Exhibit 99(j)
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of January , 2005 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and HATTERAS MASTER FUND, LP, a Delaware limited partnership
(the "Fund").
WITNESSETH:
WHEREAS, the Partnership is registered as a closed-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Partnership wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of the Partnership and any
other person authorized by the Partnership to give Oral or Written
Instructions on behalf of the Fund. An Authorized Person's scope of
authority may be limited by setting forth such limitation in a
written document signed by both parties hereto.
(d) "Book-Entry System" means 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.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "Change of Control" means a change in ownership or control (not
including transactions between wholly-owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(g) "Oral Instructions" mean oral instructions received by PFPC Trust
from an Authorized Person or from a person reasonably believed by
PFPC Trust to be an Authorized Person. PFPC Trust may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic
mail as Oral Instructions.
(h) "PFPC Trust" means PFPC Trust Company or a subsidiary or affiliate
of PFPC Trust Company.
(i) "SEC" means the Securities and Exchange Commission.
(j) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(k) "Shares" mean the shares of beneficial interest of any series or
class of the Fund.
(l) "Property" means:
(i) any and all securities and other investment items which the
Partnership 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;
(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
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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 (or persons reasonably believed by PFPC Trust to
be 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 Partnership hereby appoints PFPC Trust to provide
custodian services to the Partnership as set forth herein, on behalf of
each of its investment portfolios (each, a "Portfolio"), and PFPC Trust
accepts such appointment and agrees to furnish such services.
3. 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
Partnership or any other entity.
4. 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 pursuant to this Agreement. PFPC
Trust may assume that any Oral Instructions or Written Instructions
received hereunder are not in any
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way inconsistent with the provisions of organizational documents of
the Partnership or of any vote, resolution or proceeding of the
Fund's Board of [Directors/Trustees] or of the Fund's shareholders,
unless and until PFPC Trust receives Written Instructions to the
contrary.
(c) The Partnership agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions (except where such Oral Instructions
are given by PFPC Trust or its affiliates) so that PFPC Trust
receives the Written Instructions by the close of business on the
same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC Trust
or differ from the Oral Instructions shall in no way invalidate the
transactions or enforceability of the transactions authorized by the
Oral Instructions or PFPC Trust's ability to rely upon such Oral
Instructions.
5. 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
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follow the advice of counsel.
(d) Protection of PFPC Trust. PFPC Trust shall be indemnified by the
Partnership 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 Partnership 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.
6. RECORDS; VISITS. The books and records pertaining to the Partnership 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 Partnership 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 Partnership or to an authorized representative of the Fund, at the
Fund's expense.
7. 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
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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 Partnership or PFPC Trust, or their respective
subsidiaries and affiliated companies; (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 Partnership 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
Confidential Information and shall not be subject to such confidentiality
obligations if: (a) it is already known to the receiving party at the time
it is obtained; (b) it is or becomes publicly known or available through
no wrongful act of the receiving party; (c) 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; (d) it is released by the protected party
to a third party without restriction; (e) it is requested or required to
be disclosed by the receiving party pursuant to a court order, subpoena,
governmental or regulatory agency request or law (provided the receiving
party will provide the other party written notice of the same, to the
extent such notice is permitted); (f) release of such information by PFPC
Trust is necessary or desirable in connection with the provision of
services under this Agreement; (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.
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8. 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.
9. 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.
10. 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
failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC Trust's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or obligations under this
Agreement.
11. 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 Partnership and PFPC Trust. The
Partnership acknowledges that PFPC Trust may receive float benefits in
connection with maintaining certain accounts required to provide services
under this Agreement.
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12. INDEMNIFICATION. The Fund, on behalf of each Portfolio, 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, attorneys' fees and disbursements and
liabilities arising under the Securities Laws and any state and foreign
securities and blue sky laws) arising directly or indirectly from any
action or omission to act which PFPC Trust takes in connection with the
provision of services to the Fund. Neither PFPC Trust, nor any of its
affiliates, shall be indemnified against any liability (or any expenses
incident to such liability) caused by PFPC Trust's or its affiliates' own
willful misfeasance, bad faith, gross negligence or reckless disregard in
the performance of PFPC Trust's activities under this Agreement. The
provisions of this Section 12 shall survive termination of this Agreement.
13. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the Partnership or any Portfolio except as specifically
set forth herein or as may be specifically agreed to by PFPC Trust
and the Partnership 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 and only to the extent such damages
arise out of PFPC Trust's willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties under this Agreement.
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(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
Trust shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion; interruption,
loss or malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature; or
non-performance by a third party; and (ii) PFPC Trust shall not be
under any duty or obligation to inquire into and shall not be liable
for the validity or invalidity, authority or lack thereof, or
truthfulness or accuracy or lack thereof, of any instruction,
direction, notice, instrument or other information which PFPC Trust
reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, (i)
neither PFPC Trust nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or not
the likelihood of such losses or damages was known by PFPC Trust or
its affiliates and (ii) PFPC Trust's cumulative liability to the
Partnership for all losses, claims, suits, controversies, breaches
or damages for any cause whatsoever (including but not limited to
those arising out of or related to this Agreement) and regardless of
the form of action or legal theory shall not exceed the lesser of
$100,000 or the fees received by PFPC Trust for services provided
hereunder during the 12 months immediately prior to the date of such
loss or damage.
(d) No party may assert a cause of action against PFPC Trust or any of
its affiliates
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that allegedly occurred more than 12 months immediately prior to the
filing of the suit (or, if applicable, commencement of arbitration
proceedings) alleging such cause of action.
(e) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(f) Notwithstanding anything in this Agreement to the contrary (other
than as specifically provided in Section 14(h)(ii)(B)(4) and Section
14(h)(iii)(A) of this Agreement), the Partnership 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 Partnership shall be responsible for the payment of
all taxes and similar items (including without limitation penalties
and interest related thereto).
(g) The provisions of this Section 13 shall survive termination of this
Agreement.
(h) 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 Partnership or
for any failure to discover any such error or omission.
14. DESCRIPTION OF SERVICES.
(a) Delivery of the Property. The Partnership 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 Shares, during the term of this Agreement. PFPC Trust will not be
responsible for any assets until actual receipt.
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(b) Receipt and Disbursement of Money. PFPC Trust, acting upon Written
Instructions, shall open and maintain a separate account for each
separate Portfolio of the Partnership(each an "Account") and shall
maintain in the Account of a particular Portfolio all cash and other
assets received from or for the Partnership specifically designated
to such Account. PFPC Trust shall make cash payments from or for the
Account of a Portfolio only for:
(i) purchases of securities in the name of a Portfolio, PFPC
Trust, PFPC Trust's nominee or a sub-custodian or nominee
thereof as provided in sub-section (j) and for which PFPC
Trust has received a copy of the broker's or dealer's
confirmation or payee's invoice, as appropriate;
(ii) purchase or redemption of Shares of the Partnership 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 14(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 shareholders, 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 shareholders, or, in lieu of paying
the Fund's transfer agent, PFPC Trust 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, 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 Partnership 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
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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 or otherwise 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
[Directors/Trustees], or any officer, employee or agent of the
Partnership 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 aggregate capital, surplus and
undivided profits, according to its last published report, of
at least one million dollars ($1,000,000), if it is a
subsidiary or affiliate of PFPC Trust, or at least twenty
million dollars ($20,000,000) if such bank or trust company is
not a subsidiary or affiliate of PFPC Trust. In addition, such
bank or trust company must be qualified to act as custodian
and agree to comply with the relevant provisions of applicable
rules and regulations. Any such arrangement will not be
entered into without prior written notice to the
Partnership(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 Partnership(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.
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(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 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 Partnership 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
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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
Partnership on behalf of that Portfolio, but only on receipt
of payment therefor; and pay out monies of the Partnership in
connection with such repurchase agreements, but only upon the
delivery of the securities;
(ix) release and deliver or exchange securities owned by the
Partnership 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 Partnership for
the purpose of redeeming in kind shares of the Partnership
upon delivery thereof to PFPC Trust; and
(xii) release and deliver or exchange securities owned by the
Partnership 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 will
deposit in Book-Entry Systems and other depositories all securities
belonging to the Portfolios eligible for deposit therein and will
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
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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 as 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 Partnership with such reports on its own
system of internal control as the Partnership 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 maintained in the Book-Entry System or in another
depository, shall be held by PFPC Trust in bearer form; all other
securities maintained for a Portfolio may be registered in the name
of the Partnership 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,
depository or sub-custodian. The Partnership reserves the right to
instruct PFPC Trust as to the method of registration and safekeeping
of the securities of the Fund. The Partnership agrees to furnish to
PFPC Trust appropriate instruments to enable PFPC Trust to maintain
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
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which it may maintain for the Accounts. With respect to
uncertificated securities which are registered in the name of the
Partnership or a Portfolio (or a nominee thereof), PFPC Trust will
reflect such securities on its records based upon the holdings
information provided to it by the issuer of such securities, but
notwithstanding anything in this Agreement to the contrary PFPC
Trust shall not be obligated to safekeep such securities or to
perform other duties with respect to such securities other than to
make payment for the purchase of such securities upon receipt of
Oral or Written Instructions, accept in sale proceeds received by
PFPC Trust upon the sale of such securities of which PFPC Trust is
informed pursuant to Oral or Written Instructions, and accept in
other distributions received by PFPC Trust with respect to such
securities or reflect on its records any reinvested distributions
with respect to such securities of which it is informed by the
issuer of the securities.
(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 Partnership on
behalf of a Portfolio, then Written Instructions or Oral
Instructions must designate the person who owns such securities.
(h) Transactions Not Requiring Instructions. Notwithstanding anything in
this Agreement requiring instructions in order to take a particular
action, in the
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absence of a contrary Written Instruction, PFPC Trust is authorized
to take the following actions without the need for instructions:
(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;
(C) receive and hold for the account of each Portfolio all
securities received as a distribution on the Portfolio's
securities as a result of a stock dividend, share
split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of
rights or similar securities issued with respect to any
securities belonging to a Portfolio and held by PFPC
Trust hereunder;
(D) present for payment and collect the amount payable upon
all securities which may mature or be 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
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(3) for transfer of securities into the name of the
Partnership 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) PFPC Trust shall:
(1) pay all income items held by it which call for
payment upon presentation and hold the cash
received by it upon such payment for the account
of each Portfolio;
(2) collect interest and cash dividends received, with
notice to the Fund, to the account of each
Portfolio;
(3) hold for the account of each Portfolio all stock
dividends, rights and similar securities issued
with respect to any securities held by PFPC Trust;
and
(4) subject to receipt of such documentation and
information as PFPC Trust may request, execute as
agent on behalf of the Partnership 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
18
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 Partnership with
the procedures required by a securities or option
exchange, providing such procedures comply with the 1940
Act and any releases of the SEC relating to the
maintenance of segregated accounts by registered
investment companies; and
(B) upon receipt of Written Instructions, for other
purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX
custodian accounts for such shareholders holding Shares
through XXX accounts, in accordance with the Fund's
prospectuses, the Internal Revenue Code of 1986, as amended
(including regulations promulgated thereunder), and with such
other procedures as are mutually agreed upon from time to time
by and among the Fund, PFPC Trust and the Fund's transfer
agent.
(j) Purchases of Securities. PFPC Trust shall settle purchased
securities upon receipt of Oral Instructions or Written Instructions
that specify:
(i) the name of the issuer and the title of the securities,
including CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through whom
the purchase was made. PFPC Trust shall upon receipt of
securities purchased by or for a Portfolio (or otherwise in
accordance with standard market
19
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;
(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 Partnership 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 anything to the contrary in this Agreement,
PFPC Trust may accept payment in such form as is consistent with standard
industry practice and may deliver assets and arrange for payment in
accordance with standard market practice.
(l) Reports; Proxy Materials.
(i) PFPC Trust shall furnish to the Partnership the following
reports:
20
(A) such periodic and special reports as the Partnership 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 Partnership
pursuant to Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time
to time between the Partnership and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Partnership 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 Partnership 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 Partnership 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
credits an Account with
21
respect to (a) income, dividends, distributions, coupons, option
premiums, other payments or similar items on a contractual payment
date or otherwise in advance of PFPC Trust's actual receipt of the
amount due, (b) the proceeds of any sale or other disposition of
assets on the contractual settlement date or otherwise in advance of
PFPC Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is subsequently
unable to collect full and final payment for the amounts so credited
within a reasonable time period using reasonable efforts or (ii)
pursuant to standard industry practice, law or regulation PFPC Trust
is required to repay to a third party such amounts so credited, or
if any Property has been incorrectly credited, PFPC Trust shall have
the absolute right in its sole discretion without demand to reverse
any such credit or payment, to debit or deduct the amount of such
credit or payment from the Account, and to otherwise pursue recovery
of any such amounts so credited from the Fund. The Partnership
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 Partnership in writing, including copies of all
demand
22
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 Partnership as soon as reasonably practicable whenever
income due on securities is not collected in due course and shall
provide the Partnership with periodic status reports of such income
collected after a reasonable time.
(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.
15. DURATION AND TERMINATION. This Agreement shall continue until terminated
by the Partnership or PFPC Trust on sixty (60) days' prior written notice
to the other party. In the event this Agreement is terminated (pending
appointment of a successor to PFPC Trust or vote of the shareholders of
the Partnership 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 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 Partnership 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
23
its fees, compensation, costs and expenses (including without limitation
fees and expenses associated with deconversion or conversion to another
service provider and other trailing expenses incurred by PFPC Trust). PFPC
Trust shall have a first priority contractual possessory 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.
16. CHANGE OF CONTROL. Notwithstanding any other provision of this Agreement,
in the event of an agreement to enter into a transaction that would result
in a Change of Control of the Fund's adviser or sponsor, the Fund's
ability to terminate the Agreement pursuant to Section 15 will be
suspended from the time of such agreement until two years after the Change
of Control.
17. NOTICES. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxx (or such other address as PFPC Trust may inform the Fund in
writing); (b) if to the Fund, at 0000 Xxx Xxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxx Xxxxxxxx, 00000, Attention: Xxxxxxx Xxxxxx (or such other address as
the Fund may inform PFPC Trust in writing); 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 delivery, hand 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.
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
24
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 Partnership30
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 Partnership or any other
person, including, without limitation, any warranties regarding
quality, suitability, merchantability, fitness for a particular
purpose or otherwise (irrespective of any course of dealing, custom
or usage of trade), of any services or any goods provided incidental
to services provided under this Agreement. PFPC Trust disclaims any
warranty of title or non-infringement except as otherwise set forth
in this Agreement.
(c) No Changes that Materially Affect Obligations. Notwithstanding
anything in this
25
Agreement to the contrary, the Partnership 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) Information. The Partnership will provide such information and
documentation as PFPC Trust may reasonably request in connection
with services provided by PFPC Trust to the Fund.
(f) 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.
(g) 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.
(h) 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.
(i) Facsimile Signatures. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
26
(j) Customer Identification Program Notice. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify,
and record certain information that identifies each person who
initially opens an account with that financial institution on or
after October 1, 2003. Consistent with this requirement, PFPC Trust
may request (or may have already requested) the Fund's name, address
and taxpayer identification number or other government-issued
identification number, and, if such party is a natural person, that
party's date of birth. PFPC Trust may also ask (and may have already
asked) for additional identifying information, and PFPC Trust may
take steps (and may have already taken steps) to verify the
authenticity and accuracy of these data elements.
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:
Title: _____________________________________
HATTERAS MASTER FUND, LP
By:
Title:
27
