CUSTODIAN SERVICES AGREEMENT
This Agreement is made as of ,
1995 by
and between XXXXX XXXXXX INCOME FUNDS, a Massachusetts
business
trust (the "Fund") and PNC BANK, NATIONAL ASSOCIATION, a national
banking association ("PNC Bank").
The Fund is registered as an open-end investment
company
under the Investment Company Act of 1940, as amended (the
"1940
Act"). The Fund wishes to retain PNC Bank to provide
custodian
services and PNC Bank wishes to furnish such services,
either
directly or through an affiliate or affiliates, as more
fully
described herein. In consideration of the premises and
mutual
covenants herein contained, the parties agree as follows:
1. Definitions.
(a) "Authorized Person". The term
"Authorized
Person" shall mean any officer of the Fund and any other
person,
who is duly authorized by the Fund's Governing Board, to
give
Oral and Written Instructions on behalf of the Fund.
Such
persons are listed in the Certificate attached hereto as
the
Authorized Persons Appendix, as such Appendix may be
amended in
writing by the Fund's Governing Board from time to time.
(b) "Book-Entry System". The term "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.
(c) "CFTC". The term "CFTC" shall mean
the
Commodities Futures Trading Commission.
(d) "Governing Board". The term "Governing
Board"
shall mean the Fund's Board of Directors if the Fund
is a
corporation or the Fund's Board of Trustees if the Fund
is a
trust, or, where duly authorized, a competent committee
thereof.
(e) "Oral Instructions". The term "Oral
Instructions"
shall mean oral instructions received by PNC Bank
from an
Authorized Person or from a person reasonably believed by
PNC
Bank to be an Authorized Person.
(f) "SEC". The term "SEC" shall mean the
Securities
and Exchange Commission.
(g) "Securities and Commodities Laws". The
term
"Securities and Commodities Laws" shall mean the "1933 Act"
which
shall mean the Securities Act of 1933, the "1934 Act" which
shall
mean the Securities Exchange Act of 1934, the 1940 Act, and
the
"CEA" which shall mean the Commodities Exchange Act, as
amended.
(h) "Shares". The term "Shares" shall mean the
shares
of stock of any series or class of the Fund, or,
where
appropriate, units of beneficial interest in a trust where
the
Fund is organized as a Trust.
(i) "Property". The term "Property" shall mean:
(i) any and all securities
and
other investment items which the Fund
may
from time to time deposit, or cause
to be
deposited, with PNC Bank or which PNC
Bank
may from time to time hold for the Fund;
(ii) all income in respect of
any of
such securities or other investment items;
(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 PNC Bank from time to time, from or on
behalf
of the Fund.
(j) "Written Instructions". The term
"Written
Instructions" shall mean written instructions signed by
one
Authorized Person and received by PNC Bank. The
instructions may
be delivered by hand, mail, tested telegram, cable,
telex or
facsimile sending device.
2. Appointment. The Fund hereby appoints PNC
Bank to
provide custodian services to the Fund, and PNC Bank accepts
such
appointment and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or,
where
applicable, will provide PNC Bank with the following:
(a) certified or authenticated copies of
the
resolutions of the Fund's Governing Board, approving
the
appointment of PNC Bank or its affiliates to provide
services;
(b) a copy of the Fund's most recent
effective
registration statement;
(c) a copy of the Fund's advisory
agreement or
agreements;
(d) a copy of the Fund's distribution
agreement or
agreements;
(e) a copy of the Fund's administration
agreements if
PNC Bank is not providing the Fund with such services;
(f) copies of any shareholder servicing
agreements
made in respect of the Fund; and
(g) certified or authenticated copies of any and
all
amendments or supplements to the foregoing.
4. Compliance with Government Rules and
Regulations.
PNC Bank undertakes to comply with all applicable
requirements of
the Securities and Commodities Laws and any laws, rules
and
regulations of governmental authorities having jurisdiction
with
respect to all duties to be performed by PNC Bank
hereunder.
Except as specifically set forth herein, PNC Bank
assumes no
responsibility for such compliance by the Fund.
5. Instructions. Unless otherwise provided in
this
Agreement, PNC Bank shall act only upon Oral and
Written
Instructions. PNC Bank shall be entitled to rely upon any
Oral
and Written Instructions it receives from an Authorized
Person
(or from a person reasonably believed by PNC Bank to
be an
Authorized Person) pursuant to this Agreement. PNC Bank
may
assume that any Oral or Written Instructions received
hereunder
are not in any way inconsistent with the provisions
of
organizational documents or this Agreement or of any
vote,
resolution or proceeding of the Fund's Governing Board or of
the
Fund's shareholders.
The Fund agrees to forward to PNC Bank Written
Instructions
confirming Oral Instructions so that PNC Bank 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 PNC
Bank
shall in no way invalidate the transactions or
enforceability of
the transactions authorized by the Oral Instructions.
The Fund further agrees that PNC Bank shall
incur no
liability to the Fund in acting upon Oral or Written
Instructions
provided such instructions reasonably appear to have
been
received from an Authorized Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If PNC Bank is in doubt
as to
any action it should or should not take, PNC Bank may
request
directions or advice, including Oral or Written
Instructions,
from the Fund.
(b) Advice of Counsel. If PNC Bank shall be in
doubt
as to any questions of law pertaining to any action it
should or
should not take, PNC Bank may request advice at its own cost
from
such counsel of its own choosing (who may be counsel for
the
Fund, the Fund's advisor or PNC Bank, at the option of PNC
Bank).
(c) Conflicting Advice. In the event of a
conflict
between directions, advice or Oral or Written Instructions
PNC
Bank receives from the Fund, and the advice it receives
from
counsel, PNC Bank shall be entitled to rely upon and follow
the
advice of counsel.
(d) Protection of PNC Bank. PNC Bank
shall be
protected in any action it takes or does not take in
reliance
upon directions, advice or Oral or Written
Instructions it
receives from the Fund or from counsel and which PNC
Bank
believes, in good faith, to be consistent with those
directions,
advice or Oral or Written Instructions.
Nothing in this paragraph shall be construed so
as to
impose an obligation upon PNC Bank (i) to seek such
directions,
advice or Oral or Written Instructions, or (ii) to
act in
accordance with such directions, advice or Oral or
Written
Instructions unless, under the terms of other provisions of
this
Agreement, the same is a condition of PNC Bank's properly
taking
or not taking such action.
7. Records. The books and records pertaining to the
Fund
which are in the possession of PNC Bank, 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, or the
Fund's
Authorized Persons, shall have access to such books and
records
at all time during PNC Bank's normal business hours. Upon
the
reasonable request of the Fund, copies of any such books
and
records shall be provided by PNC Bank to the Fund or
to an
Authorized Person of the Fund, at the Fund's expense.
8. Confidentiality. PNC Bank agrees to keep
confidential
all records of the Fund and information relative to the
Fund and
its shareholders (past, present and potential), unless
the
release of such records or information is otherwise
consented to,
in writing, by the Fund. The Fund agrees that such consent
shall
not be unreasonably withheld and may not be withheld where
PNC
Bank may be exposed to civil or criminal contempt
proceedings or
when required to divulge. The Fund further agrees that,
should
PNC Bank be required to provide such information or
records to
duly constituted authorities (who may institute civil or
criminal
contempt proceedings for failure to comply), PNC Bank shall
not
be required to seek the Fund's consent prior to disclosing
such
information.
9. Cooperation with Accountants. PNC Bank shall
cooperate
with the Fund's independent public accountants and shall
take all
reasonable action in the performance of its obligations
under
this Agreement to ensure that the necessary information is
made
available to such accountants for the expression of
their
opinion, as required by the Fund.
10. Disaster Recovery. PNC Bank shall enter into and
shall
maintain in effect with appropriate parties one or
more
agreements making reasonable provision for emergency
use of
electronic data processing equipment to the extent
appropriate
equipment is available. In the event of equipment failures,
PNC
Bank shall, at no additional expense to the Fund, take
reasonable
steps to minimize service interruptions but shall
have no
liability with respect thereto.
11. Compensation. As compensation for custody
services
rendered by PNC Bank during the term of this Agreement, the
Fund
will pay to PNC Bank a fee or fees as may be agreed to in
writing
from time to time by the Fund and PNC Bank.
12. Indemnification. The Fund agrees to indemnify and
hold
harmless PNC Bank and its nominees from all taxes,
charges,
expenses, assessment, claims and liabilities (including,
without
limitation, liabilities arising under the Securities
and
Commodities Laws and any state and foreign securities and
blue
sky laws, and amendments thereto, and expenses,
including
(without limitation) attorneys' fees and disbursements,
arising
directly or indirectly from any action which PNC Bank
takes or
does not take (i) at the request or on the direction of
or in
reliance on the advice of the Fund or (ii) upon Oral or
Written
Instructions. Neither PNC Bank, nor any of its nominees,
shall
be indemnified against any liability to the Fund or to
its
shareholders (or any expenses incident to such liability)
arising
out of PNC Bank's own willful misfeasance, bad faith,
negligence
or reckless disregard of its duties and obligations under
this
Agreement.
13. Responsibility of PNC Bank. PNC Bank shall be
under no
duty to take any action on behalf of the Fund
except as
specifically set forth herein or as may be specifically
agreed to
by PNC Bank, in writing. PNC Bank shall be obligated to
exercise
care and diligence in the performance of its duties
hereunder, to
act in good faith and to use its best effort, within
reasonable
limits, in performing services provided for under this
Agreement.
PNC Bank shall be responsible for its own negligent
failure to
perform its duties under this Agreement. Notwithstanding
the
foregoing, PNC Bank shall not be responsible for losses
beyond
its control, provided that PNC Bank has acted in accordance
with
the standard of care set forth above; and provided further
that
PNC Bank shall only be responsible for that portion of
losses or
damages suffered by the Fund that are attributable to
the
negligence of PNC Bank.
Without limiting the generality of the foregoing or of
any
other provision of this Agreement, PNC Bank, in connection
with
its duties under this Agreement, shall not be under any
duty or
obligation to inquire into and shall not be liable for (a)
the
validity or invalidity or authority or lack thereof of any
Oral
or Written Instruction, notice or other instrument which
conforms
to the applicable requirements of this Agreement, and which
PNC
Bank reasonably believes to be genuine; or (b) delays or
errors
or loss of data occurring by reason of circumstances beyond
PNC
Bank's control, including acts of civil or military
authority,
national emergencies, labor difficulties, fire, flood
or
catastrophe, acts of God, insurrection, war, riots or
failure of
the mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the
contrary,
PNC Bank shall have no liability to the Fund for
any
consequential, special or indirect losses or damages which
the
Fund may incur or suffer by or as a consequence of PNC
Bank's
performance of the services provided hereunder, whether or
not
the likelihood of such losses or damages was known by PNC
Bank.
14. Description of Services.
(a) Delivery of the Property. The Fund will
deliver
or arrange for delivery to PNC Bank, all the property
owned by
the Fund, including cash received as a result of the
distribution
of its Shares, during the period that is set forth in
this
Agreement. PNC Bank will not be responsible for such
property
until actual receipt.
(b) Receipt and Disbursement of Money. PNC
Bank,
acting upon Written Instructions, shall open and
maintain
separate account(s) 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, PNC
Bank
shall open separate custodial accounts for each separate
series,
class or portfolio of the Fund and shall hold in such
account(s)
all cash received from or for the accounts of the
Fund
specifically designated to each separate series, class
or
portfolio. PNC Bank shall make cash payments from or for
the
account of the Fund only for:
(i) purchases of securities
in the
name of the Fund or PNC Bank or PNC
Bank's
nominee as provided in sub-paragraph j
and
for which PNC Bank 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 PNC Bank;
(iii) payment of, subject to
Written
Instructions, interest, taxes,
administration,
accounting, distribution, advisory,
management
fees or similar expenses which are to be
borne by
the Fund;
(iv) payment to, subject to
receipt of
Written Instructions, the Fund's transfer
agent,
as agent for the shareholders, 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 shareholders,
or, in
lieu of paying the Fund's transfer agent, PNC
Bank
may arrange for the direct payment of
cash
dividends and distributions to
shareholders in
accordance with procedures mutually agreed
upon
from time to time by and among the Fund, PNC
Bank
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 PNC Bank;
(vi) payments of the amounts
of
dividends received with respect to
securities
sold short; payments made to a sub-
custodian
pursuant to provisions in sub-paragraph c of
this
Paragraph; and
(viii) payments, upon Written
Instructions
made for other proper Fund purposes. PNC
Bank is
hereby authorized to endorse and collect
all
checks, drafts or other orders for the
payment of
money received as custodian for the account
of the
Fund.
(c) Receipt of Securities.
(i) PNC Bank shall hold
all
securities received by it for the
account of
the Fund 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. PNC Bank
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
and
upon Written Instructions, accompanied
by a
certified resolution of the Fund's
Governing
Board, authorizing the transaction.
In no
case may any member of the Fund's
Governing
Board, or any officer, employee or
agent of
the Fund withdraw any securities. At
PNC
Bank's own expense and for its
own
convenience, PNC Bank may enter
into
sub-custodian agreements with other
banks or
trust companies to perform duties
described
in this sub-paragraph c. 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 PNC Bank,
or at
least twenty million dollars
($20,000,000) if
such bank or trust company is
not a
subsidiary or affiliate of PNC Bank.
In
addition, such bank or trust company
must
agree to comply with the relevant
provisions
of the 1940 Act and other applicable
rules
and regulations. PNC Bank shall
remain
responsible for the performance of all
of its
duties as described in this Agreement
and
shall hold the Fund harmless from PNC
Bank's
own (or any sub-custodian chosen by PNC
Bank
under the terms of this sub-paragraph c)
acts
or omissions, under the standards of
care
provided for herein.
(d) Transactions Requiring Instructions. Upon
receipt
of Oral or Written Instructions and not otherwise, PNC
Bank,
directly or through the use of the Book-Entry System, shall:
(i) deliver any securities
held
for the Fund 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 or
Written
Instructions, proxies, consents,
authorizations,
and any other instruments whereby the
authority of
the Fund 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; provided that, in
any
such case, the cash or other consideration
is to
be delivered to PNC Bank;
(iv) deliver any securities held
for the
Fund 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 the Fund 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 Fund and take such other
steps
as shall be stated in said Oral 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 the
Fund to any bank or trust company for the
purpose
of a pledge or hypothecation to secure any
loan
incurred by the Fund; provided, however,
that
securities shall be released only upon
payment to
PNC Bank 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 the Fund 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
owned by the Fund for the purpose
of
redeeming in kind shares of the Fund
upon
delivery thereof to PNC Bank; and
(xi) release and deliver or
exchange
securities owned by the Fund for other
corporate
purposes. PNC Bank 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 above.
(e) Use of Book-Entry System. The Fund shall
deliver to
PNC Bank certified resolutions of the Fund's Governing
Board
approving, authorizing and instructing PNC Bank on a
continuous
and on-going basis, to deposit in the Book-Entry System
all
securities belonging to the Fund 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 Fund, and deliveries and returns of securities
loaned,
subject to repurchase agreements or used as
collateral in
connection with borrowings. PNC Bank shall continue to
perform
such duties until it receives Written or Oral
Instructions
authorizing contrary actions(s).
To administer the Book-Entry System properly, the
following
provisions shall apply:
(i) With respect to
securities of
the Fund which are maintained in
the
Book-Entry system, established
pursuant to
this sub-paragraph e hereof, the
records of
PNC Bank shall identify by Book-
Entry or
otherwise those securities belonging to
the
Fund. PNC Bank shall furnish the
Fund a
detailed statement of the Property held
for
the Fund under this Agreement at
least
monthly and from time to time and
upon
written request.
(ii) Securities and any cash of the
Fund
deposited in the Book-Entry System will at
all
times be segregated from any assets and
cash
controlled by PNC Bank in other than a
fiduciary
or custodian capacity but may be commingled
with
other assets held in such capacities. PNC
Bank
and its sub-custodian, if any, will pay out
money
only upon receipt of securities and will
deliver
securities only upon the receipt of money.
(iii) All books and records
maintained by
PNC Bank which relate to the Fund's
participation
in the Book-Entry System will at all times
during
PNC Bank's regular business hours be open to
the
inspection of the Fund's duly authorized
employees
or agents, and the Fund will be furnished
with all
information in respect of the services
rendered to
it as it may require.
(iv) PNC Bank will provide the Fund
with
copies of any report obtained by PNC Bank on
the
system of internal accounting control of
the
Book-Entry System promptly after receipt of
such a
report by PNC Bank. PNC Bank will also
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 the Fund which are issued or issuable only in bearer
form,
except such securities held in the Book-Entry System,
shall be
held by PNC Bank in bearer form; all other securities held
for
the Fund may be registered in the name of the Fund; PNC
Bank; the
Book-Entry System; a sub-custodian; or any duly
appointed
nominee(s) of the Fund, PNC Bank, Book-Entry system
or
sub-custodian. The Fund reserves the right to instruct PNC
Bank
as to the method of registration and safekeeping of
the
securities of the Fund. The Fund agrees to furnish to PNC
Bank
appropriate instruments to enable PNC Bank to hold or
deliver in
proper form for transfer, or to register its registered
nominee
or in the name of the Book-Entry System, any securities
which it
may hold for the account of the Fund and which may from
time to
time be registered in the name of the Fund. PNC Bank shall
hold
all such securities which are not held in the Book-Entry
System
in a separate account for the Fund in the name of the
Fund
physically segregated at all times from those of any other
person
or persons.
(g) Voting and Other Action. Neither PNC Bank
nor its
nominee shall vote any of the securities held pursuant to
this
Agreement by or for the account of the Fund, except in
accordance
with Written Instructions. PNC Bank, directly or through
the use
of the Book-Entry System, shall execute in blank and
promptly
deliver all notice, proxies, and proxy soliciting
materials to
the registered holder of such securities. If the
registered
holder is not the Fund then Written or Oral Instructions
must
designate the person(s) who owns such securities.
(h) Transactions Not Requiring Instructions. In
the
absence of contrary Written Instructions, PNC Bank is
authorized
to take the following actions:
(i) Collection of Income and
Other
Payments.
(A) collect and
receive
for the account of the Fund, 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 the
Fund of
such receipt and credit such
income, as
collected, to the Fund'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 the Fund all
securities
received as a distribution on
the
Fund's portfolio 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
portfolio securities belonging to
the
Fund held by PNC Bank hereunder;
(D) present for
payment
and collect the amount payable
upon all
securities which may mature or
be
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.
(ii) Miscellaneous Transactions.
(A) PNC Bank
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 the
Fund
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 or PNC
Bank or
nominee of either, 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
PNC Bank.
(B) Unless and
until PNC
Bank receives Oral or
Written
Instructions to the contrary, PNC
Bank
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 the
Fund;
(2)
collect
interest and cash
dividends
received, with notice to the
Fund,
to the Fund's account;
(3) hold
for
the account of the Fund all
stock
dividends, rights and
similar
securities issued with
respect to
any securities held by PNC
Bank;
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 such
certificate as
the owner of the securities
covered
thereby, to the extent it
may
lawfully do so.
(i) Segregated Accounts.
(i) PNC Bank shall upon
receipt of
Written or Oral Instructions establish
and
maintain segregated account(s) on its
records
for and on behalf of the Fund.
Such
account(s) 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
proper
corporate purposes.
(ii) PNC Bank may enter into
separate
custodial agreements with various
futures
commission merchants ("FCMs") that the Fund
uses
("FCM Agreement"). Pursuant to an FCM
Agreement,
the Fund's margin deposits in any
transactions
involving futures contracts and options on
futures
contracts will be held by PNC Bank in
accounts
("FCM Account") subject to the disposition by
the
FCM involved in such contracts and in
accordance
with the customer contract between FCM and
the
Fund ("FCM Contract"), SEC rules and the
rules of
the applicable commodities exchange. Such
FCM
Agreements shall only be entered into
upon
receipt of Written Instructions from the
Fund
which state that:
(A) a customer
agreement
between the FCM and the Fund has
been
entered into; and
(B) the Fund
is in
compliance with all the rules
and
regulations of the CFTC.
Transfers of
initial margin shall be made into a
FCM
Account only upon Written
Instructions;
transfers of premium and
variation
margin may be made into a FCM
Account
pursuant to Oral Instructions.
Transfers of
funds
from a FCM Account to the FCM for
which
PNC Bank holds such an account may
only
occur upon certification by the
FCM to
PNC Bank that pursuant to the
FCM
Agreement and the FCM Contract,
all
conditions precedent to its
right to
give PNC Bank such instructions
have
been satisfied.
(iii) PNC Bank shall arrange for
the
establishment of XXX custodian accounts for
such
share- holders holding Shares through
XXX
accounts, in accordance with the
Fund's
prospectuses, the Internal Revenue Code
(including
regulations), and with such other
procedures as
are mutually agreed upon from time to time
by and
among the Fund, PNC Bank and the Fund's
transfer
agent.
(j) Purchases of Securities. PNC Bank shall
settle
purchased securities upon receipt of Oral or Written
Instructions
from the Fund or its investment advisor(s) 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; and
(vi) the name of the person from
whom or
the broker through whom the purchase was
made. PNC
Bank shall upon receipt of securities
purchased by
or for the Fund pay out of the moneys held
for the
account of the Fund 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 or Written Instructions.
(k) Sales of Securities. PNC Bank shall settle
sold
securities upon receipt of Oral or Written Instructions from
the
Fund 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, settlement
and
sale;
(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; and
(vii) the location to which the
security
must be delivered and delivery deadline, if
any.
PNC Bank shall deliver the securities upon
receipt
of the total amount payable to the Fund upon
such
sale, provided that the total amount
payable is
the same as was set forth in the Oral or
Written
Instructions. Subject to the foregoing, PNC
Bank
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.
(i) PNC Bank shall furnish
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 the Fund,
listing the
portfolio securities belonging to
the
Fund with the adjusted average
cost of
each issue and the market value at
the
end of such month, and stating the
cash
account of the Fund
including
disbursement;
(C) the reports
to be
furnished to the Fund pursuant to
Rule
17f-4; and
(D) such
other
information as may be agreed upon
from
time to time between the Fund and
PNC
Bank.
(ii) PNC Bank 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. PNC Bank shall be under no
other
obligation to inform the Fund as to such
actions
or events.
(m) 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 PNC Bank)
shall
be at the sole risk of the Fund. If payment is not
received by
PNC Bank within a reasonable time after proper demands have
been
made, PNC Bank shall notify the Fund in writing, including
copies
of all demand letters, any written responses, memoranda of
all
oral responses and telephonic demands thereto, and
await
instructions from the Fund. PNC Bank shall not be
obliged to
take legal action for collection unless and until
reasonably
indemnified to its satisfaction. PNC Bank shall also notify
the
Fund as soon as reasonably practicable whenever income
due on
securities is not collected in due course.
15. Duration and Termination. This Agreement
shall
continue until terminated by the Fund or by PNC Bank on
sixty
(60) days' prior written notice to the other party. In the
event
this Agreement is terminated (pending appointment of a
successor
to PNC Bank or vote of the shareholders of the Fund to
dissolve
or to function without a custodian of its cash,
securities or
other property), PNC Bank shall not deliver cash,
securities or
other property of the Fund to the Fund. It may deliver them
to a
bank or trust company of PNC Bank'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. PNC Bank shall
not be
required to make any such delivery or payment until full
payment
shall have been made to PNC Bank of all of its
fees,
compensation, costs and expenses. PNC Bank shall have a
security
interest in and shall have a right of setoff against
Property in
the Fund's possession as security for the payment of such
fees,
compensation, costs and expenses.
16. Notices. All notices and other
communications,
including Written Instructions, shall be in writing
or by
confirming telegram, cable, telex or facsimile sending
device.
Notice shall be addressed (a) if to PNC Bank at PNC
Bank's
address: Airport Business Center, International Court 2,
000
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxx 00000, marked for
the
attention of the Custodian Services Department (or its
successor)
(b) if to the Fund, at the address of the Fund; or (c)
if to
neither of the foregoing, at such other address as shall
have
been notified to the sender of any such notice or
other
communication. 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.
17. 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. 18. Delegation. PNC Bank may assign its
rights
and delegate its duties hereunder to any wholly-owned
direct or
indirect subsidiary of PNC Bank, National Association or PNC
Bank
Corp., provided that (i) PNC Bank gives the Fund thirty (30)
days
prior written notice; (ii) the delegate agrees with PNC
Bank to
comply with all relevant provisions of the 1940 Act; and
(iii)
PNC Bank and such delegate promptly provide such
information as
the Fund may request, and respond to such questions as the
Fund
may ask, relative to the assignment, including
(without
limitation) the capabilities of the delegate.
19. 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.
20. Further Actions. Each party agrees to perform
such
further acts and execute such further documents as are
necessary
to effectuate the purposes hereof.
21. Miscellaneous. 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 and/or Oral Instructions. 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.
This Agreement shall be deemed to be a contract
made in
Pennsylvania and governed by Pennsylvania law, without
regard to
principles of conflicts of law. 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. This Agreement shall be binding
upon
and shall inure to the benefit of the parties hereto and
their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused
this
Agreement to be executed by their officers designated
below on
the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By:
Title:
XXXXX XXXXXX INCOME FUNDS
By:
Title:
