CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of June 13, 2005 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of
Delaware ("PFPC Trust"), and WILSHIRE MUTUAL FUNDS, INC., a Maryland
corporation (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian services,
and PFPC Trust wishes to furnish custodian services, either directly or through
an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Definitions. As used in this Agreement:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of the Fund and any other
person authorized by the Fund to give 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) "PFPC Trust" means PFPC Trust Company or a subsidiary or affiliate of
PFPC Trust Company.
(g) "SEC" means the Securities and Exchange Commission.
(h) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(i) "Shares" mean the shares of beneficial interest of any series or
class of the Fund.
(j) "Property" means:
(i) any and all securities and other investment items which the
Fund may from time to time deposit, or cause to be deposited,
with PFPC Trust or which PFPC Trust may from time to time hold
for the Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of securities issued by the Fund,
which are received by PFPC Trust from time to time, from or on
behalf of the Fund.
(k) "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 an Authorized Person (or a person
reasonably believed by PFPC Trust to be an Authorized Person) to PFPC
Trust by means of an electronic transaction reporting system which
requires the use of a password or other authorized identifier in
order to gain access or (iii) instructions transmitted via e-mail by
an Authorized Person (or a person reasonably believed by PFPC Trust
to be an Authorized Person) to PFPC
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Trust which PFPC Trust has received and opened. The instructions may
be delivered electronically (with respect to sub-items (ii) or
(iii) above) or by hand, mail or facsimile sending device.
2. Appointment. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund as set forth herein, on behalf of each of its
investment portfolios listed on Schedule A hereto (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
Fund or any other entity.
4. Instructions.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act
only upon Written Instructions.
(b) PFPC Trust shall be entitled to reasonably rely upon any Written
Instruction it receives pursuant to this Agreement. PFPC Trust may
assume that any Written Instructions received hereunder are not in
any way inconsistent with the provisions of organizational documents
of the Fund or of any vote, resolution or proceeding of the Fund's
Board of Directors or of the Fund's shareholders, unless and until
PFPC Trust receives Written Instructions to the contrary.
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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 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 Written Instructions PFPC Trust receives from the Fund, and
the advice it receives from counsel, PFPC Trust shall be entitled to
rely upon and follow the advice of counsel and shall notify the Fund
of any such action that materially conflicts with such Written
Instructions.
(d) Protection of PFPC Trust. PFPC Trust shall be indemnified by the Fund
and without liability for any action PFPC Trust takes or does not
take in reasonable reliance upon Written Instructions PFPC Trust
receives from or on behalf of the Fund, or advice PFPC Trust receives
from counsel, and which PFPC Trust believes, in good faith, to be
consistent with those Written Instructions or advice. Nothing in this
section shall be construed to impose an obligation upon PFPC Trust
(i) to seek such advice or Written Instructions, or (ii) to act in
accordance with such advice or Written Instructions.
6. Records; Visits. The books and records pertaining to the Fund and any
Portfolio which are in the possession or under the control of PFPC Trust
shall be the property of the Fund. Such books and records shall be prepared
and maintained as required by the 1940 Act
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and other applicable securities laws, rules and regulations and shall, to
the extent practicable, be maintained separately for each Portfolio of the
Fund. The Fund, its authorized representatives, and Authorized Persons
shall, in coordination with PFPC, have access to such books and records at
all times during PFPC Trust's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be provided
by PFPC Trust to the Fund or to an authorized representative of the Fund,
at the Fund's expense.
7. Confidentiality. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information") and
neither party shall use the other party's Confidential Information for any
purpose other than in connection with the performance of this Agreement or
as permitted by this Agreement. 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, the
Fund's portfolio holdings information, information about product plans,
marketing strategies, finances, operations, customer relationships,
customer profiles, customer lists, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Fund or PFPC Trust, their respective
subsidiaries and affiliated companies; (b) any scientific or technical
information, design, process, procedure, formula, or improvement that is
commercially valuable and secret in the sense that its confidentiality
affords the Fund or PFPC Trust a competitive advantage over its
competitors; (c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object code,
flow charts, databases, inventions, know-how, and trade secrets, whether or
not patentable or copyrightable; and (d) anything designated by the Fund or
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PFPC Trust 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.
8. Cooperation with Independent Registered Public Accounting Firm. PFPC Trust
shall cooperate with the Fund's independent registered public accounting
firm and shall take all reasonable action to make any requested information
available to such firm as reasonably requested by the Fund.
9. PFPC System. PFPC Trust shall retain title to and ownership of any and all
databases, 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.
Notwithstanding the foregoing, the parties acknowledge that the Fund shall
retain all ownership rights in Fund data which reside on the PFPC system.
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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, negligence or
reckless disregard of its duties or obligations under this Agreement.
11. Compensation.
(a) As compensation for custody services rendered by PFPC Trust during the
term of this Agreement, the Fund, on behalf of each of the Portfolios, will
pay to PFPC Trust a fee or fees as may be agreed to in writing from time to
time by the Fund and PFPC Trust. The Fund acknowledges that PFPC Trust may
receive float benefits in connection with maintaining certain accounts
required to provide services under this Agreement.
(b) The undersigned hereby represents and warrants to PFPC Trust that
(i) the terms of this Agreement, (ii) the fees and expenses associated with
this Agreement, and (iii) any benefits accruing to PFPC Trust or to the
adviser or sponsor to the Fund in connection with this Agreement, including
but not limited to any fee waivers, conversion cost reimbursements, up
front payments, signing payments or periodic payments made or to be made by
PFPC Trust to such adviser or sponsor or any affiliate of the Fund relating
to this
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Agreement have been fully disclosed to the Board of Directors of the Fund
and that, if required by applicable law, such Board of Directors has
approved or will approve the terms of this Agreement, any such fees and
expenses, and any such benefits.
12. Indemnification.
(a) 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
pursuant to this Agreement. 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, 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.
(b) PFPC Trust agrees to indemnify, defend and hold harmless the Fund and
its affiliates, including their respective officers, directors and
employees, from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, reasonable attorney's fees and
disbursements and liabilities arising under the Securities Laws and any
state and foreign securities and blue sky laws) to the extent caused by
PFPC Trust's willful misfeasance, bad faith, negligence or reckless
disregard in the performance of PFPC Trust's activities under this
Agreement.
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(c) Legal Action Against Indemnification Party.
(i) Notice of the Action
A party that seeks indemnification under Section 12(a) or 12(b) must
promptly give the other party notice of any legal action. However, a delay
in notice does not relieve an indemnifying party of any liability to an
indemnified party, except to the extent the indemnifying party shows that
the delay prejudiced the defense of the action.
(ii) Participating in or Assuming the Defense
The indemnifying party may participate in the defense at any time or it may
assume the defense by giving notice to the other party. After assuming the
defense, the indemnifying party:
(1) must select an attorney that is satisfactory to the other party;
(2) is not liable to the other party for any later attorney's fees or
for any other later expenses that the other party incurs, except for
reasonable investigation costs;
(3) must not compromise or settle the action without the other
party's consent (but the other party must not unreasonably withhold
its consent); and
(4) is not liable for any compromise or settlement made without its
consent.
(iii) Failing to Assume the Defense
If the indemnifying party fails to participate in or assume the defense
within 15 days after receiving notice of the action, the indemnifying party
is bound by any determination made in the action or by any compromise or
settlement made by the other party.
13. Responsibility of PFPC Trust.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the Fund or any Portfolio except as specifically set forth
herein or as may be
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specifically agreed to by PFPC Trust and the Fund in a written
amendment hereto. PFPC Trust shall be obligated to exercise care and
diligence in the performance of its duties hereunder and to act in
good faith in performing services provided for under this Agreement.
PFPC Trust shall be liable only for any damages arising out of PFPC
Trust's failure to perform its duties under this Agreement and only
to the extent such damages arise out of PFPC Trust's willful
misfeasance, bad faith, negligence or reckless disregard of its
duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
(i) provided that PFPC Trust has acted in accordance with the
standard of care set forth above, 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
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known by PFPC Trust or its affiliates and (ii) PFPC Trust's
cumulative liability to the Fund for all losses, claims, suits,
controversies, breaches or damages for any cause whatsoever
(including but not limited to those arising out of or related to this
Agreement) and regardless of the form of action or legal theory shall
not exceed the greater of the estimated fees to be received by PFPC
Trust for services provided hereunder during a 24-month period or
$200,000.
(d) No party may assert a cause of action against PFPC Trust or any of
its affiliates in connection with the performance of this Agreement
more than 12 months after signing of the audit opinion of the Fund
for the financial year during which facts are known to the Fund that
should have alerted it that a basis for such cause of action might
exist.
(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 Fund shall be
responsible for all filings, tax returns and reports on any
transactions undertaken pursuant to this Agreement, or in respect of
the Property or any collections undertaken pursuant to this
Agreement, which may be requested by any relevant authority. In
addition, the Fund shall be responsible for the payment of all taxes
and similar items (including without limitation penalties and
interest related thereto).
(g) The provisions of this Section 13 shall survive termination of this
Agreement.
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(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 Fund or for any
failure to discover any such error or omission.
14. Description of Services.
(a) Delivery of the Property. The Fund will deliver or arrange for
delivery to PFPC Trust all the Property owned by the Portfolios,
including cash received as a result of the distribution of Shares,
during the term of this Agreement. PFPC Trust will not be responsible
for any assets until actual receipt.
(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 Fund (each an "Account") and shall maintain
in the Account of a particular Portfolio all cash and other assets
received from or for the Fund 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) of this Section and for
which PFPC Trust has received a copy of the broker's or
dealer's confirmation or payee's invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PFPC
Trust;
(iii) payment of, subject to Written Instructions, interest, taxes
(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;
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(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 Fund and held by or delivered to PFPC
Trust;
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(ix) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian
for the Accounts.
(c) Receipt of Securities; Subcustodians.
(i) PFPC Trust shall hold all securities received by it for the
Accounts in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry
System or through a sub-custodian or depository. All such
securities shall be held or disposed of only upon Written
Instructions 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, or any officer, employee or agent of the Fund
withdraw any securities.
At PFPC Trust's own expense and for its own convenience, PFPC
Trust may enter into sub-custodian agreements with other banks
or trust
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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 Fund (or as
otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign
assets in accordance with the requirements of the 1940 Act and
the rules and regulations thereunder. Any such arrangement
will not be entered into without prior written notice to the
Fund (or as otherwise provided in the 1940 Act).
PFPC Trust shall remain responsible for the acts and omissions
of any sub-custodian chosen by PFPC Trust under the terms of
this sub-section (c) to the same extent that PFPC Trust is
responsible for its own acts and omissions under this
Agreement.
(d) Transactions Requiring Instructions. Upon receipt of 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 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;
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(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 Written Instructions to be for the purpose of
effectuating a duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Fund;
(vii) release securities belonging to a Portfolio to any bank or
trust company for the purpose of a pledge or hypothecation to
secure any loan incurred by the Fund on behalf of that
Portfolio; provided, however, that securities shall be
released only upon payment to PFPC Trust of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made subject to proper
prior authorization, further securities may be released for
that purpose; and repay such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon surrender
of the note or notes evidencing the loan;
(viii) release and deliver securities owned by a Portfolio in
connection with any repurchase agreement entered into by the
Fund on behalf of that Portfolio, but only on receipt of
payment therefor; and pay out monies of the Fund in connection
with such repurchase agreements, but only upon the delivery of
the securities;
(ix) release and deliver or exchange securities owned by the Fund
in connection with any conversion of such securities, pursuant
to their terms, into other securities;
(x) release and deliver securities to a broker in connection with
the broker's custody of margin collateral relating to futures
and options transactions;
(xi) release and deliver securities owned by the Fund for the
purpose of redeeming in kind shares of the Fund upon delivery
thereof to PFPC Trust; and
(xii) release and deliver or exchange securities owned by the Fund
for other purposes.
PFPC Trust must also receive a certified resolution describing
the nature
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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 authorizing contrary actions.
Notwithstanding anything in this Agreement to the contrary, PFPC
Trust's use of a Book-Entry System shall comply with the requirements
of Rule 17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other depository
as follows:
(i) With respect to securities of each Portfolio which are
maintained in a Book-Entry System or another depository, the
records of PFPC Trust shall identify by book-entry or
otherwise those securities 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 Fund with such reports on its own system
of internal control as the Fund may reasonably request from time to
time.
(f) Registration of Securities. All securities held for a Portfolio which
are issued or issuable only in bearer form, except such securities
maintained in the Book-Entry
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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 Fund on behalf of that Portfolio, PFPC
Trust, a Book-Entry System, another depository, a sub-custodian, or
any duly appointed nominee of the Fund, PFPC Trust, Book-Entry
System, depository or sub-custodian. The Fund reserves the right to
instruct PFPC Trust as to the method of registration and safekeeping
of the securities of the Fund. The Fund agrees to furnish to PFPC
Trust appropriate instruments to enable PFPC Trust to 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 which it may maintain for
the Accounts. With respect to uncertificated securities which are
registered in the name of the Fund 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 Written Instructions, accept in sale proceeds received by
PFPC Trust upon the sale of such securities of which PFPC Trust is
informed pursuant to 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
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the securities held pursuant to this Agreement by or for the account
of a Portfolio, except in accordance with Written Instructions. PFPC
Trust, directly or through the use of another entity, shall execute
in blank and promptly deliver all notices, proxies and proxy
soliciting materials received by PFPC Trust as custodian of the
Property to the registered holder of such securities. If the
registered holder is not the Fund on behalf of a Portfolio, then
Written Instructions 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 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
applicable Portfolio 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
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(E) take any action which may be necessary and proper in
connection with the collection and receipt of such
income and other payments and the endorsement for
collection of checks, drafts, and other negotiable
instruments.
(ii) Miscellaneous Transactions.
(A) PFPC Trust is authorized to deliver or cause to be
delivered Property against payment or other
consideration or written receipt therefor in the
following cases:
(1) for examination by a broker or dealer selling
for the account of a Portfolio in accordance
with street delivery custom;
(2) for the exchange of interim receipts or
temporary securities for definitive securities;
and
(3) for transfer of securities into the name of the
Fund on behalf of a Portfolio or PFPC Trust or a
sub-custodian or a nominee of one of the
foregoing, or for exchange of securities for a
different number of bonds, certificates, or
other evidence, representing the same aggregate
face amount or number of units bearing the same
interest rate, maturity date and call
provisions, if any; provided that, in any such
case, the new securities are to be delivered to
PFPC Trust.
(B) 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
19
Fund all necessary ownership certificates
required by a national governmental taxing
authority or under the laws of any U.S. state
now or hereafter in effect, inserting the Fund's
name, on behalf of a Portfolio, on such
certificate as the owner of the securities
covered thereby, to the extent it may lawfully
do so.
(iii) Other Matters
(A) Subject to receipt of such documentation and
information as PFPC Trust may request, PFPC Trust will,
in such jurisdictions as PFPC Trust may agree from time
to time, seek to reclaim or obtain a reduction with
respect to any withholdings or other taxes relating to
assets maintained hereunder (provided that PFPC Trust
will not be liable for failure to obtain any particular
relief in a particular jurisdiction); and
(B) PFPC Trust is authorized to deduct or withhold any sum
in respect of tax which PFPC Trust considers is
required to be deducted or withheld "at source" by any
relevant law or practice.
(i) Segregated Accounts.
(i) PFPC Trust shall upon receipt of Written Instructions
establish and maintain segregated accounts on its records for
and on behalf of each Portfolio. Such accounts may be used to
transfer cash and securities, including securities in a
Book-Entry System or other depository:
(A) for the purposes of compliance by the Fund with the
procedures required by a securities or option exchange,
providing such procedures comply with the 1940 Act and
any releases of the SEC relating to 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
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of Written Instructions that specify:
(i) the name of the issuer and the title of the securities,
including CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through whom
the purchase was made. PFPC Trust shall upon receipt of
securities purchased by or for a Portfolio (or otherwise in
accordance with standard market practice) pay out of the
monies held for the account of the Portfolio the total amount
payable to the person from whom or the broker through whom the
purchase was made, provided that the same conforms to the
total amount payable as set forth in such Written Instructions.
(k) Sales of Securities. PFPC Trust shall settle sold securities upon
receipt of Written Instructions that specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made;
(vii) the location to which the security must be delivered and
delivery deadline, if any; and
(viii) the Portfolio involved.
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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 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 Fund the following reports:
(A) such periodic and special reports as the Fund may
reasonably request;
(B) a monthly statement summarizing all transactions and
entries for the account of each Portfolio, listing each
portfolio security belonging to each Portfolio (with
the corresponding security identification number) held
at the end of such month and stating the cash balance
of each Portfolio at the end of such month.
(C) the reports required to be furnished to the Fund
pursuant to Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time
to time between the Fund and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any proxy
statement, proxy material, notice of class action, notice of a
call or conversion or similar communication received by it as
custodian of the Property. PFPC Trust shall be under no other
obligation to inform the Fund as to such actions or events.
For clarification, except with respect to class action
notices, PFPC Trust shall have no responsibility to transmit
such material or to inform the Fund or any other person of
such actions or events upon termination of this Agreement.
22
(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 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
23
the Fund. The Fund hereby grants to PFPC Trust and to each
sub-custodian utilized by PFPC Trust in connection with providing
services to the Fund 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 and to each such sub-custodian of any advance
or credit made by PFPC Trust and/or by such sub-custodian (including
charges related thereto) to such Account. Notwithstanding anything in
this Agreement to the contrary, PFPC Trust shall be entitled to
assign any rights it has under this sub-section (m) to any
sub-custodian utilized by PFPC Trust in connection with providing
services to the Fund which sub-custodian makes any credits or
advances with respect to the Fund.
(n) Collections. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PFPC Trust) shall be at the sole risk of the
Fund. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Fund in writing, including copies of all demand letters, any written
responses and memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to take
legal action for collection unless and until reasonably indemnified
to its satisfaction. PFPC Trust shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Fund with periodic
status reports of such income collected after a reasonable time.
(o) Excess Cash Sweep. PFPC Trust will, consistent with applicable law,
sweep any
24
net excess cash balances daily into an investment vehicle or other
instrument designated in writing by the Fund, so long as the
investment vehicle or instrument is acceptable to PFPC Trust, subject
to a fee, paid to PFPC Trust for such service, to be agreed between
the parties. Such investment vehicle or instrument may be offered by
an affiliate of PFPC Trust or by a PFPC Trust client and PFPC Trust
may receive compensation therefrom to the extent permitted by the
1940 Act or an exemption therefrom.
(p) 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.
(q) Fund Information Requests. PFPC Trust will provide information and
documentation relating to the Fund and reasonably cooperate with the
Fund as the Fund may reasonably request, including but not limited to
providing information requested pursuant to any government or
regulatory request.
15. Duration and Termination.
(a) This Agreement shall be effective on the date first written above
and unless terminated pursuant to its terms shall continue until
June 30, 2008 (the "Initial Term").
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year ("Renewal
Terms") each, unless the Fund or PFPC provides written notice to the
other of its intent not to renew. Such notice must be received not
less than ninety (90) days prior to the expiration of the Initial
Term or the then current Renewal Term.
25
(c) PFPC Inc., a PFPC Trust affiliate, and the Fund anticipate
entering into a Fund Accounting, Financial and Regulatory
Administration and Transfer Agency Services Agreement to be dated as
of June 27, 2005 (the "Fund Accounting Agreement"), which will
contain a "Key Personnel" provision. If the parties enter into the
Fund Accounting Agreement and the Fund terminates the Fund Accounting
Agreement as a result of the Fund's and PFPC Inc.'s inability to
mutually agree on an appropriate replacement of any Key Personnel, as
defined in the Fund Accounting Agreement, the Fund shall have the
right to terminate this Agreement by notifying PFPC Trust in writing,
and this Agreement shall terminate on the later of (i) a month-end
date identified in such notice, which shall be at least sixty
(60) days following PFPC Trust's receipt of such notice; or (ii) the
termination date of the Fund Accounting Agreement. If the Fund
terminates this Agreement pursuant to this Section 15(c), the Fund
shall be responsible for the payment of fees pursuant to this
Agreement only for the period up to and including the Termination
Date.
(d) In the event this Agreement is terminated (pending appointment of
a successor to PFPC Trust or vote of the shareholders of the Fund to
dissolve or to function without a custodian of its cash, securities
or other property), PFPC Trust shall deliver the cash, securities or
other property of the Portfolios to a bank or trust company selected
by the Fund which meets the requirements of the 1940 Act. If the Fund
has not instructed PFPC Trust to deliver such cash, securities and
26
other property to a particular bank or trust company by the time this
Agreement is terminated, PFPC Trust may deliver such cash, securities
and other property to a bank or trust company of PFPC Trust's choice
which meets the requirements of the 1940 Act and has 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. Immediately prior to making such
delivery, PFPC Trust may deduct all fees, compensation, costs and
expenses to which it shall then be entitled with respect to each
Portfolio after receiving Written Instructions from two Authorized
Persons (such Written Instructions to be provided at least 48 hours
prior to the effective date of termination).
(e) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other
party (the "Non-Defaulting Party") may give written notice thereof to
the Defaulting Party, and if such material breach shall not have been
remedied within thirty (30) days after such written notice is given,
then the Non-Defaulting Party may terminate this Agreement by giving
thirty (30) days written notice of such termination to the Defaulting
Party. In all cases, termination by the Non-Defaulting Party shall
not constitute a waiver by the Non-Defaulting Party of any other
rights it might have under this Agreement or otherwise against the
Defaulting Party.
16. Notices. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, 0/xx/ Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxx; (b) if to the Fund, at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxx
Xxxxxx, XX 00000, Attention: Funds
27
Management Group; 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.
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; Assignment. PFPC Trust may assign its rights and delegate its
duties hereunder to any affiliate of PFPC Trust or of The PNC Financial
Services Group, Inc., provided that PFPC Trust gives the Fund 30 days'
prior written notice of such assignment or delegation.
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. 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.
28
(b) No Representations or Warranties. Except as expressly provided in
this Agreement, PFPC Trust hereby disclaims all representations and
warranties, express or implied, made to the Fund or any other person,
including, without limitation, any warranties regarding quality,
suitability, merchantability, fitness for a particular purpose or
otherwise (irrespective of any course of dealing, custom or usage of
trade), of any services or any goods provided incidental to services
provided under this Agreement. PFPC Trust disclaims any warranty of
title or non-infringement except as otherwise set forth in this
Agreement.
(c) No Changes that Materially Affect Obligations. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees not to
make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of PFPC Trust hereunder without the prior written
approval of PFPC Trust, which approval shall not be unreasonably
withheld or delayed.
(d) Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(e) Information. The Fund 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.
29
(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.
(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.
[Signature Page Follows]
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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: Vice President
Date:
-----------------------------
WILSHIRE MUTUAL FUNDS, INC.
By:
-----------------------------
Title: Senior Managing Director
Date: July 8, 2005
31
Schedule A
This Schedule A, dated as of June 13, 2005, is Schedule A to that certain
Custodian Services Agreement dated as of June 13, 2005 by and between PFPC
Trust Company and Wilshire Mutual Funds, Inc.
Large Company Growth Portfolio
Large Company Value Portfolio
Small Company Growth Portfolio
Small Company Value Portfolio
Dow Xxxxx Wilshire 5000 Index Portfolio
[Remainder of Page Intentionally Left Blank]
32
