CUSTODIAN SERVICES AGREEMENT
This Agreement is made as of December 1, 2003 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and FIRST DEFINED PORTFOLIO FUND, LLC, a Delaware limited
liability company (the "Fund").
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services to its investment portfolios listed on Exhibit A attached hereto and
made a part hereof, as such Exhibit A may be amended from time to time (each, a
"Portfolio"), 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
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written document signed by both parties hereto.
(d) "BOARD MEMBERS" shall mean the Trustees of the Fund.
(e) "BOOK-ENTRY SYSTEM" means the Federal Reserve Treasury book-entry
system for United States and federal agency securities, its
successor or successors, and its nominee or nominees and any
book-entry system registered with the SEC under the 1934 Act.
(f) "INTERESTS" mean the shares of beneficial interest of any series
or class of each Portfolio of the Fund.
(g) "MEMBER" shall have the same meaning as set forth in the limited
liability company agreement.
(h) "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.
(i) "PFPC TRUST" means PFPC Trust Company or a subsidiary or
affiliate of PFPC Trust Company.
(j) "SEC" means the Securities and Exchange Commission.
(k) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act and the 1940
Act.
(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 or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund to each of the Portfolios and PFPC Trust accepts
such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC Trust with the following:
(a) at PFPC Trust's request, certified or authenticated copies of the
resolutions of the Fund's Board Members, 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 Interests;
(e) a copy of each Portfolio's administration agreement;
(f) copies of any distribution and/or shareholder 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 Board Members 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
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invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions or PFPC Trust's ability to
rely upon such Oral Instructions.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC Trust may request directions or
advice, including Oral Instructions or Written Instructions, from
the Fund.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any
question of law pertaining to any action it should or should not
take, PFPC Trust may request advice from counsel of its own
choosing (who may be counsel for the Fund, the Fund's investment
adviser or PFPC Trust, at the option of PFPC Trust).
(c) CONFLICTING ADVICE. In the event of a conflict between directions
or advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel,
PFPC Trust shall be entitled to rely upon and follow the advice
of counsel.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be indemnified by the
Fund and without liability for any action PFPC Trust takes or
does not take in reliance upon directions or advice or Oral
Instructions or Written Instructions PFPC Trust receives from or
on behalf of the Fund or from counsel and which PFPC Trust
believes, in good faith, to be consistent with those directions
or advice or Oral Instructions or Written Instructions. Nothing
in this section shall be construed so as to impose an obligation
upon PFPC Trust (i) to seek such directions or advice or Oral
Instructions or Written Instructions, or (ii) to act in
accordance with such directions or advice or Oral Instructions or
Written Instructions.
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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; and (d) anything designated as
confidential. Notwithstanding the foregoing, information shall not be
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subject to such confidentiality obligations if: (a) release of such
information is necessary or desirable in connection with PFPC Trust's
provision of services under this Agreement; (b) it is already known to
the receiving party at the time it is obtained; (c) it is or becomes
publicly known or available through no wrongful act of the receiving
party; (d) it is rightfully received from a third party who, to the best
of the receiving party's knowledge, is not under a duty of
confidentiality; (e) it is released by the protected party to a third
party without restriction; (f) it is required to be disclosed by the
receiving party pursuant to a requirement of a court order, subpoena,
governmental or regulatory agency or law (provided the receiving party
will provide the other party written notice of such requirement, to the
extent such notice is permitted); (g) it is relevant to the defense of
any claim or cause of action asserted against the receiving party; or
(h) it has been or is independently developed or obtained by the
receiving party.
9. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the
Fund's independent public accountants and shall take all reasonable
action to make any requested information available to such accountants
as reasonably requested by the Fund.
10. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and
all data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions,
discoveries, patentable or copyrightable matters, concepts, expertise,
patents, copyrights, trade secrets, and other related legal rights
utilized by PFPC Trust in connection with the services provided by PFPC
Trust to the Fund.
11. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of equipment
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failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall
have no liability with respect to the loss of data or service
interruptions caused by equipment failure provided such loss or
interruption is not caused by PFPC Trust's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties or obligations
under this Agreement.
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.
(a) The Fund, on behalf of the Portfolios, agrees to indemnify, defend and
hold harmless PFPC Trust and its affiliates, including their respective
officers, directors, agents and employees from all taxes, charges,
expenses, assessments, claims and liabilities (including, without
limitation, reasonable attorneys' fees and disbursements and liabilities
arising under the Securities Laws and any state and foreign securities
and blue sky laws) ("Claims") arising directly or indirectly from any
action or omission to act which PFPC Trust takes in connection with the
provision of services to the Fund. Neither PFPC Trust, nor any of its
affiliates, shall be indemnified against any liability (or any expenses
incident to such liability) caused by PFPC Trust's or its affiliates'
own willful misfeasance, bad faith, gross negligence or reckless
disregard in the performance of PFPC Trust's activities under this
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Agreement. The provisions of this Section 13 shall survive termination
of this Agreement.
(b) INDEMNIFICATION OF THE FUND. PFPC agrees to defend, indemnify and
hold the Fund and its officers, directors and employees harmless from
any and all Claims arising directly or indirectly from the negligence,
bad faith or willful misfeasance of PFPC in the performance of its
duties hereunder. Notwithstanding the foregoing, the Fund shall not be
indemnified against any Claim caused by the Fund's or the Fund's other
service providers' willful misfeasance, bad faith or negligence.
(c) INDEMNIFICATION PROCEDURE.
(i) Notice of the Action. A party that seeks indemnification under
this Agreement must promptly give the other party notice of any
legal action. But a delay in notice does not relieve an
indemnifying party of any liability to an indemnified party,
except to the extent the indemnifying party shows that the delay
prejudiced the defense of the action.
(ii) Participating in or Assuming the Defense. The indemnifying party
may participate in the defense at any time or it may assume the
defense by giving notice to the other party. After assuming the
defense, the indemnifying party:
(1) must select an attorney that is satisfactory to the
other party;
(2) is not liable to the other party for any
later attorney's fees or for any other later expenses that
the other party incurs, except for reasonable
investigation costs;
(3) must not compromise or settle the action without the
other party's consent (but the other party must not
unreasonably withhold its consent);
and
(4) is not liable for any compromise or settlement made
without its consent.
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(iii) FAILING TO ASSUME THE DEFENSE. If the indemnifying party fails to
participate in or assume the defense within 15 days after
receiving notice of the action, the indemnifying party is bound
by any determination made in the action or by any compromise or
settlement made by the other party.
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,
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
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liable for the validity or invalidity, authority or lack thereof,
or truthfulness or accuracy or lack thereof, of any instruction,
direction, notice, instrument or other information which PFPC
Trust reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC Trust nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or
not the likelihood of such losses or damages was known by PFPC
Trust or its affiliates.
(d) Each party shall have a duty to mitigate damages for which the
other party may become responsible.
(e) Notwithstanding anything in this Agreement to the contrary (other
than as specifically provided in Section 15(h)(ii)(B)(4) and
Section 15(h)(iii)(A) of this Agreement), the Fund shall be
responsible for all filings, tax returns and reports on any
transactions undertaken pursuant to this Agreement, or in respect
of the Property or any collections undertaken pursuant to this
Agreement, which may be requested by any relevant authority. In
addition, the Fund shall be responsible for the payment of all
taxes and similar items (including without limitation penalties
and interest related thereto).
(f) The provisions of this Section 14 shall survive termination of
this Agreement. (f) Notwithstanding anything in this Agreement to
the contrary, PFPC Trust shall have no liability either for any
error or omission of any of its predecessors as servicer on
behalf of the Fund or for any failure to discover any such error
or omission.
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15. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Fund will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Portfolios,
including cash received as a result of the distribution of
Interests, 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 Interests of the Fund delivered
to PFPC Trust;
(iii) payment of, subject to Written Instructions, interest,
taxes (provided that tax which PFPC Trust considers is
required to be deducted or withheld "at source" will be
governed by Section 15(h)(iii)(B) of this Agreement),
administration, accounting, distribution, advisory and
management fees 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
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upon from time to time by and among the Fund, PFPC Trust
and the Fund's transfer agent;
(v) payments, upon receipt of Written Instructions, in
connection with the conversion, exchange or surrender of
securities owned or subscribed to by the Fund and held by
or delivered to PFPC Trust;
(vi) payments of the amounts of dividends received with respect
to securities sold short;
(vii) payments to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(ix) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian
for the 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 or through a sub-custodian or
depository. All such securities shall be held or disposed
of only upon Written Instructions of the Fund pursuant to
the terms of this Agreement. PFPC Trust shall have no
power or authority to assign, hypothecate, pledge or
otherwise dispose of any such securities or investment,
except upon the express terms of this Agreement or upon
Written Instructions authorizing the transaction. In no
case may any member of the Fund's Board of Trustees, 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
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into without prior written notice to the Fund (or as
otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign
assets. Any such arrangement will not be entered into
without prior written notice to the Fund (or as otherwise
provided in the 1940 Act).
PFPC Trust shall remain responsible for the acts and
omissions of any sub-custodian chosen by PFPC Trust under
the terms of this sub-section (c) to the same extent that
PFPC Trust is responsible for its own acts and omissions
under this Agreement.
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC
Trust shall:
(i) deliver any securities held for a Portfolio against the
receipt of payment for the sale of such securities or
otherwise in accordance with standard market practice;
(ii) execute and deliver to such persons as may be designated
in such Oral Instructions or Written Instructions,
proxies, consents, authorizations, and any other
instruments whereby the authority of 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
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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 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 by
the Fund on behalf of that Portfolio, but only on receipt
of payment therefor; and pay out monies of the Fund in
connection with such repurchase agreements, but only upon
the delivery of the securities;
(ix) release and deliver or exchange securities owned by the
Fund in connection with any conversion of such securities,
pursuant to their terms, into other securities;
(x) release and deliver securities to a broker in connection
with the broker's custody of margin collateral relating to
futures and options transactions;
(xi) release and deliver securities owned by the Fund for the
purpose of redeeming in kind shares of the Fund upon
delivery thereof to PFPC Trust; and
(xii) release and deliver or exchange securities owned by the
Fund for other purposes.
PFPC Trust must also receive a certified resolution
describing the nature of the corporate purpose and the
name and address of the person(s) to whom delivery shall
be made when such action is pursuant to sub-paragraph
d(xii).
(e) USE OF BOOK-ENTRY SYSTEM OR OTHER DEPOSITORY. PFPC Trust is
authorized and instructed, on a continuous basis, to deposit in
Book-Entry Systems and other depositories all securities
belonging to the Portfolios eligible for deposit therein and to
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utilize Book-Entry Systems and other depositories 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.
Notwithstanding anything in this Agreement to the contrary, PFPC
Trust's use of a Book-Entry System shall comply with the
requirements of Rule 17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other depository as
follows:
(i) With respect to securities of each Portfolio which are
maintained in a Book-Entry System or another depository,
the records of PFPC Trust shall identify by book-entry or
otherwise those securities belonging to each Portfolio.
(ii) Assets of each Portfolio deposited in a Book-Entry System
or another depository will (to the extent consistent with
applicable law and standard practice) at all times be
segregated from any assets and cash controlled by PFPC
Trust in other than a fiduciary or custodian capacity but
may be commingled with other assets held in such
capacities.
PFPC Trust will provide the Fund with such reports on its own
system of internal control as the Fund may reasonably request
from time to time.
(f) REGISTRATION OF SECURITIES. All Securities held for a Portfolio
which are issued or issuable only in bearer form, except such
securities held in the Book-Entry System or in another
depository, shall be held by PFPC Trust in bearer form; all other
securities held for a Portfolio may be registered in the name of
the Fund on behalf of that Portfolio, PFPC Trust, a Book-Entry
System, another depository, a sub-custodian, or any duly
appointed nominee of the Fund, PFPC Trust, Book-Entry System,
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depository or sub-custodian. The Fund reserves the right to
instruct PFPC Trust as to the method of registration and
safekeeping of the securities of the Fund. The Fund agrees to
furnish to PFPC Trust appropriate instruments to enable PFPC
Trust to hold or deliver in proper form for transfer, or to
register in the name of its nominee or in the name of the
Book-Entry System or in the name of another appropriate entity,
any securities which it may hold for the Accounts.
(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 Portfolio, except in accordance with
Written Instructions. PFPC Trust, directly or through the use of
another entity, shall execute in blank and promptly deliver all
notices, proxies and proxy soliciting 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 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;
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(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, Interest 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 called,
redeemed, retired or otherwise become payable (on a
mandatory basis) on the date such securities become
payable; and
(E) take any action which may be necessary and proper
in connection with the collection and receipt of
such income and other payments and the endorsement
for collection of checks, drafts, and other
negotiable instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause to be
delivered Property against payment or other
consideration or written receipt therefor in the
following cases:
(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:
Page 18
(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) subject to receipt of such documentation and
information as PFPC Trust may request,
execute as agent on behalf of the Fund all
necessary ownership certificates required by
a national governmental taxing authority or
under the laws of any U.S. state now or
hereafter in effect, inserting the Fund's
name, on behalf of a Portfolio, on such
certificate as the owner of the securities
covered thereby, to the extent it may
lawfully do so.
(iii) OTHER MATTERS.
(A) subject to receipt of such documentation and
information as PFPC Trust may request, PFPC Trust
will, in such jurisdictions as PFPC Trust may agree
from time to time, seek to reclaim or obtain a
reduction with respect to any withholdings or other
taxes relating to assets maintained hereunder
(provided that PFPC Trust will not be liable for
failure to obtain any particular relief in a
particular jurisdiction); and
(B) PFPC Trust is authorized to deduct or withhold any
sum in respect of tax which PFPC Trust considers is
required to be deducted or withheld "at source" by
any relevant law or practice.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or
Oral Instructions establish and maintain segregated
accounts on its records for and on behalf of each
Portfolio. Such accounts may be used to transfer cash and
securities, including securities in a Book-Entry System or
other depository:
(A) for the purposes of compliance by the Fund with the
procedures required by a securities or option
exchange, providing such procedures comply with the
1940 Act and any releases of the SEC relating to
Page 19
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 Interests
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 (or
otherwise in accordance with standard market practice) pay
out of the monies held for the account of the Portfolio
the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that
the same conforms to the total amount payable as set forth
in such Oral Instructions or Written Instructions.
(k) SALES OF SECURITIES. 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;
Page 20
(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 is consistent with standard
industry practice 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 corresponding security
identification number) held at the end of such
month and stating the cash balance of each
Portfolio at the end of such month.
(C) the reports required to be furnished to the Fund
pursuant to Rule 17f-4 of the 1940 Act; and
Page 21
(D) such other information as may be agreed upon from
time to time between the Fund and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any proxy
statement, proxy material, notice of a call or conversion
or similar communication received by it as custodian of
the Property. PFPC Trust shall be under no other
obligation to inform the Fund as to such actions or
events. For clarification, upon termination of this
Agreement PFPC Trust shall have no responsibility to
transmit such material or to inform the Fund or any other
person of such actions or events.
(m) CREDITING OF ACCOUNTS. PFPC Trust may in its sole discretion
credit an Account with respect to income, dividends,
distributions, coupons, option premiums, other payments or
similar items prior to PFPC Trust's actual receipt thereof, and
in addition PFPC Trust may in its sole discretion credit or debit
the assets in an Account on a contractual settlement date with
respect to any sale, exchange or purchase applicable to the
Account; provided that nothing herein or otherwise shall require
PFPC Trust to make any advances or to credit any amounts until
PFPC Trust's actual receipt thereof. If PFPC Trust in its sole
discretion credits an Account with respect to (a) income,
dividends, distributions, coupons, option premiums, other
payments or similar items on a contractual payment date or
otherwise in advance of PFPC Trust's actual receipt of the amount
due, (b) the proceeds of any sale or other disposition of assets
on the contractual settlement date or otherwise in advance of
PFPC Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is subsequently
Page 22
unable to collect full and final payment for the amounts so
credited within a reasonable time period using reasonable efforts
or (ii) pursuant to standard industry practice, law or regulation
PFPC Trust is required to repay to a third party such amounts so
credited, or if any Property has been incorrectly credited, PFPC
Trust shall have the absolute right in its sole discretion
without demand to reverse any such credit or payment, to debit or
deduct the amount of such credit or payment from the Account, and
to otherwise pursue recovery of any such amounts so credited from
the Fund. The Fund hereby grants a first priority contractual
possessory security interest in and a right of setoff against the
assets maintained in an Account hereunder in the amount necessary
to secure the return and payment to PFPC Trust of any advance or
credit made by PFPC Trust (including charges related thereto) to
such Account.
(n) COLLECTIONS. All collections of monies or other property in
respect, or which are to become part, of the Property (but not
the safekeeping thereof upon receipt by PFPC Trust) shall be at
the sole risk of the Fund. If payment is not received by 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.
Page 23
(o) FOREIGN EXCHANGE.
PFPC Trust and/or sub-custodians may enter into or arrange
foreign exchange transactions (at such rates as they may consider
appropriate) in order to facilitate transactions under this
Agreement, and such entities and/or their affiliates may receive
compensation in connection with such foreign exchange
transactions.
16. DURATION AND TERMINATION.
(a) This Agreement shall be effective on the date first written above
and shall continue until June 12, 2008 (the "Initial Term").
(b) Upon the expiration of the Initial Term, this Agreement
shall automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or PFPC provides written
notice to the other of its intent not to renew. Such notice must
be received not less than ninety (90) days prior to the
expiration of the Initial Term or the then current Renewal Term.
(c) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other
party (the "Non-Defaulting Party") may give written notice
thereof to the Defaulting Party, and if such material breach
shall not have been remedied within thirty (30) days after such
written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written
notice of such termination to the Defaulting Party. In all cases,
termination by the Non-Defaulting Party shall not constitute a
Page 24
waiver by the Non-Defaulting Party of any other rights it might
have under this Agreement or otherwise against the Defaulting
Party.
In the event this Agreement is terminated (pending appointment of
a successor to PFPC Trust or vote of the 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. NOTICES. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxx; (b) if to the Fund, at 0000 Xxxxxxxxxxx Xxxx, Xxxxx, XX 00000,
Attention: 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 electronic, hand or facsimile sending device, it
Page 25
shall be deemed to have been given immediately. If notice is sent by
first-class mail, it shall be deemed to have been given five days after
it has been mailed. If notice is sent by messenger, it shall be deemed
to have been given on the day it is delivered.
18. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
19. DELEGATION; ASSIGNMENT. PFPC Trust may assign its rights and delegate
its duties hereunder to any affiliate of PFPC Trust or of The PNC
Financial Services Group, Inc., provided that PFPC Trust gives the Fund
30 days' prior written notice of such assignment or delegation.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to
delegated duties.
(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
Page 26
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.
(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
Page 27
this Agreement shall constitute the valid and binding execution
hereof by such party.
(i) The Fund and PFPC Trust agree that the obligations of the Fund
under the Agreement shall not be binding upon any of the Board
Members, Members, nominees, officers, employees or agents,
whether past, present or future, of the Fund individually, but
are binding only upon the assets and property of the Fund (or
applicable Portfolio thereof), as provided in the Certificate of
Formation and Limited Liability Company Agreement. The execution
and delivery of this Agreement have been authorized by the Board
Members of the Fund, and signed by an authorized officer of the
Fund, acting as such, and neither such authorization by such
Board Members nor such execution and delivery by such officer
shall be deemed to have been made by any of them or any Member of
the Fund individually or to impose any liability on any of them
or any Member of the Fund personally, but shall bind only the
assets and property of the Fund (or applicable Portfolio
thereof), as provided in the Articles of Incorporation,
Certificate of Formation or Limited Liability Company Agreement.
Page 28
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/ Xxxxxx X. Xxxxx
----------------------------------
Title: Vice President
----------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Title: President
----------------------------------
Page 29
EXHIBIT A
THIS EXHIBIT A, dated as of December 1, 2003 is Exhibit A to that
certain Custodian Services Agreement dated as of December 1, 2003 between PFPC
Trust Company and First Defined Portfolio Fund, LLC.
PORTFOLIOS
The Target Managed VIP Portfolio
The DOWSM DART 10 Portfolio
Global Target 15 Portfolio
S&P Target 24 Portfolio
NASDAQ Target 15 Portfolio
First Trust 10 Uncommon Values Portfolio
First Trust Energy Portfolio
First Trust Financial Services Portfolio
First Trust Pharmaceutical Portfolio
First Trust Technology Portfolio
Value Line Target 25 Portfolio
Page 30
