CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of May 18, 2009 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
(the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as a closed-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 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
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successor or successors, and its nominee or nominees and any
book-entry system registered with the SEC under the 1934 Act.
(e) "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.
(f) "SEC" means the Securities and Exchange Commission.
(g) "Securities Laws" mean the 1933 Act, the 1934 Act and the 1940 Act.
(h) "Shares" mean the shares of beneficial interest of any series or
class of the Fund.
(i) "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.
(j) "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 (with respect to sub-item (ii) above) or
by hand, mail or facsimile sending device.
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2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund and PFPC Trust accepts such appointment and agrees to
furnish such services. PFPC Trust shall be under no duty to take any
action hereunder on behalf of the Fund except as specifically set forth
herein or as may be specifically agreed to by PFPC Trust and the Fund in a
written amendment hereto. PFPC Trust shall not bear, or otherwise be
responsible for, any fees, cost or expenses charged by any third party
service providers engaged by the Fund or by any other third party service
provider to the Fund.
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 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 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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(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions (except where such Oral Instructions
are given by PFPC Trust or its affiliates) so that PFPC Trust
receives the Written Instructions by the close of business on the
same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC Trust
or differ from the Oral Instructions shall in no way 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). The Fund shall pay the
reasonable cost of any counsel retained by PFPC Trust with prior
notice to the Fund.
(c) Conflicting Advice. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel,
PFPC Trust shall be entitled to rely upon and follow the advice of
counsel.
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(d) Protection of PFPC Trust. PFPC Trust shall be indemnified by the
Fund and without liability for any action PFPC Trust takes or does
not take in reliance upon directions or advice or Oral Instructions
or Written Instructions PFPC Trust receives from or on behalf of the
Fund, or from counsel and which PFPC Trust believes, in good faith,
to be consistent with those directions or advice or Oral
Instructions or Written Instructions. Nothing in this section shall
be construed so as to impose an obligation upon PFPC Trust (i) to
seek such directions or advice or Oral Instructions or Written
Instructions, or (ii) to act in accordance with such directions or
advice or Oral Instructions or Written Instructions.
6. RECORDS; VISITS.
(a) The books and records pertaining to the Fund, 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 provided the Fund provides PFPC Trust with
written notice of such laws, rules and regulations, other than the
1940 Act and The Internal Revenue Code Of 1986, as amended, that are
applicable. The Fund and Authorized Persons shall have access to
such books and records at all times during PFPC Trust's normal
business hours upon reasonable advance notice; provided, however,
the Fund's independent public accountants shall have access to such
books and records without prior notice to PFPC Trust in order to
comply with the requirements of Rule 17f-2 under the 1940 Act. 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.
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(b) PFPC Trust shall keep the following records:
(i) all books and records as are customarily maintained by the
custodian for a registered investment company.
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
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 and 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 as confidential.
Notwithstanding the foregoing, information shall not be Confidential
Information and shall not be subject to such confidentiality obligations
if: (a) it is necessary for PFPC Trust to release such information in
connection with the provision of services under this Agreement; (b) it is
already known to the receiving party at the time it is obtained; (c) it is
or becomes publicly known or available through no wrongful act of the
receiving party; (d) it is rightfully received from a third party who, to
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the best of the receiving party's knowledge, is not under a duty of
confidentiality; (e) it is released by the protected party to a third
party without restriction; (f) it is 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); (g) it is Fund information provided by PFPC Trust in
connection with an independent third party compliance or other review; (h)
it is relevant to the defense of any claim or cause of action asserted
against the receiving party; or (i) it has been or is independently
developed or obtained by the receiving party. PFPC Trust acknowledges and
agrees that in connection with its services under this Agreement it
receives non-public confidential portfolio holdings information
("Portfolio Information") with respect to the Fund. PFPC Trust agrees
that, subject to the foregoing provisions of and the exceptions set forth
in this Section 7 (other than the exception set forth above in this
Section as Sub-item (a), which exception set forth in sub-item (a) shall
not be applicable to the Fund's Portfolio Information), PFPC Trust will
keep confidential the Fund's Portfolio Information and will not disclose
the Fund's Portfolio Information other than pursuant to a Written
Instruction (such Written Instruction may be a standing Written
Instruction).
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 TRUST 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,
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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, 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 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
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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
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.
(c) Notwithstanding the limitation of liability provisions of this
Agreement or the termination of this Agreement, the Fund shall
remain responsible for paying PFPC Trust the fees and other amounts
set forth in this Agreement and in the applicable fee letter.
12. INDEMNIFICATION.
The Fund agrees to indemnify, defend and hold harmless PFPC Trust and its
affiliates providing services under this Agreement, including their
respective officers, directors, agents and employees from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, reasonable attorneys' fees and disbursements and liabilities
arising under the Securities Laws and any state and foreign securities and
blue sky laws) ("Claims") arising directly or indirectly from any action
or omission to act which PFPC Trust takes in connection with the provision
of services to the Fund. Neither PFPC Trust, nor any of its affiliates,
shall be indemnified against any liability (or any expenses incident to
such liability) caused by PFPC Trust's or its affiliates' own willful
misfeasance, bad faith, negligence or reckless disregard in the
performance of PFPC Trust's or its affiliates' activities under this
Agreement. The provisions of this Section 12 shall survive termination of
this Agreement.
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PFPC Trust agrees to defend, indemnify and hold the Fund and its
officers, directors and employees harmless from any and all Claims arising
directly or indirectly from the negligence, bad faith, reckless disregard
or willful misfeasance of PFPC Trust and its affiliates in the performance
of its duties hereunder. Notwithstanding the foregoing, the Fund shall not
be indemnified against any Claim caused by the Fund's or the Fund's other
service providers' willful misfeasance, bad faith or negligence.
Indemnification Procedure.
(i) Notice of the Action. A party that seeks indemnification under
this Agreement must promptly give the other party notice of
any legal action; provided, however, that a delay in notice
does not relieve an indemnifying party of any liability to an
indemnified party, except to the extent the indemnifying party
shows that the delay prejudiced the defense of the action.
(ii) Participating in or Assuming the Defense. The indemnifying
party may participate in the defense at any time or it may
assume the defense by giving notice to the other party. After
assuming the defense, the indemnifying party:
(1) must select an attorney that is satisfactory to the
other party;
(2) is not liable to the other party for any later
attorney's fees or for any other later expenses that the
other party incurs, except for reasonable investigation
costs;
(3) must not compromise or settle the action without the
other party's consent (but the other party must not
unreasonably withhold its consent); and
(4) is not liable for any compromise or settlement made
without its consent.
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(iii) Failing to Assume the Defense. If the indemnifying party fails
to participate in or assume the defense within 15 days after
receiving notice of the action, the indemnifying party is
bound by any determination made in the action or by any
compromise or settlement made by the other party.
13. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the Fund except as specifically set forth herein or as may
be specifically agreed to by PFPC Trust and the Fund in a written
amendment hereto. PFPC Trust shall be obligated to exercise
commercially reasonable care and diligence in the performance of its
duties hereunder and to act in good faith in performing services
provided for under this Agreement. As set forth herein, and as may
be agreed to in writing from time to time by PFPC Trust and the Fund
with regard to such matters of liability, PFPC Trust shall be liable
only for any damages arising out of PFPC Trust's failure to perform
its duties under this Agreement to the extent such damages arise out
of PFPC Trust's willful misfeasance, bad faith, negligence or
reckless disregard of its duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
Trust shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion; interruption,
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loss or malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature; or
non-performance by a third party; failure of the mails; or functions
or malfunctions of the internet, firewalls, encryption systems or
security devices caused by any of the above; (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; and (iii) PFPC Trust shall not be
liable for any damages arising out of any action or omission to act
by any prior service provider of the Fund or for any failure to
discover any such errors or omissions.
(c) Notwithstanding anything in this Agreement to the contrary, neither
party to this Agreement nor their respective affiliates shall be
liable for any consequential, incidental, exemplary, punitive,
special or indirect losses or damages, whether or not the likelihood
of such losses or damages was known by such party.
(d) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(e) Notwithstanding anything in this Agreement to the contrary (other
than as specifically provided in Section 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).
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(f) The provisions of this Section 13 shall survive termination of this
Agreement.
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 Fund,
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 separate accounts for the Fund
(the "Account"). PFPC Trust shall maintain in the Account all cash
and other assets received from or for the account of the Fund,
subject to the terms of this Agreement. PFPC Trust shall make cash
payments from or for the Account of the Fund only for:
(i) purchases of securities in the name of the Fund, 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) redemption of Shares of the Fund upon receipt of Written
Instructions;
(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, license and management
fees which are to be borne by the Fund;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, 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
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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
Account.
(c) Receipt of Securities; Subcustodians.
PFPC Trust shall hold all securities received by it for the
Account 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 upon their mere receipt.
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
Agreement with respect to domestic assets. Such bank or trust
company shall have an aggregate capital, surplus and undivided
profits, according to its last published report, of at least
one million dollars ($1,000,000), if it is a subsidiary or
affiliate of PFPC Trust, or at least twenty million dollars
($20,000,000) if such bank or trust company is not a
subsidiary or affiliate of PFPC Trust. In addition, such bank
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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. Any such arrangement will not be entered into without
prior written notice to the Fund (or as otherwise provided in
the 1940 Act).
Sub-custodians utilized by PFPC Trust may be subsidiaries or
affiliates of PFPC Trust, and such entities will be
compensated for their services at such rates as are agreed
between the entity and PFPC Trust. PFPC Trust shall remain
responsible for the acts and omissions of any sub-custodian
chosen by PFPC Trust under the terms of this sub-section (c)
to the same extent that PFPC Trust is responsible for its own
acts and omissions under this Agreement.
(d) Transactions Requiring Instructions. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC Trust
shall:
(i) deliver any securities held for the Fund 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 received
by PFPC Trust as custodian whereby the authority of the Fund
as owner of any securities may be exercised;
(iii) deliver any securities to the issuer thereof, or its agent,
when such securities are called, redeemed, retired or
otherwise become payable 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 the Fund against receipt of
other securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer,
merger, consolidation or recapitalization of any corporation
or other entity, or the exercise of any conversion privilege;
(v) deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
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corporation or other entity, and receive and hold under the
terms of this Agreement such certificates of deposit, interim
receipts or other instruments or documents as may be issued to
it to evidence such delivery;
(vi) make such transfer or exchanges of the assets of the Fund and
take such other steps as shall be stated in said Oral
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 the Fund to any bank or trust
company for the purpose of a pledge or hypothecation to secure
any loan incurred by the Fund; provided, however, that
securities shall be released only upon payment to 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 the Fund in
connection with any repurchase agreement entered into by the
Fund, 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.
(e) Use of Book-Entry System or Other Depository. PFPC Trust is
authorized and instructed, on a continuous basis, to deposit in
Book-Entry Systems and other depositories all securities belonging
to the Fund eligible for deposit therein and to utilize Book-Entry
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Systems and other depositories to the extent possible in connection
with settlements of purchases and sales of securities by the Fund,
and deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with
borrowings. PFPC Trust shall continue to perform such duties until
it receives Written Instructions or Oral Instructions authorizing
contrary actions. Notwithstanding anything in this Agreement to the
contrary, PFPC Trust's use of a Book-Entry System shall comply with
the requirements of Rule 17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other depository as
follows:
(i) With respect to securities of the Fund which are maintained in
a Book-Entry System or another depository, the records of PFPC
Trust shall identify by book-entry or otherwise those
securities belonging to the Fund.
(ii) Assets of the Fund 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 the Fund which
are issued or issuable only in bearer form, except such securities
held in the Book-Entry System or in another depository, shall be
held by PFPC Trust in bearer form; all other securities held for the
Fund may be registered in the name of the Fund, 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 agrees to furnish to PFPC
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Trust appropriate instruments to enable PFPC Trust to hold or
deliver in proper form for transfer, or to register in the name of
its nominee or in the name of the Book-Entry System or in the name
of another appropriate entity, any securities which it may hold
pursuant to this Agreement. With respect to uncertificated
securities which are registered in the name of the Fund (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 the Fund, 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, then Written
Instructions or Oral Instructions must designate the person who owns
such securities.
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(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 the Fund, all
income, dividends, distributions, coupons, option
premiums, other payments and similar items, included or
to be included in the Property, and, in addition,
promptly advise the Fund of such receipt and credit such
income to the Fund's custodian account;
(B) endorse and deposit for collection, in the name of the
Fund, checks, drafts, or other orders for the payment of
money;
(C) receive and hold for the account of the Fund all
securities received as a distribution on the Fund's
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 the Fund 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 the
aforementioned 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 the Fund in accordance with street
delivery custom;
19
(2) for the exchange of interim receipts or temporary
securities for definitive securities; and
(3) for transfer of securities into the name of the
Fund or 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 the Fund;
(2) collect interest and cash dividends received, with
notice to the Fund, to the account of the Fund;
(3) hold for the account of the Fund all stock
dividends, rights and similar securities issued
with respect to any securities held by PFPC Trust;
and
(4) subject to receipt of such documentation and
information as PFPC Trust may request, execute as
agent on behalf of the Fund all necessary
ownership certificates required by a national
governmental taxing authority or under the laws of
any U.S. state now or hereafter in effect,
inserting the Fund's name on 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
20
(B) PFPC Trust is authorized to deduct or withhold any sum
in respect of tax which PFPC Trust considers is required
to be deducted or withheld "at source" by any relevant
law or practice.
(i) Segregated Accounts.
(i) PFPC Trust shall upon receipt of Written Instructions or Oral
Instructions establish and maintain segregated accounts on its
records for and on behalf of the Fund. 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 offering
document, 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; and
(vi) the name of the person from whom or the broker through whom
the purchase was made. PFPC Trust shall upon receipt of
21
securities purchased by or for the Fund (or otherwise in
accordance with standard market practice) pay out of the
monies held for the account of the Fund the total amount
payable to the person from whom or the broker through whom the
purchase was made, provided that the same conforms to the
total amount payable as set forth in such Oral 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 Fund upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made; and
(vii) the location to which the security must be delivered and
delivery deadline, if any.
PFPC Trust shall deliver the securities upon receipt of the total amount
payable to the Fund upon such sale, provided that the total amount payable
is the same as was set forth in the Oral 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 industry 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;
22
(B) a monthly statement summarizing all transactions and
entries for the account of the Fund, listing each
portfolio security belonging to the Fund (with the
corresponding security identification number) held at
the end of such month and stating the cash balance of
the Fund 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 a call or conversion or
similar communication received by it as custodian of the
Property. PFPC Trust shall be under no other obligation to
inform the Fund as to such actions or events. For
clarification, upon termination of this Agreement PFPC Trust
shall have no responsibility to transmit such material or to
inform the Funds or any other person of such actions or
events.
(m) Crediting of Accounts. PFPC Trust may in its sole discretion credit
an Account with respect to income, dividends, distributions,
coupons, option premiums, other payments or similar items prior to
PFPC Trust's actual receipt thereof, and in addition PFPC Trust may
in its sole discretion credit or debit the assets in an Account on a
contractual settlement date with respect to any sale, exchange or
purchase applicable to the Account; provided that nothing herein or
otherwise shall require PFPC Trust to make any advances or to credit
any amounts until PFPC Trust's actual receipt thereof. If PFPC Trust
in its sole discretion credits an Account with respect to (a)
income, dividends, distributions, coupons, option premiums, other
23
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 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.
24
(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 sweep any 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.
(p) Foreign Exchange. PFPC Trust, its sub-custodians and the respective
affiliates of such entities (together, "Affiliated Entities")
jointly or separately may act as principal and/or agent for foreign
exchange ("FX") transactions for the Fund, and any of the Affiliated
Entities may arrange FX transactions for the Fund with third parties
25
that act as principal or agent. Affiliated Entities and third
parties may receive fees and other compensation in connection with
FX transactions for the Fund, and PFPC Trust may receive from such
entities a portion of their fees or other compensation. Unless PFPC
Trust itself is the principal for a FX transaction, PFPC Trust will
not be responsible and shall have no liability for the actions or
omissions of any principal (including any other Affiliated Entity)
to any FX transaction for the Fund nor any responsibility to monitor
the commercial terms of any such FX transactions.
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 12, 2010 (the "Initial Term").
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for succesive terms of one (1) year ("Renewal
Terms") each, unless the Fund or PFPC Trust provides written notice
to the other of its intent not to renew. Such notice must be
received not less than ninety (90) days prior to the expiration of
the Initial Term or the then current Renewal Term.
(c) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other
party (the "Non-Defaulting Party") may give written notice thereof
to the Defaulting Party, and if such material breach shall not have
been remedied within thirty (30) days after such written notice is
given, then the Non-Defaulting Party may terminate this Agreement by
giving thirty (30) days written notice of such termination to the
Defaulting Party. In all cases, termination by the Non-Defaulting
26
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. 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 not deliver cash, securities or other property of the Fund to
the Fund. It may deliver them to a bank or trust company of PFPC
Trust's choice, having an aggregate capital, surplus and undivided
profits, as shown by its last published report, of not less than
twenty million dollars ($20,000,000), as a custodian for the Fund to
be held under terms similar to those of this Agreement. PFPC Trust
shall not be required to make any delivery or payment of assets upon
termination until full payment shall have been made to PFPC Trust of
all of its fees, compensation, costs and expenses known at such time
(such expenses include, without limitation, all expenses associated
with movement (or duplication) of records and materials and
conversion thereof to a successor service provider, or to a bank or
trust company pending appointment of such successor, and all
trailing expenses incurred by PFPC Trust). PFPC Trust shall have a
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. NOTICES. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx,
XX (or such other address as PFPC Trust may inform the Fund in writing);
(b) if to the Fund, at 000 Xxxx Xxxxxxx Xxxxx, Xxxxxxx, XX 00000,
27
Attention: W. Xxxxx Xxxxxxx fax (000) 000-0000 (or such other address as
the Funds 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 receiving
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. ASSIGNMENT. PFPC Trust may assign this Agreement to any affiliate of PFPC
Trust or of The PNC Financial Services Group, Inc., provided that PFPC
Trust gives the Fund thirty (30) days' prior written notice of such
assignment.
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) Non-Solicitation. During the term of this Agreement and for one year
thereafter, the Fund shall not (with the exceptions noted in the
immediately succeeding sentence) knowingly solicit or recruit for
employment or hire any of PFPC Trust's employees, and the Fund shall
cause the Fund's sponsor and the Fund's affiliates to not (with the
exceptions noted in the immediately succeeding sentence) knowingly
solicit or recruit for employment or hire any of PFPC Trust's
employees. To "knowingly" solicit, recruit or hire within the
meaning of this provision does not include, and therefore does not
prohibit, solicitation, recruitment or hiring of a PFPC Trust
employee by the Fund, the Fund's sponsor or an affiliate of the Fund
if the PFPC Trust employee was identified by such entity solely as a
result of the PFPC Trust employee's response to a general
advertisement by such entity in a publication of trade or industry
interest or other similar general solicitation by such entity.
(c) 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.
(d) 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
29
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. The scope of services to be provided by PFPC
Trust under this Agreement shall not be increased as a result of new
or revised regulatory or other requirements that may become
applicable with respect to the Fund, unless the parties hereto
expressly agree in writing to any such increase.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
(i) Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as may be explicitly stated
in this Agreement, (i) this Agreement is not for the benefit of any
other person or entity and (ii) there shall be no third party
beneficiaries hereof.
30
(j) Facsimile Signatures. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(k) The Fund and PFPC Trust agree that the obligations of the Fund under
the Agreement shall not be binding upon any of the directors,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund individually, but are binding only
upon the assets and property of the Fund. The execution and delivery
of this Agreement have been authorized by the directors of the Fund,
and signed by an authorized officer of the Fund, acting as such, and
neither such authorization by such directors nor such execution and
delivery by such officer shall be deemed to have been made by any of
them or any shareholder of the Fund individually or to impose any
liability on any of them or any shareholder of the Fund personally,
but shall bind only the assets and property of the Fund.
(l) 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.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx, III
----------------------------------------
Name: Xxxxxx X. Xxxxx, III
Title: Senior Vice President
FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE
INCOME FUND II
By: /s/ W. Xxxxx Xxxxxxx
----------------------------------------
Name: W. Xxxxx Xxxxxxx
Title: Secretary
32
