CUSTODY AGREEMENT
THIS AGREEMENT dated as of the ____ day of _________, 1997, is made by
and between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under
the laws of the state of Missouri, having its trust office located at 000 Xxxx
00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 ("Custodian"), and PILGRIM AMERICA BANK
AND THRIFT FUND, INC., a Maryland corporation, having its principal office and
place of business at Two Renaissance Square, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000.
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian of the Fund; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints
Custodian as custodian of the Assets (as defined below) at any time
owned by the Fund. For purposes of this Agreement, the term "Assets"
shall mean investment securities, and cash.
2. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets. Except as permitted by the Investment
Company Act of 1940, Fund will deliver or cause to be
delivered to Custodian all Assets acquired and owned by it
during the time this Agreement shall continue in effect,
including all documentation required by Fund to be delivered
to Custodian relating to or evidencing the interests in loans
acquired by the Fund. Custodian shall have no responsibility
or liability whatsoever for or on account of Assets or loan
documents not so delivered. All Assets so delivered to
Custodian (other than bearer securities) shall be registered
in the name of Fund or its nominee, or of a nominee of
Custodian, or shall be properly endorsed and in form for
transfer satisfactory to Custodian.
B. Delivery of Accounts and Records. Fund shall turn over to
Custodian all of the Fund's relevant accounts and records
previously maintained by it. Custodian shall be entitled to
rely conclusively on the completeness and correctness of the
accounts and records turned over to it by Fund, and Fund shall
indemnify and hold Custodian harmless of and from any and all
expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other
deficiency of such accounts and records or in the failure of
Fund to provide any portion of such or to provide in a timely
manner any other information needed by the Custodian
knowledgeably to perform its function hereunder.
C. Delivery of Assets to Third Parties. Custodian will receive
delivery of and keep safely the Assets of Fund delivered to it
from time to time segregated in a separate account. Custodian
will not deliver, assign, pledge or hypothecate any such
Assets to any person except as permitted by the provisions of
this Agreement or any agreement executed by it according to
the terms of Section 2.S. of this Agreement. Upon delivery of
any such Assets to a subcustodian pursuant to Section 2.S. of
this Agreement, Custodian will create and maintain records
identifying those Assets which have been delivered to the
subcustodian as belonging to the Fund. The Custodian is
responsible for the securities and monies of Fund only until
they have been transmitted to and received by other persons as
permitted under the terms of this Agreement, except for
securities and monies transmitted to subcustodians appointed
under Section 2.S. of this Agreement, for which Custodian
remains responsible to the extent provided in Section 2.S. of
this Agreement. Custodian may participate directly or
indirectly through a subcustodian in the Depository Trust
Company, Treasury/Federal Reserve Book Entry System or
Participant Trust Company (PTC) or other depository approved
by the Fund (as such entities are defined at 17 CFR Section
270.17f-4(b)) (each a "Depository" and collectively the
"Depositories").
D. Registration of Securities. The Custodian shall at all times
hold registered securities of the Fund in the name of the
Custodian, the Fund, or a nominee of either of them, unless
specifically directed by instructions to hold such registered
securities in so-called "street name," provided that, in any
event, all such securities and other Assets shall be held in
an account of the Custodian containing only Assets of the
Fund, or only Assets held by the Custodian as a fiduciary or
custodian for customers, and provided further, that the
records of the Custodian at all times shall indicate the Fund
or other customer for which such securities and other Assets
are held in such account and the respective interests therein.
If, however, the Fund directs the Custodian to maintain
securities in "street name", notwithstanding anything
contained herein to the contrary, the Custodian shall be
obligated only to utilize its best efforts to timely collect
income due the Fund on such securities and to notify the Fund
of relevant corporate actions including, without limitation,
pendency of calls, maturities, tender or exchange offers. All
Assets, and the ownership thereof by Fund, which are held by
Custodian hereunder, however, shall at all times be
identifiable on the records of the Custodian. The Fund agrees
to hold Custodian and its nominee harmless for any liability
as a record holder of securities held in custody.
E. Exchange of Assets. Upon receipt of instructions as defined
herein in Section 3.A, Custodian will exchange, or cause to be
exchanged, Assets held by it for the account of Fund for other
Assets issued or paid in connection with any reorganization,
recapitalization, merger, consolidation, split-up of shares,
change of par value, conversion, refinancing or otherwise, and
will deposit any such Assets in accordance with the terms of
any reorganization or protective plan. Without instructions,
Custodian is authorized to exchange securities held by it in
2
temporary form for securities in definitive form, to effect an
exchange of shares when the par value of the stock is changed,
and upon receiving payment therefor, to surrender Assets held
by it at maturity or when advised of earlier call for
redemption, except that Custodian shall receive instructions
prior to surrendering any convertible security.
F. Purchases of Investments of the Fund. Fund will, on each
business day on which a purchase of Assets shall be made by
it, deliver to Custodian instructions which shall specify with
respect to each such purchase:
1. The name of the issuer and description of the Asset;
2. The number of shares or the principal amount
purchased, and accrued interest, if any;
3. The trade date;
4. The settlement date;
5. The purchase price per unit and the brokerage
commission, taxes and other expenses payable in
connection with the purchase;
6. The total amount payable upon such purchase; and
7. The name of the person from whom or the broker or
dealer through whom the purchase was made.
In accordance with such instructions, Custodian will pay for
out of monies held for the account of Fund, but only insofar
as monies are available therein for such purpose, and receive
the Assets so purchased by or for the account of Fund except
that Custodian may in its sole discretion advance funds to the
Fund which may result in an overdraft because the monies held
by the Custodian on behalf of the Fund are insufficient to pay
the total amount payable upon such purchase. Except as
otherwise instructed by Fund, such payment shall be made by
the Custodian only upon receipt of Assets: (a) by the
Custodian; (b) by a clearing corporation of a national
exchange of which the Custodian is a member; or (c) by a
Depository. Notwithstanding the foregoing, (i) in the case of
a repurchase agreement, the Custodian may release funds to a
Depository prior to the receipt of advice from the Depository
that the securities underlying such repurchase agreement have
been transferred by book-entry into the account maintained
with such Depository by the Custodian, on behalf of its
customers, provided that the Custodian's instructions to the
Depository require that the Depository make payment of such
funds only upon transfer by book-entry of the securities
underlying the repurchase agreement in such account; (ii) in
the case of time deposits, call account deposits, currency
deposits and other deposits, foreign
3
exchange transactions, futures contracts or options, the
Custodian may make payment therefor before receipt of an
advice or confirmation evidencing said deposit or entry into
such transaction; (iii) in the case of the purchase of
securities, the settlement of which occurs outside of the
United States of America, the Custodian may make, or cause a
subcustodian appointed pursuant to Section 2.S.2. of this
Agreement to make, payment therefor in accordance with
generally accepted local custom and market practice; and (iv)
in the case of interests in loans, Custodian shall make
payment therefor and additional advances relating thereto at
such times and to such parties as instructed by Fund without
regard to the time of delivery to Custodian of documentation
evidencing the Fund's interest in the loan or the additional
advance, as applicable.
G. Sales and Deliveries of Investments of the Fund - Other than
Options and Futures. Fund will, on each business day on which
a sale of Assets of Fund has been made, deliver to Custodian
instructions specifying with respect to each such sale:
1. The name of the issuer and description of the Assets;
2. The number of shares or principal amount sold, and
accrued interest, if any;
3. The date on which the Assets sold were purchased or
other information identifying the Assets sold and to
be delivered;
4. The trade date;
5. The settlement date;
6. The sale price per unit and the brokerage commission,
taxes or other expenses payable in connection with
such sale;
7. The total amount to be received by Fund upon such
sale; and
8. The name and address of the broker or dealer through
whom or person to whom the sale was made.
In accordance with such instructions, Custodian will deliver
or cause to be delivered the Assets thus designated as sold
for the account of Fund to the broker or other person
specified in the instructions relating to such sale. Except as
otherwise instructed by Fund, such delivery shall be made upon
receipt of payment therefor: (a) in such form as is
satisfactory to the Custodian; (b) credit to the account of
the Custodian with a clearing corporation of a national
securities exchange of which the Custodian is a member; or (c)
credit to the account of the Custodian, on behalf of its
customers, with a Depository. Notwithstanding the foregoing:
(i) in the case of securities held in physical form, such
securities shall
4
be delivered in accordance with "street delivery custom" to a
broker or its clearing agent; (ii) in the case of the sale of
securities, the settlement of which occurs outside of the
United States of America, the Custodian may make, or cause a
subcustodian appointed pursuant to Section 2.S.2. of this
Agreement to make, payment therefor in accordance with
generally accepted local custom and market practice; and (iii)
in the case of the sale of an interest in a loan, the
Custodian shall receive the purchase price for the account of
Fund and deliver the loan documents relating to the interest
sold as instructed by Fund.
H. Purchases or Sales of Security Options, Options on Indices and
Security Index Futures Contracts. Fund will, on each business
day on which a purchase or sale of the following options
and/or futures shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such
purchase or sale:
1. In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer
through whom the sale or purchase was made.
2. In the case of options on indices:
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening,
exercising, expiring or closing transaction;
h. Whether the transaction involves a put or
call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer
through whom the sale or purchase was made,
or other applicable settlement instructions.
5
3. In the case of security index futures contracts:
a. The last trading date specified in the
contract and, when available, the closing
level, thereof;
b. The index level on the date the contract is
entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in
addition to instructions, and if not already
in the possession of Custodian, Fund shall
deliver a substantially complete and
executed custodial safekeeping account and
procedural agreement which shall be
incorporated by reference into this Custody
Agreement); and
f. The name and address of the futures
commission merchant through whom the sale or
purchase was made, or other applicable
settlement instructions.
4. In the case of options on index future contracts:
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or
call;
h. Whether the option is written or purchased;
and
i. The market on which the option is traded.
I. Securities Pledged or Loaned. If specifically allowed for in
the prospectus of Fund:
1. Upon receipt of instructions, Custodian will release
or cause to be released securities held in custody to
the pledgee designated in such instructions by way of
pledge or hypothecation to secure any loan incurred
by Fund; provided, however, that the securities shall
be released only upon payment to Custodian of the
monies borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made, further securities may be
released or caused to be released for that purpose
upon receipt of instructions. Upon receipt of
instructions, Custodian will pay, but only from funds
available for such purpose, any such loan upon
redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note
or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated
in such instructions; provided, however,
6
that the securities will be released only upon
deposit with Custodian of full cash collateral as
specified in such instructions, and that Fund will
retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt
of instructions and the loaned securities, Custodian
will release the cash collateral to the borrower.
J. Routine Matters. Custodian will, in general, attend to all
routine and mechanical matters in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings
with Assets of Fund except as may be otherwise provided in
this Agreement or directed from time to time by the Fund in
writing.
K. Deposit Account. Custodian will open and maintain one or more
special purpose deposit accounts in the name of Custodian
("Accounts"), subject only to draft or order by Custodian upon
receipt of instructions. All monies received by Custodian from
or for the account of Fund shall be deposited in said
Accounts. Barring events not in the control of the Custodian
such as strikes, lockouts or labor disputes, riots, war or
equipment or transmission failure or damage, fire, flood,
earthquake or other natural disaster, action or inaction of
governmental authority or other causes beyond its control, at
9:00 a.m., Kansas City time, on the second business day after
deposit of any check into Fund's Account, Custodian agrees to
make Fed Funds available to the Fund in the amount of the
check. Deposits made by Federal Reserve wire will be available
to the Fund immediately and ACH wires will be available to the
Fund on the next business day. Income earned on the Assets
will be credited to Fund based on the schedule attached as
Exhibit A. The Custodian will be entitled to reverse any
credited amounts where credits have been made and monies are
not finally collected. If monies are collected after such
reversal, the Custodian will credit Fund in that amount.
Custodian may open and maintain Accounts in such banks or
trust companies as may be designated by it or by properly
authorized resolution of the governing Board of the Fund, such
Accounts, however, to be in the name of Custodian and subject
only to its draft or order.
L. Income and other Payments to Fund. Custodian will:
1. Collect, claim and receive and deposit for the
account of Fund all income and other payments which
become due and payable on or after the effective date
of this Agreement with respect to the Assets held
under this Agreement, and credit the account of Fund
in accordance with the schedule attached hereto as
Exhibit A. If for any reason, the Fund is credited
with income that is not subsequently collected,
Custodian may reverse that credited amount;
2. Execute ownership and other certificates and
affidavits for all federal, state and local tax
purposes in connection with the collection of bond
and note coupons; and
7
3. Take such other action as may be necessary or proper
in connection with:
a. the collection, receipt and deposit of such
income and other payments, including but not
limited to the presentation for payment of:
1. all coupons and other income items
requiring presentation; and
2. all other securities which may
mature or be called, redeemed,
retired or otherwise become payable
and regarding which the Custodian
has actual knowledge, or should
reasonably be expected to have
knowledge; and
b. the endorsement for collection, in the name
of Fund, of all checks, drafts or other
negotiable instruments.
Custodian, however, will not be required to institute suit or
take other extraordinary action to enforce collection except
upon receipt of instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or
other actions. Custodian will receive, claim and collect all
stock dividends, rights and other similar items and will deal
with the same pursuant to instructions.
M. Payment of Dividends and other Distributions. On the
declaration of any dividend or other distribution on the
shares of the Fund ("Fund Shares") by the governing Board of
the Fund, Fund shall deliver to Custodian instructions with
respect thereto. On the date specified in such instructions
for the payment of such dividend or other distribution,
Custodian will pay out of the monies held for the account of
Fund, insofar as the same shall be available for such
purposes, and credit to the account of the Dividend Disbursing
Agent for Fund, such amount as may be specified in such
instructions.
N. Shares of Fund Purchased by Fund. Whenever any Fund Shares are
repurchased or redeemed by Fund, Fund or its agent shall
advise Custodian of the aggregate dollar amount to be paid for
such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate
dollar amount to the account of Fund and either deposit the
same in the account maintained for the purpose of paying for
the repurchase or redemption of Fund Shares or deliver the
same in accordance with such advice. Custodian shall not have
any duty or responsibility to determine that Fund Shares have
been removed from the proper shareholder account or accounts
or that the proper number of such shares have been cancelled
and removed from the shareholder records.
O. Shares of Fund Purchased from Fund. Whenever Fund Shares are
purchased from Fund, Fund will deposit or cause to be
deposited with Custodian the amount
8
received for such shares. Custodian shall not have any duty or
responsibility to determine that Fund Shares purchased from
Fund have been added to the proper shareholder account or
accounts or that the proper number of such shares have been
added to the shareholder records.
P. Proxies and Notices. Custodian will promptly deliver or mail
or have delivered or mailed to Fund all proxies properly
signed, all notices of meetings, all proxy statements, all
payment and rate notices and other notices, requests or
announcements affecting or relating to Assets held by
Custodian for Fund and will, upon receipt of instructions,
execute and deliver or cause its nominee to execute and
deliver or mail or have delivered or mailed such proxies or
other authorizations as may be required. Except as provided by
this Agreement or pursuant to instructions hereafter received
by Custodian, neither it nor its nominee will exercise any
power inherent in any Assets, including any power to vote the
same, or execute any proxy, power of attorney, or other
similar instrument voting any of Assets, or give any consent,
approval or waiver with respect thereto, or take any other
similar action.
Q. Disbursements. Custodian will pay or cause to be paid insofar
as funds are available for the purpose, bills, statements and
other obligations of Fund (including but not limited to
obligations in connection with the conversion, exchange or
surrender of Assets owned by Fund, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal
fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting
forth the name of the person to whom payment is to be made,
the amount of the payment, and the purpose of the payment.
R. Daily Statement of Accounts. Custodian will, within a
reasonable time, render to Fund as of the close of business on
each day, a detailed statement of the amounts received or paid
and of Assets received or delivered for the account of Fund
during said day. Custodian will, from time to time, upon
request by Fund, render a detailed statement of the Assets
held for Fund under this Agreement, and Custodian will
maintain such books and records as are necessary to enable it
to do so and will permit such persons as are authorized by
Fund, including Fund's independent public accountants, access
to such records or confirmation of the contents of such
records; and if demanded, will permit federal and state
regulatory agencies to examine the securities, books and
records. Upon the written instructions of Fund or as demanded
by federal or state regulatory agencies, Custodian will
instruct any subcustodian to give such persons as are
authorized by Fund, including Fund's independent public
accountants, access to such records or confirmation of the
contents of such records; and if demanded, to permit federal
and state regulatory agencies to examine the books, records
and securities held by subcustodian which relate to Fund.
9
S. Appointment of Subcustodians.
1. Notwithstanding any other provisions of this
Agreement, all or any of the Assets of Fund may be
held in Custodian's own custody or in the custody of
one or more other banks or trust companies selected
by Custodian. Any such subcustodian must have the
qualifications required for custodian under the
Investment Company Act of 1940, as amended. Any such
subcustodians may participate directly or indirectly
in any Depository. Custodian shall be responsible to
the Fund for any loss, damage or expense suffered or
incurred by the Fund resulting from the actions or
omissions of any subcustodian selected and appointed
by Custodian (except subcustodians appointed at the
request of Fund and as provided in Subsection 2
below) to the same extent Custodian would be
responsible to the Fund under Section 4 of this
Agreement if it committed the act or omission itself.
Custodian is not responsible for Depositories except
to the extent such entities are responsible to
Custodian. Upon request of the Fund, Custodian shall
be willing to contract with other subcustodians
reasonably acceptable to the Custodian for purposes
of (i) effecting third-party repurchase transactions
with banks, brokers, dealers, or other entities
through the use of a common custodian or
subcustodian, or (ii) providing depository and
clearing agency services with respect to certain
variable rate demand note securities, or (iii) for
other reasonable purposes specified by Fund;
provided, however, that the Custodian shall be
responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting
from the actions or omissions of any such
subcustodian only to the same extent such
subcustodian is responsible to the Custodian. The
Fund shall be entitled to review the Custodian's
contracts with any such subcustodians appointed at
the request of Fund.
2. Notwithstanding any other provisions of this
Agreement, Fund's foreign securities (as defined in
Rule 17f-5(c)(1) under the Investment Company Act of
1940) and Fund's cash or cash equivalents, in amounts
deemed by the Fund to be reasonably necessary to
effect Fund's foreign securities transactions, may be
held in the custody of one or more banks or trust
companies acting as subcustodians, according to
Section 2.S.1; and thereafter, pursuant to a written
contract or contracts as approved by Fund's governing
Board, may be transferred to an account maintained by
such subcustodian with an eligible foreign custodian,
as defined in Rule 17f-5(c)(2), provided that any
such arrangement involving a foreign custodian shall
be in accordance with the provisions of Rule 17f-5
under the Investment Company Act of 1940 as that Rule
may be amended from time to time. The Custodian shall
be responsible for the monies and securities of Fund
held by eligible foreign subcustodians to the extent
the eligible foreign subcustodians are liable to the
domestic subcustodian with which the Custodian
contracts for foreign subcustody purposes.
10
T. Adoption of Procedures. Custodian and Fund hereby adopt the
Funds Transfer Operating guidelines attached hereto as Exhibit
B. Custodian and Fund may from time to time adopt procedures
as they agree upon, and Custodian may conclusively assume that
no procedure approved by Fund, or directed by Fund, conflicts
with or violates any requirements of its prospectus,
declaration of trust, bylaws, or any rule or regulation of any
regulatory body or governmental agency. Fund will be
responsible to notify Custodian of any changes in statutes,
regulations, rules or policies which might necessitate changes
in Custodian's responsibilities or procedures.
U. Overdrafts. In the event Custodian or any subcustodian shall,
in its sole discretion, advance cash or securities for any
purpose (including but not limited to loan advances,
securities settlements, purchase or sale of foreign exchange
or foreign exchange contracts and assumed settlement) for the
benefit of Fund, the advance shall be payable by the Fund on
demand. Any such cash advance shall be subject to an overdraft
charge at the rate set forth in the then-current fee schedule
from the date advanced until the date repaid. As security for
each such advance, Fund hereby grants Custodian and such
subcustodian a lien on and security interest in all property
at any time held for the account of Fund, including without
limitation all Assets acquired with the amount advanced.
Should the Fund fail to repay the advance within a reasonable
time after written notice from Custodian, the Custodian and
such subcustodian shall be entitled to utilize available cash
and to dispose of Assets pursuant to applicable law to the
extent necessary to obtain reimbursement of the amount
advanced and any related overdraft charges.
V. Exercise of Rights; Tender Offers. Upon receipt of
instructions, the Custodian shall: (a) deliver warrants, puts,
calls, rights or similar securities to the issuer or trustee
thereof, or to the agent of such issuer or trustee, for the
purpose of exercise or sale, provided that the new securities,
cash or other assets, if any, are to be delivered to the
Custodian; and (b) deposit securities upon invitations for
tenders thereof, provided that the consideration for such
securities is to be paid or delivered to the Custodian or the
tendered securities are to be returned to the Custodian.
3. INSTRUCTIONS.
A. The term "instructions", as used herein, means written
(including telecopied) or oral instructions to Custodian which
Custodian reasonably believes were given by a designated
representative of Fund. Fund shall provide Custodian, as often
as necessary, written instructions naming one or more
designated representatives to give instructions in the name
and on behalf of Fund, which instructions may be received and
accepted from time to time by Custodian as conclusive evidence
of the authority of any designated representative to act for
Fund and may be considered to be in full force and effect (and
Custodian will be fully protected in acting in reliance
thereon) until receipt by Custodian of notice to the contrary.
11
Unless such written instructions delegating authority to any
person to give instructions specifically limit such authority
or require that the approval of anyone else will first have
been obtained, Custodian will be under no obligation to
inquire into the right of the person giving such instructions
to do so. Notwithstanding any of the foregoing provisions of
this Section 3 no authorizations or instructions received by
Custodian from Fund, will be deemed to authorize or permit any
director, trustee, officer, employee, or agent of Fund to
withdraw any of the Assets of Fund upon the mere receipt of
such authorization or instructions from such director,
trustee, officer, employee or agent. Notwithstanding any other
provision of this Agreement, Custodian, upon receipt (and
acknowledgment if required at the discretion of Custodian) of
the instructions of a designated representative of Fund will
undertake to deliver for Fund's account monies (provided such
monies are on hand or available) in connection with Fund's
transactions and to wire transfer such monies to such broker,
dealer, subcustodian, bank or other agent specified in such
instructions by a designated representative of Fund.
B. No later than the next business day immediately following each
oral instruction, Fund will send Custodian written
confirmation of such oral instruction. At Custodian's sole
discretion, Custodian may record on tape, or otherwise, any
oral instruction whether given in person or via telephone,
each such recording identifying the date and the time of the
beginning and ending of such oral instruction.
C. If Custodian shall provide Fund direct access to any
computerized recordkeeping and reporting system used hereunder
or if Custodian and Fund shall agree to utilize any electronic
system of communication, Fund shall be fully responsible for
any and all consequences of the use or misuse of the terminal
device, passwords, access instructions and other means of
access to such system(s) which are utilized by, assigned to or
otherwise made available to the Fund. Fund agrees to implement
and enforce appropriate security policies and procedures to
prevent unauthorized or improper access to or use of such
system(s). Custodian shall be fully protected in acting
hereunder upon any instructions, communications, data or other
information received by Custodian by such means as fully and
to the same effect as if delivered to Custodian by written
instrument signed by the requisite authorized
representative(s) of Fund. Fund shall indemnify and hold
Custodian harmless from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses and
liability which may be suffered or incurred by Custodian as a
result of the use or misuse, whether authorized or
unauthorized, of any such system(s) by Fund or by any person
who acquires access to such system(s) through the terminal
device, passwords, access instructions or other means of
access to such system(s) which are utilized by, assigned to or
otherwise made available to the Fund, except to the extent
attributable to any negligence or willful misconduct by
Custodian.
12
4. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall at all times use reasonable care and due
diligence and act in good faith in performing its duties under
this Agreement. Custodian shall hold harmless and indemnify
Fund from and against any loss or liability arising out of
Custodian's negligence, willful misconduct, or bad faith.
Custodian shall not be responsible for, and the Fund shall
indemnify and hold Custodian harmless from and against, any
loss or liability arising out of actions taken by Custodian
pursuant to this Agreement or any instructions provided to it
hereunder, provided that Custodian has acted in good faith and
with due diligence and reasonable care. Neither party shall be
liable to the other for consequential, special or punitive
damages. Custodian may request and obtain the advice and
opinion of counsel for Fund, or of its own counsel with
respect to questions or matters of law, and it shall be
without liability to Fund for any action taken or omitted by
it in good faith, in conformity with such advice or opinion.
If Custodian reasonably believes that it could not prudently
act according to the instructions of the Fund or the Fund's
counsel, it may in its discretion, with notice to the Fund,
not act according to such instructions.
B. Custodian may rely upon the advice and statements of Fund and
Fund's accountants and other persons believed by, it in good
faith, to be expert in matters upon which they are consulted,
and Custodian shall not be liable for any actions taken, in
good faith, upon such advice and statements.
C. If Fund requests Custodian in any capacity to take, with
respect to any Assets, any action which involves the payment
of money by it, or which in Custodian's opinion might make it
or its nominee liable for payment of monies or in any other
way, Custodian, upon notice to Fund given prior to such
actions, shall be and be kept indemnified by Fund in an amount
and form satisfactory to Custodian against any liability on
account of such action; provided, however, that nothing herein
shall obligate Custodian to take any such action except in its
sole discretion.
D. Custodian shall be entitled to receive, and Fund agrees to pay
to Custodian, on demand, reimbursement for such cash
disbursements, costs and expenses as may be agreed upon from
time to time by Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder
upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing
to it to be genuine and to have been properly executed and
shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter
required to be ascertained from Fund hereunder, instructions
or a certificate signed by the Fund's President, or other
authorized officer.
F. Without limiting the generality of the foregoing, Custodian
shall be under no duty or obligation to inquire into, and
shall not be liable for:
13
1. The validity of the issue of any Assets purchased by
or for Fund, the legality of the purchase thereof,
the validity, completeness, correctness or
sufficiency of any loan documents required by Fund to
be received by Custodian, the sufficiency of the
evidence of ownership of Assets required by Fund to
be received by Custodian, or the propriety of the
decision to purchase or amount paid for any Assets;
2. The legality of the sale of any Assets by or for
Fund, or the propriety of the amount for which the
same are sold;
3. The legality of the issue or sale of any Fund Shares,
or the sufficiency of the amount to be received
therefor;
4. The legality of the repurchase or redemption of any
Fund Shares, or the propriety of the amount to be
paid therefor; or
5. The legality of the declaration of any dividend by
Fund, or the legality of the issue of any Fund Shares
in payment of any dividend.
G. Custodian shall not be liable for, or considered to be
Custodian of, any money represented by any check, draft, wire
transfer, clearing house funds, uncollected funds, or
instrument for the payment of money to be received by it on
behalf of Fund, until Custodian actually receives such money,
provided only that it shall advise Fund promptly if it fails
to receive any such money in the ordinary course of business,
and use its best efforts and cooperate with Fund toward the
end that such money shall be received.
H. Except for any subcustodians or eligible foreign custodians
appointed under Section 2.S. to the extent provided therein,
Custodian shall not be responsible for loss occasioned by the
acts, neglects, defaults or insolvency of any broker, bank,
trust company, or any other person with whom Custodian may
deal in the absence of negligence or bad faith on the part of
Custodian.
I. Notwithstanding anything herein to the contrary, Custodian
may, and with respect to any foreign subcustodian appointed
under Section 2.S.2 must, provide Fund for its approval,
agreements with banks or trust companies which will act as
subcustodians for Fund pursuant to Section 2.S of this
Agreement.
J. Custodian shall not be responsible or liable for the failure
or delay in performance of its obligations under this
Agreement, or those of any entity for which it is responsible
hereunder, arising out of or caused, directly or indirectly,
by circumstances beyond the affected entity's reasonable
control, including, without limitation: any interruption, loss
or malfunction of any utility, transportation, computer
(hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a
delay in mails; governmental or
14
exchange action, statute, ordinance, rulings, regulations or
direction; war, strike, riot, emergency, civil disturbance,
terrorism, vandalism, explosions, labor disputes, freezes,
floods, fires, tornados, acts of God or public enemy,
revolutions, or insurrection.
5. COMPENSATION. Fund will pay to Custodian such compensation as is stated
in the Fee Schedule from time to time agreed to in writing by Custodian
and Fund. Custodian may charge such compensation against monies held by
it for the account of Fund. Custodian will also be entitled,
notwithstanding the provisions of Sections 4.C. or 4.D. hereof, to
charge against any monies held by it for the account of Fund the amount
of any loss, damage, liability, advance, or expense for which it shall
be entitled to reimbursement under the provisions of this Agreement
including fees or expenses due to Custodian for other services provided
to the Fund by the Custodian. Custodian will not be entitled to
reimbursement by Fund for any loss or expenses of any subcustodian,
except to the extent Custodian would be entitled to reimbursement
hereunder if it incurred the loss or expense itself directly.
6 TERMINATION. This Agreement shall continue in effect until terminated
by either party by notice in writing received by the other party not
less than ninety (90) days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, Fund
will pay to Custodian such compensation for its reimbursable
disbursements, costs and expenses paid or incurred to such date. The
governing Board of Fund will, forthwith upon giving or receiving notice
of termination of this Agreement, appoint as successor custodian a
qualified bank or trust company. Custodian will, upon termination of
this Agreement, deliver to the successor custodian so appointed, at
Custodian's office, all securities then held by Custodian hereunder,
duly endorsed and in form for transfer, all funds, loan documents and
other properties of Fund deposited with or held by Custodian hereunder,
or will co-operate in effecting changes in book-entries at the
Depositories. In the event no written order designating a successor
custodian has been delivered to Custodian on or before the date when
such termination becomes effective, then Custodian may deliver the
securities, funds and properties of Fund to a bank or trust company at
the selection of Custodian and meeting the qualifications for
custodian, if any, set forth in the governing documents of the Fund and
having not less that Two Million Dollars ($2,000,000) aggregate
capital, surplus and undivided profits, as shown by its last published
report. Upon delivery to a successor custodian, Custodian will have no
further obligations or liabilities under this Agreement. Thereafter
such bank or trust company will be the successor custodian under this
Agreement and will be entitled to reasonable compensation for its
services. In the event that no such successor custodian can be found,
Fund will submit to its shareholders, before permitting delivery of the
cash and securities owned by Fund to anyone other than a successor
custodian, the question of whether Fund will be liquidated or function
without a custodian. Notwithstanding the foregoing requirement as to
delivery upon termination of this Agreement, Custodian may make any
other delivery of the securities, funds, loan documents and property of
Fund which is permitted by the Investment Company Act of 1940, Fund's
governing documents then in
15
effect or apply to a court of competent jurisdiction for the
appointment of a successor custodian.
7. NOTICES. Notices, requests, instructions and other writings received by
Fund at Two Renaissance Square, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000, or at such other address as Fund may have
designated to Custodian in writing, will be deemed to have been
properly given to Fund hereunder; and notices, requests, instructions
and other writings received by Custodian at its offices at 000 Xxxx
00xx Xxxxxx, 00xx Xxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, or to such other
address as it may have designated to Fund in writing, will be deemed to
have been properly given to Custodian hereunder.
8. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of
Missouri and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective successors and
permitted assigns.
C. No provisions of the Agreement may be amended or modified, in
any manner except by a written agreement properly authorized
and executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original but all of which
together will constitute one and the same instrument.
F. If any part, term or provision of this Agreement is determined
to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered
severable and not be affected, and the rights and obligations
of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
G. Custodian will not release the identity of Fund to an issuer
which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and Fund unless the Fund
directs the Custodian otherwise.
H. This Agreement may not be assigned by either party without
prior written consent of the other party.
16
I. If any provision of the Agreement, either in its present form
or as amended from time to time, limits, qualifies, or
conflicts with the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, such statues,
rules and regulations shall be deemed to control and supersede
such provision without nullifying or terminating the remainder
of the provisions of this Agreement.
J. The representations and warranties and the indemnification
extended hereunder are intended to and shall continue after
and survive the expiration, termination or cancellation of
this Agreement.
K. The Custody Agreement between Custodian and Fund, then known
as Pilgrim Regional Bankshares, Inc. dated as of October 1,
1989, is hereby cancelled and superseded effective as of the
date hereof, except that all rights, duties and liabilities
which may have arisen under such Custody Agreement prior to
the effectiveness hereof shall continue and survive.
Otherwise, this Agreement does not in any way affect any other
agreements entered into between the parties hereto.
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
---------------------------------------
Title:
------------------------------------
PILGRIM AMERICA BANK AND THRIFT FUND, INC.
By:
---------------------------------------
Title:
------------------------------------
EXHIBIT A
---------
INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE
==========================================================================================================================
TRANSACTION DTC PHYSICAL FED
==========================================================================================================================
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Calls Puts As Received C or F* As Received C or F*
--------------------------------------------------------------------------------------------------------------------------
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
--------------------------------------------------------------------------------------------------------------------------
Tender Reorgs. As Received C As Received C N/A
--------------------------------------------------------------------------------------------------------------------------
Dividends Paydate C Paydate C N/A
--------------------------------------------------------------------------------------------------------------------------
Floating Rate Int. Paydate C Paydate C N/A
--------------------------------------------------------------------------------------------------------------------------
Floating Rate Int. N/A As Rate Received C N/A
(No Rate)
--------------------------------------------------------------------------------------------------------------------------
Mtg. Backed P&I Paydate C Paydate + 1 Bus. C Paydate F
Day
--------------------------------------------------------------------------------------------------------------------------
Fixed Rate Int. Paydate C Paydate C Paydate F
--------------------------------------------------------------------------------------------------------------------------
Euroclear N/A C Paydate C
==========================================================================================================================
Legend
------
------------------------------------------------------------------
TRANSACTION CREDIT DATE FUNDS TYPE
------------------------------------------------------------------
Loan Payments As Received F
------------------------------------------------------------------
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
19
