Exhibit (j)
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of January 18, 2002 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and XXXXXXXXXX PARTNERS ABSOLUTE RETURN FUND L.L.C., a Delaware
limited liability company (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as a closed-end, non-diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Definitions. As Used in This Agreement:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Authorized Person" means any officer of the Fund and any
other person authorized by the Fund to give Oral or Written
Instructions on behalf of the Fund. An Authorized Person's
scope of authority may be limited by setting forth such
limitation in a written document signed by both parties
hereto.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry
system for United States and federal agency securities, its
successor or successors, and its nominee or nominees and any
book-entry system maintained by an exchange registered with
the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "Change of Control" means a change in ownership or control
(not including transactions between wholly-owned direct or
indirect subsidiaries of a common parent) of 25% or more of
the beneficial ownership of the shares of common stock or
shares of beneficial interest of an entity or its parent(s).
(g) "Oral Instructions" mean oral instructions received by PFPC
Trust from an Authorized Person or from a person reasonably
believed by PFPC Trust to be an Authorized Person. PFPC Trust
may, in its sole discretion in each separate instance,
consider and rely upon instructions it receives from an
Authorized Person via electronic mail as Oral Instructions.
(h) "PFPC Trust" means PFPC Trust Company or a subsidiary or
affiliate of PFPC Trust Company.
(i) "SEC" means the Securities and Exchange Commission.
(j) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940
Act and the CEA.
(k) "Shares" mean the shares of beneficial interest of any series
or class of the Fund.
(l) "Property" means:
(i) any and all securities and other investment items
which the Fund may from time to time deposit, or
cause to be deposited, with PFPC Trust or which PFPC
Trust may from time to time hold for the Fund;
(ii) all income in respect of any of such securities or
other investment items;
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(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of securities issued by the
Fund, which are received by PFPC Trust from time to
time, from or on behalf of the Fund.
(m) "Written Instructions" mean (i) written instructions signed by
two Authorized Persons and received by PFPC Trust or (ii)
trade instructions transmitted by means of an electronic
transaction reporting system which requires the use of a
password or other authorized identifier in order to gain
access. The instructions may be delivered electronically or by
hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. Appointment. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund, on behalf of each of its investment portfolios
(each, a "Portfolio"), and PFPC Trust accepts such appointment and
agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where applicable, will
provide PFPC Trust with the following:
(a) at PFPC Trust's request, certified or authenticated copies of
the resolutions of the Fund's directors, approving the
appointment of PFPC Trust or its affiliates to provide
services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution/underwriting agreement with respect
to each class of Shares;
(e) a copy of each Portfolio's administration agreement;
(f) copies of any distribution and/or member servicing plans and
agreements made in respect of the Fund or a Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
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4. Compliance with Laws.
PFPC Trust undertakes to comply with material applicable requirements
of the Securities Laws and material laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties
to be performed by PFPC Trust hereunder. Except as specifically set
forth herein, PFPC Trust assumes no responsibility for such compliance
by the Fund or any other entity.
5. Instructions.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall
act only upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instruction
or Written Instruction it receives from an Authorized Person
(or from a person reasonably believed by PFPC Trust to be an
Authorized Person) pursuant to this Agreement. PFPC Trust may
assume that any Oral Instructions or Written Instructions
received hereunder are not in any way inconsistent with the
provisions of organizational documents of the Fund or of any
vote, resolution or proceeding of the Fund's directors or of
the Fund's members, unless and until PFPC Trust receives
Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions (except where such Oral
Instructions are given by PFPC Trust or its affiliates) so
that PFPC Trust receives the Written Instructions by the close
of business on the same day that such Oral Instructions are
received. The fact that such confirming Written Instructions
are not received by PFPC Trust or differ from the Oral
Instructions shall in no way invalidate the transactions or
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enforceability of the transactions authorized by the Oral
Instructions or PFPC Trust's ability to rely upon such Oral
Instructions.
6. Right to Receive Advice.
(a) Advice of the Fund. If PFPC Trust is in doubt as to any action
it should or should not take, PFPC Trust may request
directions or advice, including Oral Instructions or Written
Instructions, from the Fund.
(b) Advice of Counsel. If PFPC Trust shall be in doubt as to any
question of law pertaining to any action it should or should
not take, PFPC Trust may request advice from counsel of its
own choosing (who may be counsel for the Fund, the Fund's
investment adviser or PFPC Trust, at the option of PFPC
Trust).
(c) Conflicting Advice. In the event of a conflict between
directions or advice or Oral Instructions or Written
Instructions PFPC Trust receives from the Fund, and the advice
it receives from counsel, PFPC Trust shall be entitled to rely
upon and follow the advice of counsel.
(d) Protection of PFPC Trust. PFPC Trust shall be indemnified by
the Fund and without liability for any action PFPC Trust takes
or does not take in reliance upon directions or advice or Oral
Instructions or Written Instructions PFPC Trust receives from
or on behalf of the Fund or from counsel and which PFPC Trust
believes, in good faith, to be consistent with those
directions or advice or Oral Instructions or Written
Instructions. Nothing in this section shall be construed so as
to impose an obligation upon PFPC Trust (i) to seek such
directions or advice or Oral Instructions or Written
Instructions, or (ii) to act in accordance with such
directions or advice or Oral Instructions or Written
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Instructions.
7. Records; Visits. The books and records pertaining to the Fund and any
Portfolio, which are in the possession or under the control of PFPC
Trust, shall be the property of the Fund. Such books and records shall
be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and
Authorized Persons shall have access to such books and records at all
times during PFPC Trust's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be
provided by PFPC Trust to the Fund or to an authorized representative
of the Fund, at the Fund's expense.
8. Confidentiality. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that
is competitively sensitive material, and not generally known to the
public, including, but not limited to, information about product plans,
marketing strategies, finances, operations, customer relationships,
customer profiles, customer lists, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Fund or PFPC Trust, their respective
subsidiaries and affiliated companies and the customers, clients and
suppliers of any of them; (b) any scientific or technical information,
design, process, procedure, formula, or improvement that is
commercially valuable and secret in the sense that its confidentiality
affords the Fund or PFPC Trust a competitive advantage over its
competitors; (c) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software, source
code, object code, flow charts, databases, inventions, know-how, and
trade secrets, whether or not patentable or copyrightable;
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and (d) anything designated as confidential. Notwithstanding the
foregoing, information shall not be subject to such confidentiality
obligations if it: (a) is already known to the receiving party at the
time it is obtained; (b) is or becomes publicly known or available
through no wrongful act of the receiving party; (c) is rightfully
received from a third party who, to the best of the receiving party's
knowledge, is not under a duty of confidentiality; (d) is released by
the protected party to a third party without restriction; (e) is
required to be disclosed by the receiving party pursuant to a
requirement of a court order, subpoena, governmental or regulatory
agency or law (provided the receiving party will provide the other
party written notice of such requirement, to the extent such notice is
permitted); (f) is relevant to the defense of any claim or cause of
action asserted against the receiving party; or (g) has been or is
independently developed or obtained by the receiving party.
9. Cooperation with Accountants. PFPC Trust shall cooperate with the
Fund's independent public accountants and shall take all reasonable
action to make any requested information available to such accountants
as reasonably requested by the Fund.
10. PFPC System. PFPC Trust shall retain title to and ownership of any and
all data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions,
discoveries, patentable or copyrightable matters, concepts, expertise,
patents, copyrights, trade secrets, and other related legal rights
utilized by PFPC Trust in connection with the services provided by PFPC
Trust to the Fund.
11. Disaster Recovery. PFPC Trust shall enter into and shall maintain in
effect with appropriate parties one or more agreements making
reasonable provisions for
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emergency use of electronic data processing equipment to the extent
appropriate equipment is available. In the event of equipment failures,
PFPC Trust shall, at no additional expense to the Fund, take reasonable
steps to minimize service interruptions. PFPC Trust shall have no
liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC Trust's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or obligations under
this Agreement.
12. Compensation. As compensation for custody services rendered by PFPC
Trust during the term of this Agreement, the Fund, on behalf of each of
the Portfolios, will pay to PFPC Trust a fee or fees as may be agreed
to in writing from time to time by the Fund and PFPC Trust. The Fund
acknowledges that PFPC Trust may receive float benefits in connection
with maintaining certain accounts required to provide services under
this Agreement.
13. Indemnification. The Fund, on behalf of each Portfolio, agrees to
indemnify and hold harmless PFPC Trust and its affiliates, including
their respective officers, directors, agents and employees, from all
taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, attorneys' fees and disbursements and
liabilities arising under the Securities Laws and any state and foreign
securities and blue sky laws) arising directly or indirectly from any
action or omission to act which PFPC Trust takes in connection with the
provision of services to the Fund. Neither PFPC Trust, nor any of its
affiliates, shall be indemnified against any liability (or any expenses
incident to such liability) caused by PFPC Trust's or its affiliates'
own willful misfeasance, bad faith, gross negligence or reckless
disregard in the performance of
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PFPC Trust's activities under this Agreement. The provisions of this
Section 13 shall survive termination of this Agreement.
14. Responsibility of PFPC Trust.
(a) PFPC Trust shall be under no duty to take any action hereunder
on behalf of the Fund or any Portfolio except as specifically
set forth herein or as may be specifically agreed to by PFPC
Trust and the Fund in a written amendment hereto. PFPC Trust
shall be obligated to exercise care and diligence in the
performance of its duties hereunder and to act in good faith
in performing services provided for under this Agreement. PFPC
Trust shall be liable only for any damages arising out of PFPC
Trust's failure to perform its duties under this Agreement to
the extent such damages arise out of PFPC Trust's willful
misfeasance, bad faith, gross negligence or reckless disregard
of its duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
(i) PFPC Trust shall not be liable for losses, delays,
failure, errors, interruption or loss of data occurring
directly or indirectly by reason of circumstances beyond its
reasonable control, including without limitation acts of God;
action or inaction of civil or military authority; public
enemy; war; terrorism; riot; fire; flood; sabotage; epidemics;
labor disputes; civil commotion; interruption, loss or
malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature;
or non-performance by a third party; and (ii) PFPC Trust shall
not be under any duty or obligation to inquire into and shall
not be liable for the validity or invalidity, authority or
lack thereof, or truthfulness or accuracy or lack
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thereof, of any instruction, direction, notice, instrument or
other information which PFPC Trust reasonably believes to be
genuine.
(c) Notwithstanding anything in this Agreement to the contrary,
(i) neither PFPC Trust nor its affiliates shall be liable for
any consequential, special or indirect losses or damages,
whether or not the likelihood of such losses or damages was
known by PFPC Trust or its affiliates and (ii) PFPC Trust's
cumulative liability to the Fund for all losses, claims,
suits, controversies, breaches or damages for any cause
whatsoever (including but not limited to those arising out of
or related to this Agreement) and regardless of the form of
action or legal theory shall not exceed the lesser of $250,000
or the fees received by PFPC Trust for services provided
hereunder during the 12 months immediately prior to the date
of such loss or damage.
(d) No party may assert a cause of action against PFPC Trust or
any of its affiliates that allegedly occurred more than 12
months immediately prior to the filing of the suit (or, if
applicable, commencement of arbitration proceedings) and a
formal demand letter from counsel to the Fund or one of its
affiliates alleging such cause of action.
(e) Each party shall have a duty to mitigate damages for which the
other party may become responsible.
The provisions of this Section 14 shall survive termination of this
Agreement.
15. Description of Services.
(a) Delivery of the Property. The Fund will deliver or arrange for
delivery to PFPC
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Trust, all the Property owned by the Portfolios, including
cash received as a result of the distribution of Shares,
during the term of this Agreement. PFPC Trust will not be
responsible for such property until actual receipt.
(b) Receipt and Disbursement of Money. PFPC Trust, acting upon
Written Instructions, shall open and maintain separate
accounts in the Fund's name using all cash received from or
for the account of the Fund, subject to the terms of this
Agreement. In addition, upon Written Instructions, PFPC Trust
shall open separate custodial accounts for each separate
Portfolio of the Fund (collectively, the "Accounts") and shall
hold in the Accounts all cash received from or for the
Accounts of the Fund specifically designated to each separate
Portfolio. PFPC Trust shall make cash payments from or for the
Accounts of a Portfolio only for:
(i) purchases of securities in the name of a Portfolio,
PFPC Trust, PFPC Trust's nominee or a sub-custodian
or nominee thereof as provided in sub-section (j) and
for which PFPC Trust has received a copy of the
broker's or dealer's confirmation or payee's invoice,
as appropriate;
(ii) purchase or redemption of Shares of the Fund
delivered to PFPC Trust;
(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting,
distribution, advisory, management fees or similar
expenses which are to be borne by a Portfolio;
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent for
the members, of an amount equal to the amount of
dividends and distributions stated in the Written
Instructions to be distributed in cash by the
transfer agent to members, or, in lieu of paying the
Fund's transfer agent, PFPC Trust may arrange for the
direct payment of cash dividends and distributions to
members in accordance with procedures mutually agreed
upon from time to time by and among the Fund, PFPC
Trust and the Fund's transfer agent.
(v) payments, upon receipt of Written Instructions, in
connection with the conversion, exchange or surrender
of securities owned or subscribed to by the Fund and
held by or delivered to PFPC Trust;
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(vi) payments of the amounts of dividends received with
respect to securities sold short;
(vii) payments made to a sub-custodian pursuant to
provisions in sub-section (c) of this Section; and
(viii) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian
for the Accounts.
(c) Receipt of Securities; Subcustodians.
(i) PFPC Trust shall hold all securities received by it
for the Accounts in a separate account that
physically segregates such securities from those of
any other persons, firms or corporations, except for
securities held in a Book-Entry System. All such
securities shall be held or disposed of only upon
Written Instructions of the Fund pursuant to the
terms of this Agreement. PFPC Trust shall have no
power or authority to assign, hypothecate, pledge or
otherwise dispose of any such securities or
investment, except upon the express terms of this
Agreement or upon Written Instructions authorizing
the transaction. In no case may any member of the
Fund's directors, or any officer, employee or agent
of the Fund withdraw any securities.
At PFPC Trust's own expense and for its own
convenience, PFPC Trust may enter into sub-custodian
agreements with other banks or trust companies to
perform duties described in this sub-section (c) with
respect to domestic assets. Such bank or trust
company shall have an aggregate capital, surplus and
undivided profits, according to its last published
report, of at least one million dollars ($1,000,000),
if it is a subsidiary or affiliate of PFPC Trust, or
at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or
affiliate of PFPC Trust. In addition, such bank or
trust company must be qualified to act as custodian
and agree to comply with the relevant provisions of
applicable rules and regulations. Any such
arrangement will not be entered into without prior
written notice to the Fund (or as otherwise provided
in the 1940 Act).
In addition, PFPC Trust may enter into arrangements
with sub-custodians with respect to services
regarding foreign assets. Any such arrangement will
be entered into with prior written notice to the Fund
(or as otherwise provided in the 1940 Act).
PFPC Trust shall remain responsible for the
performance of all of its duties as described in this
Agreement and shall hold the Fund and each
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Portfolio harmless from its own acts or omissions,
under the standards of care provided for herein, or
the acts and omissions of any sub-custodian chosen by
PFPC Trust under the terms of this sub-section (c).
(d) Transactions Requiring Instructions. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC
Trust, directly or through the use of the Book-Entry System,
shall:
(i) deliver any securities held for a Portfolio against
the receipt of payment for the sale of such
securities;
(ii) execute and deliver to such persons as may be
designated in such Oral Instructions or Written
Instructions, proxies, consents, authorizations, and
any other instruments whereby the authority of a
Portfolio as owner of any securities may be
exercised;
(iii) deliver any securities to the issuer thereof, or its
agent, when such securities are called, redeemed,
retired or otherwise become payable at the option of
the holder; provided that, in any such case, the cash
or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any securities held for a Portfolio against
receipt of other securities or cash issued or paid in
connection with the liquidation, reorganization,
refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise
of any conversion privilege;
(v) deliver any securities held for a Portfolio to any
protective committee, reorganization committee or
other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization
or sale of assets of any corporation, and receive and
hold under the terms of this Agreement such
certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to
evidence such delivery;
(vi) make such transfer or exchanges of the assets of the
Portfolios and take such other steps as shall be
stated in said Oral Instructions or Written
Instructions to be for the purpose of effectuating a
duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the
Fund;
(vii) release securities belonging to a Portfolio to any
bank or trust company for the purpose of a pledge or
hypothecation to secure any loan incurred by the Fund
on behalf of that Portfolio; provided, however, that
securities shall be released only upon payment to
PFPC Trust of the
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monies borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made subject to proper prior
authorization, further securities may be released for
that purpose; and repay such loan upon redelivery to
it of the securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing
the loan;
(viii) release and deliver securities owned by a Portfolio
in connection with any repurchase agreement entered
into on behalf of the Fund, but only on receipt of
payment therefor; and pay out moneys of the Fund in
connection with such repurchase agreements, but only
upon the delivery of the securities;
(ix) release and deliver or exchange securities owned by
the Fund in connection with any conversion of such
securities, pursuant to their terms, into other
securities;
(x) release and deliver securities to a broker in
connection with the broker's custody of margin
collateral relating to futures and options
transactions;
(xi) release and deliver securities owned by the Fund for
the purpose of redeeming in kind shares of the Fund
upon delivery thereof to PFPC Trust; and
(xii) release and deliver or exchange securities owned by
the Fund for other purposes.
PFPC Trust must also receive a certified resolution
describing the nature of the corporate purpose and
the name and address of the person(s) to whom
delivery shall be made when such action is pursuant
to sub-paragraph d(xii).
(e) Use of Book-Entry System. PFPC Trust is authorized and
instructed, on a continuous basis, to deposit in the
Book-Entry System all securities belonging to the Portfolios
eligible for deposit therein and to utilize the Book-Entry
System to the extent possible in connection with settlements
of purchases and sales of securities by the Portfolios, and
deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with
borrowings. PFPC Trust shall continue to perform such duties
until it receives Written Instructions or Oral Instructions
authorizing contrary actions.
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PFPC Trust shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which
are maintained in the Book-Entry System, the records
of PFPC Trust shall identify by Book-Entry or
otherwise those securities belonging to each
Portfolio.
(ii) Assets of each Portfolio deposited in the Book-Entry
System will at all times be segregated from any
assets and cash controlled by PFPC Trust in other
than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities.
PFPC Trust will provide the Fund with such reports on its own
system of internal control as the Fund may reasonably request
from time to time.
(f) Registration of Securities. All Securities held for a
Portfolio which are issued or issuable only in bearer form,
except such securities held in the Book-Entry System, shall be
held by PFPC Trust in bearer form; all other securities held
for a Portfolio may be registered in the name of the Fund on
behalf of that Portfolio, PFPC Trust, the Book-Entry System, a
sub-custodian, or any duly appointed nominee of the Fund, PFPC
Trust, Book-Entry System or sub-custodian. The Fund reserves
the right to instruct PFPC Trust as to the method of
registration and safekeeping of the securities of the Fund.
The Fund agrees to furnish to PFPC Trust appropriate
instruments to enable PFPC Trust to hold or deliver in proper
form for transfer, or to register in the name of its nominee
or in the name of the Book-Entry System or in the name of
another appropriate entity, any securities which it may hold
for the Accounts and which may from time to time be registered
in the name of the Fund on behalf of a Portfolio.
(g) Voting and Other Action. Neither PFPC Trust nor its nominee
shall vote any of the securities held pursuant to this
Agreement by or for the account of a
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Portfolio, except in accordance with Written Instructions.
PFPC Trust, directly or through the use of the Book-Entry
System, shall execute in blank and promptly deliver all
notices, proxies and proxy soliciting materials received by
PFPC Trust as custodian of the Property to the registered
holder of such securities. If the registered holder is not the
Fund on behalf of a Portfolio, then Written Instructions or
Oral Instructions must designate the person who owns such
securities.
(h) Transactions Not Requiring Instructions. In the absence of
contrary Written Instructions, PFPC Trust is authorized to
take the following actions:
(i) Collection of Income and Other Payments.
(A) collect and receive for the account of each
Portfolio, all income, dividends,
distributions, coupons, option premiums,
other payments and similar items, included
or to be included in the Property, and, in
addition, promptly advise each Portfolio of
such receipt and credit such income, as
collected, to each Portfolio's custodian
account;
(B) endorse and deposit for collection, in the
name of the Fund, checks, drafts, or other
orders for the payment of money;
(C) receive and hold for the account of each
Portfolio all securities received as a
distribution on the Portfolio's securities
as a result of a stock dividend, share
split-up or reorganization,
recapitalization, readjustment or other
rearrangement or distribution of rights or
similar securities issued with respect to
any securities belonging to a Portfolio and
held by PFPC Trust hereunder;
(D) present for payment and collect the amount
payable upon all securities which may mature
or be, on a mandatory basis, called,
redeemed, or retired, or otherwise become
payable on the date such securities become
payable; and
(E) take any action which may be necessary and
proper in connection with the collection and
receipt of such income and other payments
and the endorsement for collection of
checks, drafts, and other negotiable
instruments.
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(ii) Miscellaneous Transactions.
(A) PFPC Trust is authorized to deliver or cause
to be delivered Property against payment or
other consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or
dealer selling for the account of a
Portfolio in accordance with street
delivery custom;
(2) for the exchange of interim
receipts or temporary securities
for definitive securities; and
(3) for transfer of securities into the
name of the Fund on behalf of a
Portfolio or PFPC Trust or a
sub-custodian or a nominee of one
of the foregoing, or for exchange
of securities for a different
number of bonds, certificates, or
other evidence, representing the
same aggregate face amount or
number of units bearing the same
interest rate, maturity date and
call provisions, if any; provided
that, in any such case, the new
securities are to be delivered to
PFPC Trust.
(B) unless and until PFPC Trust receives Oral
Instructions or Written Instructions to the
contrary, PFPC Trust shall:
(1) pay all income items held by it
which call for payment upon
presentation and hold the cash
received by it upon such payment
for the account of each Portfolio;
(2) collect interest and cash dividends
received, with notice to the Fund,
to the account of each Portfolio;
(3) hold for the account of each
Portfolio all stock dividends,
rights and similar securities
issued with respect to any
securities held by PFPC Trust; and
(4) execute as agent on behalf of the
Fund all necessary ownership
certificates required by the
Internal Revenue Code or the Income
Tax Regulations of the United
States Treasury Department or under
the laws of any state now or
hereafter in effect, inserting the
Fund's name, on behalf of a
Portfolio, on such certificate as
the owner of the securities covered
thereby, to the extent it may
lawfully do so.
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(i) Segregated Accounts.
(i) PFPC Trust shall upon receipt of Written Instructions
or Oral Instructions establish and maintain
segregated accounts on its records for and on behalf
of each Portfolio. Such accounts may be used to
transfer cash and securities, including securities in
the Book-Entry System:
(A) for the purposes of compliance by the Fund
with the procedures required by a securities
or option exchange, providing such
procedures comply with the 1940 Act and any
releases of the SEC relating to the
maintenance of segregated accounts by
registered investment companies; and
(B) upon receipt of Written Instructions, for
other purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX
custodian accounts for such members holding Shares
through XXX accounts, in accordance with the Fund's
prospectuses, the Internal Revenue Code of 1986, as
amended (including regulations promulgated
thereunder), and with such other procedures as are
mutually agreed upon from time to time by and among
the Fund, PFPC Trust and the Fund's transfer agent.
(j) Purchases of Securities. PFPC Trust shall settle purchased
securities upon receipt of Oral Instructions or Written
Instructions that specify:
(i) the name of the issuer and the title of the
securities, including CUSIP number if applicable;
(ii) the number of shares or the principal amount
purchased and accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker
through whom the purchase was made. PFPC Trust shall
upon receipt of securities purchased by or for a
Portfolio pay out of the moneys held for the account
of the Portfolio the total amount payable to the
person from whom or the broker through whom the
purchase was made, provided that the same conforms to
the total amount payable as set forth in such Oral
Instructions or Written Instructions.
17
(k) Sales of Securities. PFPC Trust shall settle sold securities
upon receipt of Oral Instructions or Written Instructions that
specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and
accrued interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to
whom the sale was made;
(vii) the location to which the security must be delivered
and delivery deadline, if any; and
(viii) the Portfolio involved.
PFPC Trust shall deliver the securities upon receipt of the total
amount payable to the Portfolio upon such sale, provided that the total
amount payable is the same as was set forth in the Oral Instructions or
Written Instructions. Notwithstanding the other provisions thereof,
PFPC Trust 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.
(l) Reports; Proxy Materials.
(i) PFPC Trust shall furnish to the Fund the following
reports:
(A) such periodic and special reports as the
Fund may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the account of
each portfolio, listing each portfolio
security belonging to each Portfolio with
the adjusted average cost of each issue and
the market value at the end of such month
and stating the cash account of each
Portfolio including disbursements;
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(C) the reports required to be furnished to the
Fund pursuant to Rule 17f-4 of the 1940 Act;
and
(D) such other information as may be agreed upon
from time to time between the Fund and PFPC
Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any
proxy statement, proxy material, notice of a call or
conversion or similar communication received by it as
custodian of the Property. PFPC Trust shall be under
no other obligation to inform the Fund as to such
actions or events. For clarification, upon
termination of this Agreement PFPC Trust shall have
no responsibility to transmit such material or to
inform the Fund or any other person of such actions
or events.
(m) Crediting of Accounts. If PFPC Trust in its sole discretion
credits an Account with respect to (a) income, dividends,
distributions, coupons, option premiums, other payments or
similar items on a contractual payment date or otherwise in
advance of PFPC Trust's actual receipt of the amount due, (b)
the proceeds of any sale or other disposition of assets on the
contractual settlement date or otherwise in advance of PFPC
Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is
subsequently unable to collect full and final payment for the
amounts so credited within a reasonable time period using
reasonable efforts or (ii) pursuant to standard industry
practice, law or regulation PFPC Trust is required to repay to
a third party such amounts so credited, or if any Property has
been incorrectly credited, PFPC Trust shall have the absolute
right in its sole discretion without demand to reverse any
such credit or payment, to debit or deduct the amount of such
credit
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or payment from the Account, and to otherwise pursue recovery
of any such amounts so credited from the Fund. Nothing herein
or otherwise shall require PFPC Trust to make any advances or
to credit any amounts until PFPC Trust's actual receipt
thereof. The Fund hereby grants a first priority contractual
possessory security interest in and a right of setoff against
the assets maintained in an Account hereunder in the amount
necessary to secure the return and payment to PFPC Trust of
any advance or credit made by PFPC Trust (including charges
related thereto) to such Account.
(n) Collections. All collections of monies or other property in
respect, or which are to become part, of the Property (but not
the safekeeping thereof upon receipt by PFPC Trust) shall be
at the sole risk of the Fund. If payment is not received by
PFPC Trust within a reasonable time after proper demands have
been made, PFPC Trust shall notify the Fund in writing,
including copies of all demand letters, any written responses
and memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to
take legal action for collection unless and until reasonably
indemnified to its satisfaction. PFPC Trust shall also notify
the Fund as soon as reasonably practicable whenever income due
on securities is not collected in due course and shall provide
the Fund with periodic status reports of such income collected
after a reasonable time.
16. Duration and Termination. This Agreement shall continue until
terminated by the Fund or PFPC Trust on sixty (60) days' prior written
notice to the other party. In the event this Agreement is terminated
(pending appointment of a successor to PFPC Trust
20
or vote of the members of the Fund to dissolve or to function without a
custodian of its cash, securities or other property), PFPC Trust shall
not deliver cash, securities or other property of the Portfolios to the
Fund. It may deliver them to a bank or trust company of PFPC Trust's
choice, having an aggregate capital, surplus and undivided profits, as
shown by its last published report, of not less than twenty million
dollars ($20,000,000), as a custodian for the Fund to be held under
terms similar to those of this Agreement. PFPC Trust shall not be
required to make any delivery or payment of assets upon termination
until full payment shall have been made to PFPC Trust of all of its
fees, compensation, costs and expenses (such expenses include, without
limitation, expenses associated with movement (or duplication) of
records and materials and conversion thereof to a successor service
provider, or to a bank or trust company pending appointment of such
successor, and all trailing expenses incurred by PFPC Trust). PFPC
Trust shall have a security interest in and shall have a right of
setoff against the Property as security for the payment of such fees,
compensation, costs and expenses.
17. Change of Control. Notwithstanding any other provision of this
Agreement, in the event of an agreement to enter into a transaction
that would result in a Change of Control of the Fund's adviser or
sponsor, the Fund's ability to terminate the Agreement pursuant to
Section 16 will be suspended from the time of such agreement until two
years after the Change of Control; provided, however, that this
provision shall expire on the third anniversary of the effective date
of this Agreement.
18. Notices. Notices shall be addressed (a) if to PFPC Trust at 0000
Xxxxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000, Attention: Xxx Xxxxxxxx; (b)
21
if to the Fund, at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000,
Attention: General Counsel; or (c) if to neither of the foregoing, at
such other address as shall have been given by like notice to the
sender of any such notice or other communication by the other party. If
notice is sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. If
notice is sent by first-class mail, it shall be deemed to have been
given five days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day it is
delivered.
19. Amendments. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
20. Delegation; Assignment. PFPC Trust may assign its rights and delegate
its duties hereunder to any affiliate of PFPC Trust or of The PNC
Financial Services Group, Inc., provided that PFPC Trust gives the Fund
70 days' prior written notice of such assignment or delegation.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
22. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
23. Miscellaneous.
(a) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior
agreements and
22
understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents
their agreement, if any, with respect to delegated duties.
(b) No Representations or Warranties. Except as expressly provided
in this Agreement, PFPC Trust hereby disclaims all
representations and warranties, express or implied, made to
the Fund or any other person, including, without limitation,
any warranties regarding quality, suitability,
merchantability, fitness for a particular purpose or otherwise
(irrespective of any course of dealing, custom or usage of
trade), of any services or any goods provided incidental to
services provided under this Agreement. PFPC Trust disclaims
any warranty of title or non-infringement except as otherwise
set forth in this Agreement.
(c) No Changes that Materially Affect Obligations. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees
not to make any modifications to its registration statement or
adopt any policies which would affect materially the
obligations or responsibilities of PFPC Trust hereunder
without the prior written approval of PFPC Trust, which
approval shall not be unreasonably withheld or delayed.
(d) Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect.
(e) Governing Law. This Agreement shall be deemed to be a contract
made in Delaware and governed by Delaware law, without regard
to principles of conflicts of law.
23
(f) Partial Invalidity. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be
affected thereby.
(g) Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(h) Facsimile Signatures. The facsimile signature of any party to
this Agreement shall constitute the valid and binding
execution hereof by such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------
Title: Executive Vice President
--------------------------------------
XXXXXXXXXX PARTNERS ABSOLUTE
RETURN FUND L.L.C.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Title: Assistant Secretary
--------------------------------------
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