a person qualified to so act under the 0000 Xxx. If the
Company fails to designate a successor custodian with respect to any
PortfoLio, the Company shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the Custodian of
all Securities (other than Securities held in the Book-Entry System
which cannot be delivered to the Company) and monies then owned by such
Portfolio, be deemed to be its own custodian and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the
Book-Entry System which cannot be delivered to the Company.
18
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 15, this Agreement shall terminate to the extent specified in
such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian and specifically allocated to the Portfolio or Portfolios
specified, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled with
respect to such Portfolio or Portfolios.
16. Limitation of Liability.
The Company and the Custodian agree that the obligations of
the Company under this Agreement shall not be binding upon any of the
Directors, shareholders, nominees, officers, employees or agents,
whether past, present or future, of the Company individually, but are
binding only upon the assets and property of the Company or of the
appropriate Portfolio(s) thereof, as provided in the Articles of
Incorporation. The execution and delivery of this Agreement have been
authorized by the Directors of the Company, and signed by an authorized
officer of the Company, 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
Company individually or to impose any liability on any of them or any
shareholder of the Company personally, but shall bind only the assets
and property of the Company or of the appropriate Portfolio(s) thereof
as provided in the Articles of Incorporation.
17. Miscellaneous.
(a) Annexed hereto as Schedule A is a certification signed by two of
the present officers of the Company setting forth the names and the
signatures of the present Authorized Persons. The Company agrees to
furnish to the Custodian a new certification in similar form in the
event that any such present Authorized Person ceases to be such an
Authorized Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered
certification.
(b) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at
its offices at its address stated on the first page hereof or at such
other place as the Custodian may from time to time designate in
writing.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Company, shall be sufficiently
given if addressed to the Company and mailed or delivered to it at its
offices at its address shown on the first page
19
hereof or at such other place as the Company may from time to time
designate in writing, with a copy to:
Attention: General Counsel
SEI Corporation
000 Xxxxxxxxxx Xxxx
Xxxxx, XX 00000-0000
(d) This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality
as this Agreement, (i) authorized and approved by a vote of the Board
of Directors, including a majority of the members of the Board of
Directors who are not "interested persons" of the Company (as defined
in the 1940 Act), or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Company
without the written consent of the Custodian, or by the Custodian
without the written consent of the Company authorized or approved by a
vote of the Board of Directors, and any attempted assignment without
such written consent shall be null and void.
(f) This Agreement shall be construed in accordance with the laws of
the State of Illinois.
(g) The captions of the 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.
(h) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
20
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives duly authorized as
of the day and year first above written.
THE PBHG FUNDS, INC.
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE NORTHERN TRUST COMPANY
By: /s/
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
21
Schedule A
Certification of Authorized Persons
Employees of SEI
Xxxx Xxxxxxxxx Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxx Xxxxx Xxxxxxx
Xxxx Xxxxx Xxxx Xxxxxxxx
Employees of Pilgrim Xxxxxx & Associates
Xxxxxx Xxxxxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxxxx Xxxxx Xxxxxx
Xxxx Xxxxxxx Xxxxx Xxxxx
Employees of Supervised Service Company
Xxxxxxx Xxxxxxxx Xxxxx X'Xxxx
Xxxxxx Xxxxxxxxx Xxxxx Xxxxxxx
Xxx XxXxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxx Xxxxx Xxxxxxx
Xxxxxx Xxxxxx
Employees of Dolphin Partners, L.P.
W. Xxxxxx Xxxxx
Xxxxx Xxxxxxxx
22
Schedule B
A
Global Custody
Fee Proposal
for
SEI/PILGRIM XXXXXX
Assumptions Used:
o 1 fund
o $50.9 million (roughly EAFE weighting)
o 90 security holdings
o 202 purchase/sale transactions per annum
Services Provided:
o Safekeeping of securities
o Settlement of trades
o Foreign exchange services
o Investment and management of excess cash balances
o Interest and dividend collection and payable date crediting
o Tax withholding and reclamation
o Corporate action and proxy handling
o Monthly audited multicurrency accounting and reporting
o Client administration and Investment Manager servicing
o Daily on-line investment manager/fund administrator reporting package
Fee Proposal:
$1,500 per find per annum
14.0 Basis points on the first $50 million
9.0 Basis points on the next $50 million
6.0 Basis points on over $ 100 million
23
Any non-U.S. futures/options transactions incur a charge of $120 per roundtrip.
U.S. futures/options transactions incur a charge of $60 per roundtrip.
We do not impose additional charges for facsimile, telex, income collection, tax
reclamation, administration or other "miscellaneous" activities. Execution
costs, such as stamp duty, re-registration and delivery/receipt charges would be
passed through at cost if and as applicable.
Full access to The Northern Trust's on-line, customized reporting system, the
Electronic Delivery System (EDS), will be made available to both Pilgrim Xxxxxx
and SKI. The only charge associated with the use of EDS will be based upon
actual computer usage of $20 per Computer Resource Unit (CRU). A CRU is based on
the time used to process data by our computers, the amount of computer storage
used to hold your data records and reports as well as connect time.
Telecommunication charges do apply, however, we provide a toll-free number in
the U.S. for accessing EDS.
January 26, 1994
24
