1
Exhibit (g)(2)
FORM OF CUSTODIAN SERVICE AND MONITORING AGREEMENT
THIS AGREEMENT made as of the ___ day of ____________, 2001 by
and among PILGRIM EQUITY TRUST ("Fund"), MBIA INSURANCE CORPORATION ("MBIA") and
STATE STREET BANK AND TRUST COMPANY ("State Street").
WHEREAS, the Fund intends to establish a separate series of
the Fund, Pilgrim Principal Protection Fund ("Series"), with an obligation by
the Fund, on behalf of the Series, that on a date certain (the "Guarantee
Maturity Date"), each shareholder of the Series will be entitled to redeem each
of his or her shares for an amount no less than the Guarantee per Share, the
calculation of which is described in the Fund's Registration Statement
("Repayment Obligation"); and
WHEREAS, the Fund, on behalf of the Series, has entered into a
Financial Guaranty Agreement with MBIA (the "Financial Guaranty Agreement")
whereby MBIA will issue a policy to support the Repayment Obligation ("Policy");
and
WHEREAS, in connection therewith, the Fund intends to open
custody accounts with State Street under the terms of the Custodian Agreement
(the "Custodian Agreement") between the Fund, formerly known as Northstar Equity
Trust, and State Street dated as of August 20, 1998, as amended, on behalf of
the Series, to hold the Series' portfolio investments; and
WHEREAS, under the terms of the Financial Guaranty Agreement,
in consideration of MBIA's issuing the Policy, the Fund, on behalf of the
Series, has agreed to a particular investment strategy and to provide an
arrangement whereby trades executed for the Series through the Guarantee
Maturity Date will be monitored for conformity with certain guidelines; and
2
WHEREAS, the Fund and MBIA wish for State Street to provide
investment monitoring services in respect of the Series, and State Street is
willing to perform such services upon the following terms and conditions; and
WHEREAS, the Fund and MBIA wish for State Street to provide
trade execution services in respect of the Series, and State Street is willing
to perform such services upon the following terms and conditions.
NOW THEREFORE, in consideration of the premises and other good
and valuable consideration the parties hereto agree to the following:
1. Construction.
Unless the context of this Agreement otherwise clearly
requires, references to the plural include the singular, the singular the plural
and the part the whole and "or" has the inclusive meaning sometimes represented
by the phrase "and/or." The words "hereof," "herein," "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. The section and other headings contained
in this Agreement are for reference purposes only and shall not control or
affect the construction of this Agreement or the interpretation thereof in any
respect. Section, subsection, schedule; exhibit and attachment references are to
this Agreement unless otherwise specified.
2. Custody and Monitoring Services.
The Fund, on behalf of the Series, will open with State Street
one or more custody account(s) designated "Series" (such designated custody
account(s) hereinafter referred to as "Series Account"). The Series Account will
contain the appropriate designation in its title and will be operated subject to
the terms of the Custodian Agreement between State Street and the Fund. State
Street will monitor the assets delivered to each Series Account for conformity
with
-2-
3
the guidelines set forth in Schedule B attached hereto entitled Conforming
Assets Guidelines (the "Guidelines"). For purposes of this Agreement, State
Street will only be responsible for performing conforming assets tests on assets
that are traded through the Series Accounts and shall not be responsible for
monitoring the continuing compliance with the Guidelines of assets held in the
Series Accounts. In order to carry out the conforming assets tests, State Street
will rely on the trade information that State Street receives from the Fund on
behalf of the Series and from broker confirmations tendered by brokers to State
Street through The Depository Trust Company's Institutional Delivery
Confirmation System ("DTC ID"). Such trade information must be complete,
properly formatted and provided to State Street in a timely manner. State Street
shall perform the conforming asset tests with respect to each asset added to the
Series Account promptly after receipt of the related trade information and in
any event within one business day of such receipt by State Street. If by
applying the conforming assets tests to the Series Accounts an instance of
noncompliance with the Guidelines is noted, State Street will notify MBIA and
the Fund promptly of such noncompliance in writing via facsimile transmission.
Once State Street has notified the Fund and MBIA as to the existence of
noncompliance, State Street shall have no further obligation or duty to the
Fund, the Series or MBIA to monitor the trade, or to report its cure.
3. Notification of Event of Default/Trade Execution/Cure
Notice/Obligation to Reject Trades.
If MBIA notifies State Street, by giving a written notice to
State Street, with a copy to the Fund, substantially in the format of Exhibit 1
hereto, that an Event of Default under the Financial Guaranty Agreement has
occurred and remains uncured ("Event of Default
-0-
0
Xxxxxx"), Xxxxx Xxxxxx will promptly confirm receipt of such notice, via phone
contact and facsimile to the Fund.
After or concurrently with State Street's receipt of an Event
of Default Notice and until the end of the related DK Period (as defined below),
MBIA shall be entitled to deliver to State Street (with a copy to the Fund)
trade instructions in the format of Attachment 1 to Exhibit 1 (for manual trade
instructions) or in the format of Attachment 2 to Exhibit 1 (for electronic
instructions) with respect to the Series Account. MBIA shall deliver to State
Street, with a copy to the Fund, a written notice of the cure of such default,
substantially in the format of Exhibit 2 hereto, promptly upon the occurrence of
such cure (the "Cure Notice").
From 12:01 a.m. eastern time on the Business Day (defined as a
day upon which the New York Stock Exchange is open for trading and is not a
Saturday or Sunday, and is neither a legal holiday nor a day on which banking
institutions are generally authorized or obligated by law or regulation to
close) immediately following the day upon which State Street receives an Event
of Default Notice from MBIA until 12:01 a.m. eastern time on the Business Day
immediately following the day upon which State Street receives a Cure Notice
from MBIA (a "DK Period"), State Street shall reject and not act upon any trade
instructions issued directly by the Fund (or its investment adviser) for the
Series Account. With respect to the Series Account, State Street shall, upon the
termination of a DK Period, revert to its normal method of accepting trade
instructions from the Fund (or its investment adviser) as governed by the
Custodian Agreement. Nothing herein shall be construed as authorizing State
Street to reject for settlement securities transactions for which trade
instructions were issued prior to 12:01 am. eastern time on the Business Day
immediately following the day on which State Street receives an Event of Default
Notice.
-4-
5
From the time State Street receives an Event of Default Notice
through the end of the related DK Period, State Street is irrevocably authorized
and instructed (i) to act upon any and all trade instructions delivered by MBIA
and (ii) to execute the transactions set forth in such instructions through a
broker or dealer selected by State Street for the Series Account. State Street
will promptly notify the Fund, with a copy to MBIA, of trades executed as a
result of instructions received by MBIA. Such notification will be made via
transmission of a trade execution file to the extent possible (substantially in
the format of Exhibit 5), by close of business on the date such trades are
executed.
4. Delivery of Documents.
The Fund and MBIA will promptly furnish to State Street such
copies, properly certified or authenticated, of documents and other related
information that State Street may reasonably request or require to properly
discharge its duties herein.
5. Fees and Expenses.
(a) As compensation for the services rendered to the Fund and
MBIA pursuant to this Agreement, the Fund, on behalf of the Series, shall pay
State Street monthly fees determined as set forth in Schedule A hereto. Such
fees are to be billed monthly and shall be due and payable upon receipt of the
invoice. The Fund and State Street may agree, from time to time, to a change to
the fees set forth in Schedule A. Upon any termination of the provision of
services under this Agreement before the end of any month, the fee for the part
of the month before such termination shall be prorated according to the
proportion which such part bears to the full monthly period and shall be payable
upon the date of such termination.
(b) The Fund may request additional services, additional
processing, or special reports, with such specifications and requirements
documentation as may be reasonably
-5-
6
required by the Fund or by State Street. If State Street elects to provide such
services or arrange for their provision, it shall be entitled to additional fees
and expenses at its customary rates and charges.
(c) All fees, out-of-pocket expenses, or additional charges of
State Street shall be billed on a monthly basis and shall be due and payable by
the Fund, on behalf of the Series, upon receipt of the invoice.
(d) State Street will render, after the close of each month in
which services have been furnished, a statement reflecting all of the charges
for such month. Charges remaining unpaid thirty (30) days after receipt of such
statement (with the exception of specific amounts which may be contested in good
faith by the Fund) shall bear interest in finance charges equivalent to State
Street's Prime Rate as announced from time to time plus two (2) percent per
annum and all costs and expenses of effecting collection of any such sums,
including reasonable attorneys' fees, shall be paid by the Fund, on behalf of
the Series, to State Street.
(e) In the event that the Fund, on behalf of the Series, is
more than sixty (60) days delinquent in its payments of monthly xxxxxxxx in
connection with this Agreement (with the exception of specific amounts which may
be contested in good faith by the Fund), this Agreement may be terminated upon
sixty (60) days' written notice to the Fund and MBIA by State Street. The Fund
must notify State Street in writing of any contested amounts, with a copy to
MBIA, within thirty (30) days of receipt of a billing for such amounts. Disputed
amounts are not due and payable while they are being investigated. MBIA reserves
the right to pay the delinquent amounts thereby eliminating State Street's right
to terminate the Agreement under this subsection.
-6-
7
6. Limitation of Liability and Indemnification
(a) In undertaking the performance of its obligations
hereunder, State Street shall not be liable for any loss, damage or expense
suffered by the Fund, the Series or MBIA in connection with the matters to which
this Agreement relates or the services provided hereunder except for general
damages solely caused by or resulting from willful misfeasance, bad faith or
negligence on the part of State Street, its officers, employees or agents, in
the performance of its or their duties under this Agreement. "General damages"
means only those damages as directly and necessarily result from such act or
omission without reference to any special conditions or circumstances of the
Fund, the Series or MBIA. In no event shall State Street be liable for any
indirect, special or consequential losses or damages of any kind whatsoever
(including but not limited to lost profits), even if State Street has been
advised of the likelihood of such losses or damages and regardless of the form
of action through which any such losses or damages may be claimed.
(b) State Street shall not be responsible for, and the Fund
shall indemnify and hold State Street, its officers, employees and agents
(collectively "State Street and its agents") harmless from and against any and
all losses, damages, costs, reasonable attorneys' fees and expenses, incurred by
State Street or its agents in the performance of its/their duties hereunder,
including but not limited to those arising out of or attributable to:
(i) any and all actions of State Street and its
agents required to be taken pursuant to this Agreement;
(ii) the reliance on or use by State Street and/or
its agents of information, records, or documents which are
received by State Street and/or its agents and furnished to it
or them by or on behalf of the Fund, the Series or MBIA
-7-
8
in accordance with this Agreement, and which have been
prepared or maintained by the Fund, the Series or MBIA or any
third party on behalf of either the Fund, the Series or MBIA;
(iii) the Fund's or MBIA's refusal or failure to
comply with the terms of this Agreement or any agreement
between the Series, the Fund and MBIA relating to the matters
herein, or the Fund's, the Series', or MBIA's lack of good
faith, or its actions, or lack thereof, involving negligence
or willful misfeasance;
(iv) any delays, inaccuracies, errors in or omissions
from information or data provided to State Street or its
agents by MBIA or the Series or the Fund or provided to State
Street or its agents by data or corporate action services or
vendors;
(v) the offer or sale of shares by the Fund, the
Series or MBIA in violation of any requirement under the
Federal securities laws or regulations or the securities laws
or regulations of any state, or in violation any stop order or
other determinations or ruling by any federal agency or any
state agency with respect to the offer or sale of such shakes
in such state (1) resulting from activities, actions, or
omissions by the Fund, the Series or MBIA, or (2) existing or
arising out of activities, actions or omissions by or on
behalf of the Fund, the Series or MBIA prior to the effective
date of this Agreement;
(vi) all actions, omissions, or errors caused by
third parties to whom State Street, its agents, the Fund on
behalf of the Series, or MBIA has assigned any rights and/or
delegated any duties under this Agreement at the request of or
as required by the Fund or MBIA; and
-0-
0
(xxx) Xxxxx Xxxxxx and its agents acting upon
electronic or written trade instructions given by MBIA
pursuant to Section 3;
provided that, in no event shall State Street or its agents be indemnified for
its or their negligence, bad faith or willful misfeasance in carrying out its or
their duties hereunder.
(c) MBIA shall indemnify and hold State Street, and its agents
harmless from and against any and all losses, damages, costs, reasonable
attorneys' fees and expenses, incurred by State Street and its agents insofar as
such losses, damages or costs arise out of, or are based upon, wrongful exercise
by MBIA of its rights under the Financial Guaranty Agreement to give
instructions to State Street pursuant to Section 3 hereof; provided that, in no
event shall State Street or its agents be indemnified for its or their
negligence, bad faith or willful misfeasance in carrying out its duties
hereunder.
(d) In performing its services hereunder, State Street and its
agents shall be entitled to rely only on written instructions (oral instructions
are not permitted), notices or other communications, including electronic
transmissions, bearing or purporting to bear the manual or facsimile signature
of any person from the Series, the Fund or MBIA (an "Authorized Person") named,
and in the capacity identified, in lists (naming those persons who may authorize
the transactions in Sections 2 and 3) which are attached hereto as Exhibit 3
(for the Fund) and Exhibit 4 (for MBIA). Any changes to such lists will be
furnished to State Street from time to time in writing and given in the manner
set forth in Section 13 hereof and will be signed by an officer of either the
Fund or MBIA, as appropriate, who shall provide State Street with evidence of
his or her authority to make such changes. Each of the Fund, in Exhibit 3, and
MBIA, in Exhibit 4, will provide State Street with authenticated specimen
signatures of each Authorized Person, and each of the Fund, on behalf of the
Series, and MBIA shall indemnify State Street and
-9-
10
its agents for any loss or expense caused by reliance upon such authenticated
specimen signatures which State Street and its agents acting in good faith
believe to be genuine, valid and authorized, and shall be indemnified by each of
the Fund and MBIA as appropriate for any loss or expense caused by such
reliance. In addition, in performing its services hereunder, State Street and
its agents also shall be entitled to consult with and rely on the advice and
opinions of legal counsel retained by State Street or the Fund or MBIA, as
necessary or appropriate, including State Street's in-house counsel, and State
Street shall not be liable for any action taken, suffered or omitted by it in
accordance with the advice of such counsel.
(e) In the event that State Street or its agents shall receive
instructions, claims or demand from the Fund, the Series, or MBIA which, in
State Street's opinion, conflict with any of the provisions of this Agreement,
State Street shall notify the Fund, the Series, or MBIA, as the case may be, of
such conflict and shall be, entitled to refrain from taking any action and its
sole obligation shall be to keep safely all assets in the Series Account until
it shall receive instructions, claims or demands from such party which, in State
Street's opinion, conform to the provisions of this Agreement.
(f) The duties and responsibilities of State Street hereunder
shall be determined solely by the express provisions of this Agreement, except
that the settlement and safekeeping of assets in the Series Account shall be
governed by the terms of the Custodian Agreement between State Street and the
Fund. Should there be any conflict between the terms of the Custodian Agreement
and the terms of this Agreement regarding the services set forth in Section 3 of
this Agreement, the terms of this Agreement shall govern.
-00-
00
(x) Xxxxx Xxxxxx shall have no responsibility to make
recommendations with respect to the purchase, retention or sale of assets
relating to the Series Account or to maintain any insurance on assets in the
Series Account for the benefit of MBIA or the Series.
(h) State Street shall have no responsibility for any act or
omission, or for the solvency or insolvency, or notice to State Street or any of
its affiliates or agents of the solvency or insolvency, of any broker (other
than a State Street affiliate selected by State Street pursuant to Section 3
hereof to execute the trade instructions provided by MBIA).
(i) Any liability of the Fund under this Agreement with
respect to the Series, or in connection with the transactions contemplated
herein with respect to the Series, shall be discharged only out of the assets of
the Series, and no other series of the Fund shall be liable with respect
thereto.
7. Term.
This Agreement shall become effective immediately and shall
terminate on the earlier of the termination date under the Custodian Agreement
or [___________, 2006], unless earlier terminated by any party hereto on 90
days' written notice to the other parties. Upon termination of this Agreement,
the Fund, on behalf of the Series, shall pay to State Street such compensation
and any out-of-pocket or other reimbursable expenses which may become due or
payable under the terms hereof as of the date of termination or after the date
that the provision of services ceases, whichever is later.
8. Representations.
(a) The Fund, on behalf of the Series, represents and warrants
that the Fund has directed the Series' investment adviser to comply with the
Guidelines and purchase for such accounts only assets conforming to the
Guidelines.
-11-
12
(b) Each of the parties hereto represents and warrants that:
(i) it has the legal right, power and authority to execute; deliver and perform
this Agreement and to carry out all of the transactions contemplated hereby;
(ii) it has obtained all necessary authorizations, (iii) the execution, delivery
and performance of this Agreement and the carrying out of any of the
transactions contemplated hereby will not be in conflict with, result in a
breach of or constitute a default under any agreement or other instrument to
which it is a party or which is otherwise known to it; (iv) it does not require
the consent or approval of any governmental agency or instrumentality, except
any such consents and approvals which it has obtained; and (v) the execution and
delivery of this Agreement by it will not violate any law, regulation, charter,
by-law, order of any court or governmental agency or judgment applicable to it.
9. Notices.
Any notice required or permitted hereunder shall be in writing
and shall be deemed effective on the date of personal delivery (by private
messenger, courier service or otherwise) or upon confirmed receipt of telex or
facsimile or other electronic system acceptable to State Street, whichever
occurs first, or upon receipt if by mail to the parties at the following address
(or such other address as a party may specify by notice to the others):
If to the Fund or the Series:
Pilgrim Equity Trust
0000 X. Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Vice President
and Secretary
Phone: (000) 000-0000
Fax: (000) 000-0000
-12-
13
If to MBIA:
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to State Street:
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, Fund Manager
Phone: (000) 000-0000
Fax: (000) 000-0000
10. Waiver.
The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
11. Amendments.
This Agreement may be modified or amended from time to time by
mutual written agreement of the parties hereto. No provision of this Agreement
may be changed, discharged, or terminated orally, but only by an instrument in
writing signed by the parties.
12. Severability.
If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all others persons and circumstances.
-13-
14
13. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to laws as to
conflicts of laws, and shall be binding on all the parties hereto and their
respective successors and assigns. The Fund, MBIA and State Street hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
in the State and County of New York for the purposes of any suit, action or
other proceedings arising out of this Agreement. The Fund, MBIA and State Street
hereby irrevocably waive any objection on the ground of venue, forum non
conveniens, or any similar grounds, and irrevocably consent to service of
process by mail or in any manner permitted by New York law, and irrevocably
waive their respective rights to any jury trial. The headings of the sections
hereof are included for convenience of reference only and do not form a part of
this Agreement.
14. Benefit of the Parties.
This Agreement is for the exclusive benefit of the parties
hereto and shall not be relied upon by or create any beneficial interest in any
person not a party hereto including any shareholders of the Fund.
15. Counterparts:
This Agreement may be executed by the parties in a number of
counterparts each of which shall be an original and together shall constitute
one and the same agreement.
-14-
15
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as of the date first
written above.
PILGRIM EQUITY TRUST MBIA INSURANCE CORPORATION
By: By:
----------------------------------- ----------------------------
Name: Xxxxxx X. Naka Name:
--------------------------------- --------------------------
Title: Senior Vice President Title:
-------------------------------- -------------------------
STATE STREET BANK AND TRUST COMPANY
By:
-----------------------------------
Name: W. Xxxxxx Xxx
---------------------------------
Title: Senior Vice President
--------------------------------
-15-
16
SCHEDULE A
FEES AND EXPENSES
For the services rendered under this Agreement; the Fund shall pay to State
Street:
[------------------]
17
SCHEDULE B
CONFORMING ASSETS GUIDELINES
State Street will utilize Open Bloomberg to perform the Conforming Assets
Guideline review. In the event a security rating is not available on Open
Bloomberg, State Street will apply the rating from Moody's and Standard & Poors,
if available. If not, State Street will use the issuer's long-term debt rating
for monitoring purposes.
Equity Asset Test
- Equity securities of any company included in the S&P 500 Index, as
published by FactSet Data Systems, Inc. or by S&P
- Forward contracts on the S&P 500 Index, as traded on the Chicago
Mercantile Exchange
Fixed Income Assets Test
- U.S. Treasury or Agency Zeroes maturing on, or within 90 days
preceding, the Guarantee Maturity Date
- Non-callable corporate debt securities, maturing within 3 years
(preceding or following) of the Guarantee Maturity Date and having a
rating of at least AA- by S&P or Aa3 by Moody's
- if both Moody's and S&P have issued a rating thereon, such rating shall
be no less than Aa3/AA-
- U.S. Treasury Futures
Cash and Cash Equivalents Test
- Cash and
- the following short-term securities with remaining maturities of 180
days or less:
- (1) direct obligations of, and obligations fully guaranteed as
to full and timely payment by the full faith and credit of,
the United States of America, excluding U.S. Treasury and
Agency Zeroes
- (2) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated
under the laws of the United States of America or any state
thereof; provided that at the time of investment therein the
commercial paper or other short-term unsecured debt
obligations thereof shall be rated at least A-1 by S&P or P-1
by Moody's
- (3) bankers acceptances issued by any depository institution
or trust company referred to in clause (2) above and
- (4) commercial paper having at the time of the investment
therein a rating of at least A-1 by S&P or P-1 by Moody's
17
18
EXHIBIT 1
EVENT OF DEFAULT NOTICE
[Date]
[Addressee State Street]
Re: Event of Default
Pursuant to Section 3 of the Custodian Service and Monitoring Agreement (the
"Agreement") dated____________ among Pilgrim Equity Trust ("Fund"), State Street
Bank and Trust Company ("State Street") and MBIA Insurance Corporation ("MBIA"),
please be advised that an Event of Default, as defined in Section 4.1(___)
relating to a default under [Section 3.____ of] (1) the Financial Guaranty
Agreement dated among the Fund and MBIA, has occurred and [remains uncured.
Please reject and do not act upon any trade instructions for the settlement of
securities issued directly by the Series Fund (or its investment adviser or its
sub-adviser) for the Pilgrim Principal Protection Fund Account # _________.] or
[was cured on the date hereof, as indicated in a Cure Notice dated the date
hereof].(2) Please have the following trades listed on the attached Trade
instructions executed in respect of Pilgrim Principal Protection Fund.
MBIA Insurance Corporation
By:
Title:
copy: Pilgrim Equity Trust
0000 X. Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Vice President and Secretary
Phone: (000) 000-0000
Fax: (000) 000-0000
(1) Strike language in brackets and initial if Section 4.1(c) or (d)
Event of Default has occurred.
(2) Strike inappropriate language in brackets and initial.
18
19
EXHIBIT 1 - ATTACHMENT 1
MANUAL TRADE INSTRUCTIONS
From: MBIA Insurance Corporation
PORTFOLIO ACCOUNT BUY OR SELL SECURITY NAME TICKET/CUSIP QUANTITY
1.
2.
3.
4.
5.
6.
7.
8.
Note: CUSIP Number is only required for U.S. Treasury Strip securities.
copy: Pilgrim Equity Trust
[-----------------]
[-----------------]
Attn: Counsel
Fax: [(___) ___-____]
20
EXHIBIT 2
CURE NOTICE
[Date]
Pilgrim Equity Trust
0000 X. Xxxxxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Vice President and Secretary
Phone: (000) 000-0000
Fax: (000) 000-0000
Re: Event of Default
Pursuant to Section 3 of the Custodian Service and Monitoring Agreement (the
"Agreement") dated ___________ among Pilgrim Equity Trust ("Fund"), State Street
Bank and Trust Company ("State Street") and MBIA Insurance Corporation ("MBIA"),
please be advised that an Event of Default identified in our written notice to
State Street dated __________________, as defined in Section 4.1(___) relating
to a default under [Section 3.____ of] (3) the Financial Guaranty Agreement
dated _____________ among the Fund and MBIA has been cured. Please revert to
your normal method of accepting trade instructions from the Pilgrim Principal
Protection Fund (or its investment adviser or its sub-adviser) for Pilgrim
Principal Protection Fund (as defined in the Agreement).
MBIA Insurance Corporation
---------------------------------------
By:
Title:
copy: State Street Bank and Trust Company
(3) Strike language in brackets and initial if Section 4.1(c) or (d)
Event of Default has occurred.
21
EXHIBIT 3
AUTHORIZED PERSONS - PILGRIM EQUITY TRUST
The following Pilgrim Equity Trust personnel are authorized to instruct State
Street as it relates to Pilgrim Principal Protection Fund:
--------------------------------------------------------------------------------
Telephone: Facsimile:
--------------------------------------------------------------------------------
Telephone: Facsimile:
--------------------------------------------------------------------------------
Telephone: Facsimile:
--------------------------------------------------------------------------------
Telephone: Facsimile:
21
22
EXHIBIT 4
AUTHORIZED PERSONS AND SIGNATURE SAMPLES - MBIA INSURANCE CORPORATION
The following MBIA Insurance Corporation personnel are authorized to instruct
State Street as it relates to Pilgrim Principal Protection Fund:
--------------------------------------------------------------------------------
Telephone: Facsimile:
--------------------------------------------------------------------------------
Telephone: Facsimile:
--------------------------------------------------------------------------------
Telephone: Facsimile:
--------------------------------------------------------------------------------
Telephone: Facsimile:
22
23
EXHIBIT 5
TRADE EXECUTION; NOTIFICATION FILE
Pilgrim Principal Protection Fund must have a header (Record Type 1), the trade
execution detail for purchases and sales (Record Type 2), hash totals (Record
Type 3) one each for purchase and sales.
FLAT FILE FORMAT FOR TRADE PARSE
HEADER (RECORD TYPE 1)
FIELD POSITION LENGTH COMMENTS
----- -------- ------ --------
Record Type 1 1 "1"
Filler 2 1 space
Account 3 30 Pilgrim Portfolio
Trade Date 33 8 mm/dd/yy
Filler 41 1 space
Settlement Date 42 8 mm/dd/yy
Filler 50 1 space
Broker Number 51 6 Assigned by Pilgrim Operations
DETAIL (RECORD TYPE 2)
FIELD POSITION LENGTH COMMENTS
----- -------- ------ --------
Record Type 1 1 "2"
Filler 2 1 space
CUSIP 3 9
Filler 12 1 space
Ticker 13 6
Filler 19 1 space
Buy/Sell 20 1 "B" or "S"
Filler 21 1 space
Shares 22 7 no commas, no decimals
Filler 29 1 space
Price 30 11 six decimals, no commas
Filler 41 1 space
Commission 42 7 four decimals
Filler 49 1 space
Security Name 50 30
23
24
EXHIBIT 5 (CONT'D.)
TOTALS (RECORD TYPE 3)
FIELD POSITION LENGTH COMMENTS
----- -------- ------ --------
Record Type 1 1 "3"
filler 2 1 space
Buy/Sell 3 1 "B" or "S"
filler 4 1 space
# of trades 5 4 no comma
filler 9 1 space
# of shares 13 8 no commas, no decimals
filler 21 1 space
Gross cost/proceeds 22 13 no commas, two decimals
filler 35 1 space
Commission 36 13 no commas, three decimals
filler 49 1 space
SEC Fee 50 9 no commas, two decimals
filler 59 1 space
Net cost/proceeds 60 13 no commas, two decimals
24
