Contract
EX-28.h.1
(xv) Accept and post daily Share purchases and redemptions;
This
Transfer Agency Services Agreement ("Agreement") is entered into as of December
30, 2009 and effective as of February 20, 2010 or such other date as the parties
agree in writing ("Effective Date") by and between PNC Global Investment
Servicing (U.S.) Inc. (“PNC”), and the investment company listed on the
signature page to this Agreement (the “Investment
Company”). Capitalized terms, and certain noncapitalized terms, not
otherwise defined shall have the meanings set forth in Appendix A (Appendix A
also contains a glossary of defined terms providing the location of all defined
terms).
Background
A. The
Investment Company is registered as an open-end management investment company
under the 1940 Act.
B. The
Investment Company wishes to retain PNC to serve as its transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent, or, if
applicable, to serve as the transfer agent, registrar, dividend disbursing agent
and shareholder servicing agent for each of its Portfolios listed on Exhibit A
attached hereto and made a part hereof, as such Exhibit A may be amended from
time to time, and PNC wishes to furnish such services. The term
"Fund" as used hereinafter in this Agreement means, as applicable, the
Investment Company, if no Portfolios are listed on Exhibit A, or the Investment
Company and each Portfolio listed on Exhibit A considered in its individual and
separate capacity.
Terms
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree to
the statements made in the preceding paragraphs and as follows:
1. Appointment. The Fund hereby
appoints PNC to serve as transfer agent, registrar, dividend disbursing agent
and shareholder servicing agent to the Fund in accordance with the terms set
forth in this Agreement. PNC accepts such appointment and agrees to
furnish such services. PNC 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 PNC and the Fund in a written amendment hereto. PNC
shall not bear, or otherwise be responsible for, any fees, costs or expenses
charged by any third party service providers engaged by the Fund or by any other
third party service provider to the Fund not engaged by PNC.
2. Records;
Visits. The books and
records pertaining to the Fund, which are in the possession or under the control
of PNC, shall be the property of the Fund. The Fund and Authorized Persons shall
have access to such books and records at all times during PNC's normal business
hours. Upon the reasonable request of the Fund, copies of any such
books and records shall be provided by PNC to the Fund or to an Authorized
Person, at the Fund's expense. PNC shall coordinate with the
Investment Company’s previous service provider(s) to transfer all Fund records
to PNC within a reasonable time of the Effective Date of this
Agreement.
3. Services
(to be provided subject to the Service Levels set forth on Exhibit
B).
(a)
|
Transfer
Agent, Registrar, Dividend Disbursing Agent and Shareholder
Servicing:
|
(1) Services
to be provided on an ongoing basis to the extent applicable to a particular
Fund:
(i) Calculate
12b-1 payments;
1
(ii)
|
Maintain
shareholder registrations;
|
(iii)
|
Review
new applications and correspond with shareholders to complete or correct
information;
|
(iv)
|
Direct
payment processing of checks or
wires;
|
(v)
|
Prepare
and certify shareholder lists in conjunction with proxy
solicitations;
|
(vi)
|
Countersign
share certificates;
|
(vii)
|
Prepare
and mail to shareholders confirmation of
activity;
|
(viii)
|
Provide
toll-free lines for direct shareholder use, plus customer liaison staff
for on-line inquiry response;
|
(ix)
|
Mail
duplicate confirmations to broker-dealers of their clients' activity,
whether executed through the broker-dealer or directly with
PNC;
|
(x)
|
Provide
periodic shareholder lists and statistics to the
Fund;
|
(xi)
|
Provide
detailed data for underwriter/broker
confirmations;
|
(xii)
|
Prepare
periodic mailing of year-end tax and statement
information;
|
(xiii)
|
Notify
on a timely basis the investment adviser, accounting agent, and custodian
of Share activity;
|
(xiv)
|
Perform
other participating broker-dealer shareholder services (i.e. establish and
maintain broker-dealers on the transfer agency system) as may be agreed
upon from time to time;
|
(xv) Accept and post daily Share purchases and redemptions;
(xvi)
|
Accept,
post and perform shareholder transfers and
exchanges;
|
(xvii)
|
Issue
and cancel certificates (when requested in writing by the shareholder);
and
|
(xviii)
|
Remediation
Services, as required; and
|
(xviii)
|
Perform
certain administrative and ministerial duties relating to opening,
maintaining and processing transactions for shareholders or financial
intermediaries that trade shares through the
NSCC.
|
(2) Purchase of
Shares. PNC shall issue and credit an account of an investor,
in the manner described in the Fund's prospectus, once it receives:
(i)
|
A
purchase order in completed proper
form;
|
(ii)
|
Proper
information to establish a shareholder account;
and
|
2
(iii)
|
Confirmation
of receipt or crediting of funds for such order to the Fund's
custodian.
|
(3) Redemption of Shares.
PNC shall process requests to redeem Shares as follows:
(i)
|
All
requests to transfer or redeem Shares and payment therefor shall be made
in accordance with the Fund's prospectus, when the shareholder tenders
Shares in proper form, accompanied by such documents as PNC reasonably may
deem necessary.
|
(ii)
|
PNC
reserves the right to refuse to transfer or redeem Shares until it is
satisfied that the endorsement on the instructions is valid and genuine
and that the requested transfer or redemption is legally authorized, and
it shall incur no liability for the refusal, in good faith, to process
transfers or redemptions which PNC, in its good judgment, deems improper
or unauthorized, or until it is reasonably satisfied that there is no
basis to any claims adverse to such transfer or
redemption.
|
(iii)
|
When
Shares are redeemed, PNC shall deliver to the Fund’s custodian (the
“Custodian”) and the Fund or its designee a notification setting forth the
number of Shares redeemed. Such redeemed Shares shall be
reflected on appropriate accounts maintained by PNC reflecting outstanding
Shares of the Fund and Shares attributed to individual
accounts.
|
(iv)
|
PNC
shall, upon receipt of the monies provided to it by the Custodian for the
redemption of Shares, pay such monies as are received from the Custodian,
all in accordance with the procedures established from time to time
between PNC and the Fund.
|
(v)
|
When
a broker-dealer notifies PNC of a redemption desired by a customer, and
the Custodian provides PNC with funds, PNC shall prepare and send the
redemption check to the broker-dealer and made payable to the
broker-dealer on behalf of its customer, unless otherwise instructed in
writing by the broker-dealer.
|
(vi)
|
PNC
shall not process or effect any redemption requests with respect to Shares
of the Fund after receipt by PNC or its agent of notification of the
suspension of the determination of the net asset value of the
Fund.
|
(4) Dividends and
Distributions. Upon receipt by PNC of Written Instructions
containing all requisite information that may be reasonably requested by PNC,
including payment directions and authorization, PNC shall issue Shares in
payment of the dividend or distribution, or, upon shareholder election, pay such
dividend or distribution in cash, if provided for in the Fund's
prospectus. If requested by PNC, the Fund shall furnish a certified
resolution of the Fund's Board of Directors declaring and authorizing the
payment of a dividend or other distribution but PNC shall have no duty to
request such. Issuance of Shares or payment of a dividend or
distribution as provided for in this Section 3(a)(4), as well as payments upon
redemption as described in sub-Section 3(a)(3), shall be made after deduction
and payment of any and all amounts required to be withheld in accordance with
any applicable tax laws or other laws, rules or regulations. PNC
shall (i) mail to the Fund's shareholders such tax forms and other information,
or permissible substitute notice, relating to dividends and distributions paid
by the Fund as are required to be filed and mailed by applicable law, rule or
regulation; and (ii) prepare, maintain and file with the IRS and other
appropriate taxing authorities reports relating to all dividends by the Fund
paid to its shareholders (above threshold amounts stipulated by applicable law)
as required by tax or other laws, rules or regulations; provided, however,
notwithstanding the foregoing and notwithstanding any other provision of this
Section 3(a)(4) or this Agreement: (A) PNC's exclusive obligations with respect
to any written statement that Section 19(a) of the 1940 Act may require to be
issued with respect to the Fund shall be, upon receipt of specific Written
Instructions to such effect, to receive from the Fund the
3
information
which is to be printed on the statement, to print such information on
appropriate paper stock and to mail such statement to shareholders, and (B)
PNC's sole obligation with respect to any dividend or distribution that Section
19(a) of the 1940 Act may require be accompanied by such a written statement
shall be to act strictly in accordance with the first three sentences of this
Section 3(a)(4).
(5) Shareholder Account
Services. PNC may arrange, in accordance with the
prospectus:
|
(i)
|
for
issuance of Shares obtained
through:
|
|
(A)
|
Any
pre-authorized check plan; and
|
|
|
(B)
|
Direct
purchases through broker wire orders, checks and
applications.
|
|
(ii)
|
for
a shareholder's:
|
|
(A)
|
Exchange
of Shares for shares of another fund with which the Fund has exchange
privileges;
|
|
(B)
|
Automatic
redemption from an account where that shareholder participates in an
automatic redemption plan; and/or
|
|
|
(C)
|
Redemption
of Shares from an account with a checkwriting
privilege.
|
(6) Communications to
Shareholders. Subject to receipt by PNC of timely Written
Instructions where appropriate, PNC shall mail all communications by the Fund to
its shareholders, including:
|
(i)
|
Reports
to shareholders;
|
(ii)
|
Confirmations
of purchases and sales of Fund
shares;
|
(iii)
|
Monthly
or quarterly statements;
|
(iv)
|
Dividend
and distribution notices; and
|
(v)
|
Tax
form information.
|
(7) Records. PNC
shall maintain records of the accounts for each shareholder showing the
following information:
(i)
|
Name,
address and United States Tax Identification or Social Security
number;
|
(ii)
|
Number
and class of Shares held and number and class of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
|
(iii)
|
Historical
information regarding the account of each shareholder, including dividends
and distributions paid and the date and price for all transactions on a
shareholder's account;
|
(iv)
|
Any
stop or restraining order placed against a shareholder's
account;
|
(v)
|
Any
correspondence relating to the current maintenance of a shareholder's
account;
|
4
(vi)
|
Information
with respect to withholdings; and
|
(vii)
|
Any
information required in order for PNC to perform any calculations required
by this Agreement.
|
(8) Lost or Stolen
Certificates. PNC shall place a stop notice against any
certificate reported to be lost or stolen and comply with all applicable federal
regulatory requirements for reporting such loss or alleged
misappropriation. A new certificate shall be registered and issued
only upon:
(i)
|
The
shareholder's pledge of a lost instrument bond or such other appropriate
indemnity bond issued by a surety company approved by PNC;
and
|
(ii)
|
Completion
of a release and indemnification agreement signed by the shareholder to
protect PNC and its affiliates.
|
(9) Shareholder Inspection of
Stock Records. Upon a request from any Fund shareholder to
inspect stock records, PNC will notify the Fund and the Fund will issue
instructions granting or denying each such request. Unless PNC has
acted contrary to the Fund's instructions, the Fund agrees to and does hereby
release PNC from any liability for refusal of permission for a particular
shareholder to inspect the Fund's stock records.
(10) Withdrawal of Shares and
Cancellation of Certificates. Upon receipt of Written
Instructions, PNC shall cancel outstanding certificates surrendered by the Fund
to reduce the total amount of outstanding shares by the number of shares
surrendered by the Fund.
(11) Lost
Shareholders.
(A) PNC
shall perform such services as are required in order to comply with Rule 17Ad-17
of the 1934 Act (the “Lost Shareholder Rule”), including, but not limited to,
those set forth below. PNC may, in its sole discretion, use the
services of a third party to perform some of or all such services.
(i)
|
documentation
of search policies and procedures;
|
(ii)
|
execution
of required searches;
|
(iv)
|
preparation
and submission of data required under the Lost Shareholder
Rule.
|
(B) For
purposes of clarification: (i) Section 3(a)(11)(A) does not obligate PNC to
perform the services described therein for broker-controlled accounts, omnibus
accounts and similar accounts with respect to which PNC does not receive or
maintain information which would permit it to determine whether the account
owner is a "lost securityholder", as that term is defined in the Lost
Shareholder Rule; and (ii) Section 3(a)(11)(A) does not obligate PNC to perform
any escheat services for any accounts - all escheat responsibilities will remain
with each Fund.
(12) Tax Favored
Accounts.
5
(A) Certain
definitions:
|
(i)
|
"Eligible
Assets" means shares of the Fund and such other assets as the Fund and PNC
may mutually agree.
|
|
(ii)
|
"Participant"
means a natural person who establishes and is the beneficial owner of a
Tax Favored Account.
|
|
(iii)
|
"Tax
Favored Account" means (i) a Traditional, SEP, Xxxx, or SIMPLE individual
retirement account, (ii) an account in a money purchase or profit sharing
plan, (iii) a single participant “k” plan account, or (iv) a Xxxxxxxxx
educational savings accounts, all within the meaning of Sections 408, 401,
or 530 of the Code, which is facilitated or sponsored by the Fund or
affiliates of the Fund and with respect to which the contributions of
Participants are invested solely in Eligible
Assets.
|
(B) To
the extent requested by the Fund, PNC shall provide the following administrative
services to Tax Favored Accounts, to the extent a particular administrative
service is appropriate to the Tax Favored Account under the Code:
|
(i)
|
Establish
a record of types and reasons for distributions (i.e., attainment of age
59-1/2, disability, death, return of excess contributions,
etc.);
|
|
(ii)
|
Record
method of distribution requested and/or
made;
|
|
(iii)
|
Receive
and process designation of beneficiary forms
requests;
|
|
(iv)
|
Examine
and process requests for direct transfers between custodians/trustees;
transfer and pay over to the successor assets in the account and records
pertaining thereto as requested;
|
|
(v)
|
Prepare
any annual reports or returns required to be prepared and/or filed by a
custodian of Tax Favored Accounts, including, but not limited to, an
annual fair market value report, Forms 1099R and 5498; and file same with
the Internal Revenue Service and provide same to the Participant or
Participant's beneficiary, as applicable;
and
|
|
(vi)
|
Perform
applicable federal withholding and send to the Participant or
Participant's beneficiary, as applicable, an annual TEFRA notice regarding
required federal tax withholding.
|
(C) To
the extent requested by the Fund with respect to particular Tax Favored
Accounts: PNC shall provide disclosure documents, custodial agreements, account
agreements and forms appropriate for the establishment and administration of the
Tax Favored Accounts and PNC shall maintain such materials in compliance with
applicable provisions of the Code and the regulations promulgated
thereunder.
(D) PNC
shall, at the request of the Fund, arrange for PFPC Trust to serve as custodian
for the Tax Favored Accounts (a "Custodied Account"). In
consideration for such service, the Fund agrees:
|
(i)
|
it
will provide sixty (60) days advance written notice to PNC or PFPC Trust
and Participants in connection with a Fund liquidation or any other event
or circumstance or
|
6
|
act
or course of conduct involving the Fund that would result in an
involuntary liquidation of Fund Shares in a Custodied Account or would
materially affect the Custodied Account, its operation, the rights or
obligations of a Participant or the terms or provisions of a Custodied
Account ("Material Event"), regardless of whether the Material Event was
or was not described in an amendment to the Fund's prospectus or statement
of additional information), and reimburse PNC and PFPC for all reasonable
costs, including costs of legal counsel, incurred in determining, in
consideration of the Material Event, an appropriate course of conduct
under the law, including without limitation the Code, and under agreements
with Participants and in implementing the course of conduct determined to
be appropriate;
|
|
(ii)
|
PFPC
Trust may provide materials and communications related to its role as
custodian of the Custodied Accounts to Participants and the Fund will
coordinate joint mailings of such materials and communications with Fund
materials as PNC or PFPC Trust may reasonably requested;
and
|
|
(iii)
|
it
will, at its cost and expense, at the request of PNC, (aa) appoint and
provide for a qualified successor custodian for all Custodied Accounts in
the event this Agreement expires or is terminated or if any other event or
circumstance ocurs, other than those caused solely by a breach by PNC of
this Agreement or its Standard of Care, which constitutes commercially
reasonable cause for PFPC Trust to resign as custodian of the Custodied
Accounts or seek appointment of a successor custodian, (bb) provide for
any interim custodial or transfer arrangements made appropriate by any of
the circumstances governed by clause (aa), and (cc) use its best efforts
to facilitate all transfers of Custodied Accounts to such successor or
interim custodians.
|
(E) In
consideration for PNC or PFPC Trust furnishing any one or more of the services
provided for in this Section 3(a)(12), whether alone or in combination with
others, the Fund shall pay to PNC the related Fees and Reimbursable Expenses as
set forth in the Fee Agreement. The Fund may direct PNC to collect
such Fees and Reimbursable Expenses from the assets in relevant Tax Favored
Accounts upon appropriate disclosure to Participants, but shall remain
responsible for such Fees and Reimbursable Expenses to the extent it does not so
direct PNC or such amounts are not collectable from Participants.
(13) Print
Mail. The Fund hereby engages PNC as its print/mail service
provider with respect to those items and for such fees as may be agreed to from
time to time in writing by the Fund and PNC.
(14) Proxy
Advantage. The Fund hereby engages PNC as its proxy
solicitation service provider with respect to those items and for such fees as
may be agreed to from time to time in writing by the Fund and PNC.
(b) Anti-Money
Laundering Program Services.
(1) Anti-Money
Laundering.
(A) To
the extent the other provisions of this Agreement require PNC to establish,
maintain and monitor accounts of investors in the Fund consistent with the
Securities Laws, PNC shall perform reasonable actions necessary to assist the
Fund in complying with Section 352 of the USA PATRIOT Act, as
follows: PNC shall: (a) establish and implement written internal
policies, procedures and controls reasonably designed to help prevent the Fund
from being used to launder money or finance terrorist activities; (b) provide
for independent testing, by an employee who is
7
not
responsible for the operation of PNC's anti-money laundering (“AML”) program or
by an outside party, for compliance with PNC's written AML policies and
procedures; (c) designate a person or persons responsible for implementing and
monitoring the operation and internal controls of PNC's AML program; and (d)
provide ongoing training of PNC personnel relating to the prevention of
money-laundering activities.
(B) PNC
shall provide to the Fund on an annual basis: (w) a copy of PNC's written AML
policies and procedures; (x) at the option of PNC, a copy of a written
assessment or report prepared by the party performing the independent testing
for compliance, or a summary thereof; (y) a certification that the findings of
the independent party are satisfactory; and (z) a summary of the AML training
provided for appropriate PNC personnel.
(C) Without
limiting or expanding subsections (A) or (B) above, the parties agree this
Section 3(b)(1) relates solely to Fund compliance with Section 352 of the USA
PATRIOT Act and does not relate to any other obligation the Fund may have under
the USA PATRIOT Act, including without limitation Section 326
thereof.
(D) PNC
agrees to cooperate with, and provide reasonable assistance to, any party
designated by the Investment Company to perform the Investment Company’s annual
audit of its AML program (“AML Auditor” and “AML Audit”). The Fund
shall provide PNC with at least four (4) weeks’ written notice of any onsite AML
Audit. In connection with any AML Audit, the Fund shall provide PNC a
written information request, to which PNC shall be afforded at least two (2)
weeks to respond. The Fund and the AML Auditor shall cooperate with
PNC in order to ensure that any request in connection with an AML Audit shall
not be unduly burdensome to PNC and that any AML Audit shall not adversely
affect PNC’s business operations.
(2) Foreign Account Due
Diligence.
(A) To
assist the Fund in complying with requirements regarding a due diligence program
for “foreign financial institution” accounts in accordance with applicable
regulations promulgated by U.S. Department of Treasury under Section 312 of the
USA PATRIOT Act ("FFI Regulations"), PNC will do the following:
|
(i)
|
Implement
and operate a due diligence program that includes appropriate, specific,
risk-based policies, procedures and controls that are reasonably designed
to enable the Fund to detect and report, on an ongoing basis, any known or
suspected money laundering activity conducted through or involving any
correspondent account established, maintained, administered or managed by
the Fund for a “foreign financial institution” (as defined in 31 CFR
103.175(h))(“Foreign Financial
Institution”);
|
|
(ii)
|
Conduct
due diligence to identify and detect any Foreign Financial Institution
accounts in connection with new accounts and account
maintenance;
|
|
(iii)
|
Assess
the money laundering risk presented by each such Foreign Financial
Institution account, based on a consideration of all appropriate relevant
factors (as generally outlined in 31 CFR 103.176), and assign a risk
category to each such Foreign Financial Institution
account;
|
|
(iv)
|
Apply
risk-based procedures and controls to each such Foreign Financial
Institution account reasonably designed to detect and report known or
suspected money
|
8
|
laundering
activity, including a periodic review of the Foreign Financial Institution
account activity sufficient to determine consistency with information
obtained about the type, purpose and anticipated activity of the
account;
|
|
(v)
|
Include
procedures to be followed in circumstances in which the appropriate due
diligence cannot be performed with respect to a Foreign Financial
Institution account;
|
|
(vi)
|
Adopt
and operate enhanced due diligence policies for certain Foreign Financial
Institution accounts in compliance with 31 CFR
103.176(b);
|
|
(vii)
|
Record
due diligence program and maintain due diligence records relating to
Foreign Financial Institution accounts;
and
|
(viii) Report
to the Fund about measures taken under (i)-(vii) above.
(B) Nothing
in Section 3(b)(2) shall be construed to require PNC to perform any course of
conduct that is not required for Fund compliance with the FFI
Regulations.
(C) Without
limiting or expanding subsections (A) or (B) above, the parties agree this
Section 3(b)(2) relates solely to Fund compliance with Section 312 of the USA
PATRIOT Act and does not relate to any other obligation the Fund may have under
the USA PATRIOT Act, including without limitation Section 326
thereof.
(3) Customer Identification
Program.
(A) To
assist the Fund in complying with requirements regarding a customer
identification program in accordance with applicable regulations promulgated by
U.S. Department of Treasury under Section 326 of the USA PATRIOT Act ("CIP
Regulations"), PNC will do the following:
|
(i)
|
Implement
procedures which require that prior to establishing a new account in the
Fund PNC obtain the name, date of birth (for natural persons only),
address and government-issued identification number (collectively, the
“Data Elements”) for the "Customer” (defined for purposes of this
Agreement as provided in 31 CFR 103.131) associated with the new
account.
|
|
(ii)
|
Use
collected Data Elements to attempt to reasonably verify the identity of
each new Customer promptly before or after each corresponding new account
is opened. Methods of verification may consist of
non-documentary methods (for which PNC may use unaffiliated information
vendors to assist with such verifications) and documentary methods (as
permitted by 31 CFR 103.131), and may include procedures under which PNC
personnel perform enhanced due diligence to verify the identities of
Customers the identities of whom were not successfully verified through
the first-level (which will typically be reliance on results obtained from
an information vendor) verification
process(es).
|
|
(iii)
|
Record
the Data Elements and maintain records relating to verification of new
Customers consistent with 31 CFR
103.131(b)(3).
|
(iv)
|
Regularly
report to the Fund about measures taken under (i)-(iii)
above.
|
9
(v)
|
If
PNC provides services by which prospective Customers may subscribe for
shares in the Fund via the Internet or telephone, work with the Fund to
notify prospective Customers, consistent with 31 CFR 103.131(b)(5), about
the program conducted by the Fund in accordance with the CIP
Regulations.
|
(B) Nothing
in Section 3(b)(3) shall be construed to require PNC to perform any course of
conduct that is not required for Fund compliance with the CIP Regulations,
including by way of illustration not limitation the collection of Data Elements
or verification of identity for individuals opening Fund accounts through
financial intermediaries which use the facilities of the National Securities
Clearing Corporation.
(4) FinCEN Requests Under USA
PATRIOT Act Section 314(a). The Fund hereby engages PNC to
provide certain services as set forth in this subsection (b) with respect to
FinCEN Section 314(a) information requests ("Information Requests") received by
the Fund. Upon receipt by PNC of an Information Request delivered by the Fund in
full compliance with all 314(a) Procedures (as defined below), PNC will compare
appropriate information contained in the Information Request against relevant
information contained in account records maintained for the Fund. Information
relating to potential matches resulting from these comparisons, after review by
PNC for quality assurance purposes ("Comparison Results"), will be made
available to the Fund in a timely manner. The Fund will retain
responsibility for filing reports with FinCEN that may be appropriate based on
the Comparison Results. In addition, (i) a potential match involving
a tax identification number will be forwarded by PNC to PNC's SAR Service for
analysis in conjunction with other relevant activity contained in records for
the particular relevant account, and (ii) if, after such analysis, PNC's SAR
Service determines that the potential match could constitute a "suspicious
activity", as that term is used for purposes of the USA Patriot Act, then PNC's
SAR Service will deliver a suspicious activity referral to the Fund and support
the Fund in complying with its filing obligations related thereto. "314(a)
Procedures" means the procedures adopted from time to time by PNC governing the
delivery and processing of Information Requests transmitted by PNC's clients to
PNC, including without limitation requirements governing the timeliness,
content, completeness, format and mode of transmissions to PNC.
(5)
|
U.S. Government List
Matching Services.
|
(A) PNC
will compare Appropriate List Matching Data (as defined in subsection (C) below)
contained in PNC databases which are maintained for the Fund pursuant to this
Agreement ("Fund Data") to "U.S. Government Lists", which is hereby defined to
mean the following:
|
(i)
|
data
promulgated in connection with the list of Specially Designated Nationals
published by the Office of Foreign Asset Control of the U.S. Department of
the Treasury ("OFAC") and any other sanctions lists or programs
administered by OFAC to the extent such lists or programs remain operative
and applicable to the Fund ("OFAC
Lists");
|
|
(ii)
|
data
promulgated in connection with the list of Non-Cooperative Countries and
Territories ("NCCT List") published by the Financial Action Task
Force;
|
|
(iii)
|
data
promulgated in connection with determinations by the Director (the
"Director") of the Financial Crimes Enforcement Network of the U.S.
Department of the Treasury that a foreign jurisdiction, institution, class
of transactions, type of account or other matter is a primary money
laundering concern ("PMLC Determination");
and
|
10
|
(iv)
|
data
promulgated in connection with any other lists, programs or determinations
(A) which PNC determines to be substantially similar in purpose to any of
the foregoing lists, programs or determinations, or (B) which PNC and the
Fund agree in writing to add to the service described in this subsection
(A).
|
(B) In
the event that following a comparison of Fund Data to a U.S. Government List as
described in subsection (A) PNC determines that any Fund Data constitutes a
"match" with the U.S. Government List in accordance with the criteria applicable
to the particular U.S. Government List, PNC:
|
(i)
|
will
notify the Fund of such match;
|
|
(ii)
|
will
send any other notifications required by applicable law or regulation by
virtue of the match;
|
|
(iii)
|
if
a match to an OFAC List, will to the extent required by applicable law or
regulation assist the Fund in taking appropriate steps to block any
transactions or attempted transactions to the extent such action may be
required by applicable law or
regulation;
|
|
(iv)
|
if
a match to the NCCT List or a PMLC Determination, will to the extent
required by applicable law or regulation conduct a suspicious activity
review of accounts related to the match and if suspicious activity is
detected will deliver a suspicious activity referral to the
Fund;
|
|
(v)
|
if
a match to a PMLC Determination, will assist the Fund in taking the
appropriate special measures imposed by the Director;
and
|
|
(vi)
|
will
assist the Fund in taking any other appropriate actions required by
applicable law or regulation.
|
|
(C)
|
"Appropriate
List Matching Data" means (A) account registration and alternate payee
data, to the extent made appropriate by statutes, rules or regulations
governing the U.S. Government Lists, (ii) data determined by PNC in good
faith in light of statutes, rules or regulations governing the U.S.
Government Lists to be necessary to provide the services described in this
Section 3(b)(5), and (iii) data the parties agree in writing to be
necessary to provide the services described in this Section
3(b)(5).
|
(6) PNC
agrees to permit governmental authorities with jurisdiction over the Fund to
conduct examinations of the operations and records relating to the services
performed by PNC under this Section 3(b) upon reasonable advance request and
during normal business hours and to furnish copies at the Fund's cost and
expense of information reasonably requested by the Fund or such authorities and
relevant to the services.
(7) For
purposes of clarification: All Written Procedures relating to the services
performed by PNC pursuant to this Section 3(b) and any information, written
matters or other recorded materials relating to such services and maintained by
PNC shall constitute Confidential Information of PNC, except to the extent, if
any, such materials constitute Fund records under the Securities
Laws.
11
(8) This
Section 3(b) shall not be construed to impose on PNC any obligation other than
to engage in the specific course of conduct specified by the provisions therein,
and in particular shall not be construed to impose any other obligation on PNC
to design, develop, implement, administer, or otherwise manage compliance
activities of the Fund.
(c) Red Flags
Services. The Fund hereby engages PNC to perform Red Flags
Services as described in Appendix B, which is hereby incorporated by reference
into this Agreement as if fully set forth herein.
(d) SEC Rule
22c-2 Services. The Fund hereby engages PNC to provide access
to, and support for, the Rule 22c-2 System as described in Appendix C, which is
hereby incorporated by reference into this Agreement as if fully set forth
herein
4. Confidentiality.
(a) Each
party shall keep the Confidential Information (as defined in subsection (b)
below) of the other party in confidence and will not use or disclose or allow
access to or use of such Confidential Information except in connection with the
activities contemplated by this Agreement or as otherwise expressly agreed in
writing. Each party acknowledges that the Confidential Information of the
disclosing party will remain the sole property of such party. In
complying with the first sentence of this subsection (a), each party will use
the same degree of care it uses to protect its own confidential information, but
in no event less than a reasonable degree of care.
(b) Subject
to subsections (c) and (d) below, "Confidential Information" means (i) this
Agreement and its contents, all compensation agreements, arrangements and
understandings (including waivers) respecting this Agreement, disputes
pertaining to the Agreement, and information about a party's exercise of rights
hereunder, performance of obligations hereunder or other conduct of a party in
connection with the Agreement, (ii) and information and data exchanged between
the parties in connection with this Agreement or which becomes known by virtue
of activities connected to this Agreement that is (A) competitively sensitive
material, and not generally known to the public, including, but not limited to,
studies, plans, reports, surveys, summaries, documentation and analyses,
regardless of form, 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 Investment Company or
PNC, their respective subsidiaries and Affiliates and the customers, clients and
suppliers of any of them; (B) scientific, technical or technological
information, a design, process, procedure, formula, or improvement that is
commercially valuable and secret in the sense that its confidentiality affords
the Investment Company or PNC a competitive advantage over its competitors; (C)
a confidential or proprietary concept, documentation, report, data,
specification, computer software, source code, object code, flow chart,
database, invention, know how, or trade secret, whether or not patentable or
copyrightable; and (D) anything designated as confidential.
(c) Information
or data that would otherwise constitute Confidential Information under
subsection (b) above shall not constitute Confidential Information to the extent
it:
(i) is
already known to the receiving party at the time it is obtained;
(ii) is
or becomes publicly known or available through no wrongful act of the receiving
party;
(iii)
|
is
rightfully received from a third party who, to the receiving party’s
knowledge, is not under a duty of
confidentiality;
|
(iv) is
released by the protected party to a third party without restriction;
or
(v)
|
has
been or is independently developed or obtained by the receiving party
without reference to the Confidential Information provided by the
protected party.
|
12
(d) Confidential
Information of a disclosing party may be used or disclosed by the receiving
party in the circumstances set forth below but except for such permitted use or
disclosure shall remain Confidential Information subject to all applicable terms
of this Agreement:
(i) as
appropriate in connection with activities contemplated by this
Agreement;
(ii)
|
as
required pursuant to a court order, subpoena, governmental or regulatory
or self-regulatory authority or agency, law, regulation, or binding
discovery request in pending litigation (provided the receiving party will
provide the other party written notice of such requirement, to the extent
such notice is permitted, and subject to proper jurisdiction, if
applicable);
|
(iii)
|
as
requested by a governmental, regulatory or self-regulatory authority or
agency or independent third party in connection with an inquiry,
examination, audit or other review;
or
|
(iv)
|
the
information or data is relevant and material to any claim or cause of
action between the parties or the defense of any claim or cause of action
asserted against the receiving
party.
|
(e) Each
party agrees not to publicly disseminate Confidential Information or information
about a either party's exercise of rights hereunder, performance of obligations
hereunder or other conduct of a party in connection with the
Agreement.
(f) The
provisions of this Section 4 shall survive termination of this Agreement for a
period of three (3) years after such termination.
5. Privacy. Each party
hereto acknowledges and agrees that, subject to the reuse and re-disclosure
provisions of Xxxxxxxxxx X-X, 00 XXX Part 248.11, it shall not disclose the
non-public personal information of investors in the Fund obtained under this
Agreement, except as necessary to carry out the services set forth in this
Agreement or as otherwise permitted by law or regulation.
6. Cooperation
with Accountants. PNC shall
cooperate with the Fund's independent public accountants and shall take all
reasonable actions in the performance of its obligations under this Agreement to
ensure that the necessary information is made available to such accountants for
the expression of their opinion, as required by the Fund.
7. PNC
System. PNC shall retain
title to and ownership of any and all data bases, computer programs, screen
formats, report formats, interactive design techniques, derivative works,
inventions, discoveries, patentable or copyrightable matters, concepts,
expertise, patents, copyrights, trade secrets, and other related legal rights
utilized by PNC in connection with the services provided by PNC to the
Fund. Notwithstanding the foregoing, the parties acknowledge the Fund
shall retain all ownership rights in Fund data which resides on the PNC
System.
8. Disaster
Recovery. PNC 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 available designed to ensure the continuity of services
provided to the Fund.. In the event of equipment failures, PNC shall,
at no additional expense to the Fund, take reasonable steps to minimize service
interruptions and protect and recover Fund data. PNC 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 PNC's own
intentional misconduct, willful misfeasance, bad faith or negligence
in the performance of its duties obligations pursuant to this Section
8.
13
9. Fees and
Expenses.
(a) As
compensation for services rendered by PNC during the term of this Agreement, the
Fund will pay to PNC such fees and charges (the "Fees") as may be agreed to from
time to time in writing by the Fund and PNC (the "Fee Agreement"). In
addition, the Fund agrees to pay, and will be billed separately in arrears for,
reasonable expenses incurred by PNC in the performance of its duties hereunder
("Reimbursable Expenses").
(b) In
connection with cash management accounts that PNC may establish in its own name
for the benefit of the Funds at third party institutions, including without
limitation institutions that may be an affiliate or client of PNC (a "Third
Party Institution") for the purpose of administering the funds received by PNC
in the course of performing its services hereunder (“Service Accounts”), the
Funds acknowledge that PNC may receive (i) investment earnings from sweeping
certain funds in such Service Accounts into investment accounts at Third Party
Institutions; and (ii) balance credits with respect to the funds in the Service
Accounts not swept as described in clause (i). On a monthly basis,
PNC will offset banking service fees imposed on the Service Accounts by the
Third Party Institutions (which are passed to the Fund) with balance credits
calculated on average balances held in the Service Accounts without reduction
for amounts swept as described in clause (i). PNC may retain for its
own account the investment earnings and balance credits received from Third
Party Institutions with respect to the Service Accounts. PNC may in
its discretion use the services of Third Party Institutions in connection with
the issuance of redemption and distribution checks and may retain any benefits
resulting from such arrangements, including any commission or return on float
paid to it for balances transferred from the Service Accounts to the Third Party
Institutions.
(c) The
undersigned hereby represents and warrants to PNC that (i) the terms of this
Agreement, (ii) the fees and expenses associated with this Agreement, and (iii)
any benefits accruing to PNC 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 PNC to such adviser or sponsor or any affiliate
of the Fund relating to the 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.
(d) No
termination of this Agreement shall cause, and no provision of this Agreement
shall be interpreted in any manner that would cause, PNC's right to receive
payment of its fees and charges for services actually performed hereunder, and
Fund's obligation to pay such fees and charges, to be barred, limited, abridged,
conditioned, reduced, abrogated, or subject to a cap or other limitation or
exclusion of any nature.
(e) To
the extent that any service or course of conduct of PNC or PFPC Trust provided
hereunder is configured or performed as it is in whole or in part due to the
dictates of Shareholder Materials, standards imposed by clearing corporations or
other industry-wide service bureaus or organizations, Fund policies or laws,
rules or regulations in effect on the Effective Date and due to new or amended
provisions of any of the foregoing after the Effective Date PNC or PFPC Trust
develops, implements or provides significantly modified, different, or new
processes, procedures, resources or functionalities to perform such service or
course of conduct or to perform a related new service or course of conduct, PNC
shall be entitled to fees appropriate for such processes, procedures, resources
or functionalities or as otherwise mutually agreed by the parties.
(f) While
the Fee Agreement sets forth the Fees and certain of the expenses constituting
Reimbursable Expenses, PNC's rights hereunder to receive compensation and the
reimbursement of
14
expenses
from the Fund for services or a course of conduct performed in accordance with
the Agreement shall not be diminished to any degree solely due to such fees and
reimbursable expenses not being expressly set forth in the Fee Agreement,
including by way of illustration and not limitation fees and reimbursable
expenses arising from a service or a course of conduct performed pursuant to
Non-Standard Instructions and other Fund Communications, in connection with a
Response Failure, and responding to Fund Error.
(g) In
the event the Investment Company or any Portfolio of the Investment Company is
liquidated, ceases operations, dissolves, reorganizes or merges into another
investment company or otherwise winds down operations ("Dissolution Event") and
effects a final distribution to shareholders (a "Final Distribution"), the
Investment Company and each relevant Portfolio shall be responsible for paying
to PNC all fees and reimbursing PNC for all reasonable expenses associated with
services to be provided by PNC following the Final Distribution, whether
provided pursuant to a specific request of the Investment Company or the
Portfolio or provided by PNC due to industry standards or due to obligations
under applicable law or regulation by virtue of the services previously
performed for the Investment Company or the Portfolio ("Final
Expenses"). In connection with the foregoing, the Investment Company
or the relevant Portfolio shall (i) notify PNC as promptly as practicable
following first approval of the Dissolution Event or any aspect of the
Dissolution Event by its Board of Directors or Trustees, as appropriate, and
furnish PNC with copies of all materials filed with the SEC or distributed to
shareholders related thereto, (ii) calculate, set aside, reserve and withhold
from the Final Distribution all amounts necessary to pay the Final Expenses and
shall notify PNC as far in advance as practicable of any deadline for submitting
materials appropriate or necessary for the determination of such amounts, and
(iii) provide sufficient staff or other accommodations to ensure timely payment
of Final Expenses as they come due.
10. Instructions.
(a) Unless
the terms of this Agreement or PNC's Written Procedures expressly provide, in
the reasonable discretion of PNC, all requisite details and directions for it to
take a specific course of conduct, PNC may, prior to engaging in a course of
conduct on a particular matter, require the Fund to provide it with Oral
Instructions or Written Instructions with respect to the matter.
(b) Whether
received from the Fund in response to a request described in Section 10(a) or
otherwise, PNC shall be obligated to act only on "Standard Instructions", which
is hereby defined to mean (i) Instructions it receives which direct a course of
conduct substantially similar in all material respects to a course of conduct
provided for in PNC's Written Procedures, or (ii) if PNC's Written Procedures
provide for a particular form of instructions to be used in connection with a
matter ("Form"), Instructions it receives on the Form or conforming in all
material respects to the Form in the PNC's sole judgment.
(c) PNC
may in its sole discretion decline to follow any course of conduct contained in
an Instruction that is not a Standard Instruction (such course of conduct being
a "Non-Standard Instruction") for a bona fide legal, commercial or business
reason ("Bona Fide Reason"), including by way of example and not limitation the
following: (i) the course of conduct is not consistent or compliant with, is in
conflict with, or requires a deviation from an Industry Standard, (ii) the
course of conduct is not reasonably necessary or appropriate to or consistent
with the services contemplated by this Agreement, (iii) the course of conduct
requires a deviation from PNC's Written Procedures, (iv) the course of conduct
is in conflict or inconsistent with or violates a law, rule, regulation, or
order or legal process of any nature, (v) the course of conduct is in
conflict or inconsistent with or will violate a provision of this Agreement, or
(vi) the course of conduct imposes on PNC a risk, liability or obligation not
contemplated by this Agreement, including without limitation sanction or
criticism of a governmental, regulatory or self-regulatory authority, civil or
criminal action, a loss or downgrading of membership, participation or access
rights or privileges in or to organizations providing common services to the
financial services industry, out-of
15
pocket
costs and expenses the Fund does not agree to reimburse, requires performance of
a course of conduct customarily performed pursuant to a separate service or fee
agreement, requires a material increase in required resources, or is reasonably
likely to result in a diversion of resources, disruption in established work
flows, course of operations or implementation of controls, or (vii) PNC lacks
sufficient information, analysis or legal advice to determine that the
conditions in clauses (iv) and (vi) do not exist.
(d)
|
Notwithstanding
the right reserved to PNC by subsection (c)
above:
|
(i)
|
PNC
may in good faith consider implementing a Non-Standard Instruction if the
Fund agrees in a prior written authorization to reimburse PNC for: the
costs and expenses incurred in consulting with and obtaining the opinions
of other work product of technical specialists, legal counsel or other
third party advisors, consultants or professionals reasonably considered
by PNC to be appropriate to fully research, develop and implement the
policies, procedures, operational structure and controls required to
perform the Non-Standard Instruction ("External Research"), the costs and
expenses associated with utilizing or expanding internal resources to
research, develop and implement the policies, procedures, operational
structure and controls required to perform the Non-Standard Instruction
("Internal Research"), and the fees and charges reasonably established by
PNC for performing the Non-Standard Instruction following its
implementation. The Fund may, in place of agreeing to reimburse
PNC for the costs of Research, agree in such written authorization to
provide PNC at the Fund's cost and expense with all Research reasonably
requested by PNC.
|
(ii)
|
Following
receipt of all requested Research, PNC may, in its sole discretion, as an
accommodation and not pursuant to any obligation, agree to follow a
Non-Standard Instruction if it subsequently receives a Written Instruction
containing terms satisfactory to it in its sole discretion, including
without limitation terms constituting additional agreements with respect
to fees, charges, and expenses, terms constituting appropriate warranties,
representations and covenants, and terms specifying with reasonable
particularity the course of conduct constituting the Non-Standard
Instruction.
|
(iii)
|
PNC
reserves the right following receipt of all External Research and Internal
Research and notwithstanding such receipt to continue to decline to
perform the Non-Standard Instruction for a Bona Fide
Reason.
|
(e) PNC
will also not be obligated to act on any Instruction with respect to which it
has reasonable uncertainty about the meaning of the Instruction or which appears
to conflict with another Instruction. PNC will advise the Fund if it has
uncertainty about the meaning of an Instruction or if it appears to conflict
with another Instruction, but PNC will have no liability for any delay between
issuance of the initial Instruction and its receipt of a clarifying
Instruction.
(f) In
addition to any other provision of this Agreement that may be applicable to a
particular Instruction, PNC may include in a form of instruction constituting a
Standard Instruction, in addition to appropriate functional terms and
provisions, indemnification terms that are substantially similar in all material
respects to indemnification terms of this Agreement and representations and
covenants that PNC reasonably believes to be appropriate due to risks,
liabilities or obligations incurred by on it by virtue of acting in an agency
capacity for the Fund or imposed on it by law, regulation, or governmental,
regulatory or self-regulatory authority by virtue of its agency
conduct. In addition, PNC may require third parties who purport to be
authorized, or who the Fund indicates has been authorized, to act on behalf of
or for the benefit of the Fund in connection with this Agreement to execute an
instrument containing indemnification terms, representations and covenants as
PNC may reasonably require prior to accepting the authority of the persons to so
act or prior to engaging in a course of conduct with them.
16
(g) PNC
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, truthfulness
or accuracy or lack thereof, or genuineness or lack thereof of any Instruction,
direction, notice, instrument or other information or communication from the
Fund which PNC reasonably believes to have been given by the Fund ("Fund
Communication"). PNC shall have no liability for engaging in a course
of conduct in accordance with any of the foregoing provided it otherwise acts in
compliance with the Agreement. PNC shall be entitled to rely upon any
Instruction it receives from an Authorized Person or from a person PNC
reasonably believes to be an Authorized Person relating to this Agreement. PNC
may assume that any Instruction received hereunder is not in any way
inconsistent with the provisions of organizational documents of the Fund or this
Agreement or of any vote, resolution or proceeding of the Fund's Board of
Directors or of the Fund's shareholders.
(h) PNC
may, in its discretion, decline to accept Oral Instructions with respect to a
particular matter under this Agreement and may require Written Instructions
before engaging in a course of conduct with respect to a particular matter under
this Agreement. In the event PNC accepts Oral Instructions, the Fund
agrees as a condition to PNC's acceptance of the Oral Instructions, to deliver
to PNC, for receipt by 5:00 PM (Eastern Time) on the same business day as the
day the Oral Instructions were given, Written Instructions which confirm the
Oral Instructions. In the event Written Instructions confirming Oral
Instructions are received late, are never received, or fail to contain terms
which confirm the Oral Instructions in all material respects: (i) the validity,
authorization and enforceability of the Oral Instructions, all actions,
transactions, and conduct occurring as a result of the Oral Instructions, and
PNC's ability to rely on the Oral Instructions shall not be abridged, abrogated,
nullified or adversely impacted in any manner; and (ii) PNC's memorialization of
the Oral Instructions shall be conclusively presumed to be the controlling
Written Instructions in the event confirming Written Instructions are never
received or are received but fail to confirm the Oral Instructions in all
material respects.
(i) In
the event facts, circumstances, or conditions exist or events occur, other than
due to a breach by PNC of its Standard of Care, including without limitation
situations contemplated by Section 2(e), and PNC reasonably determines that it
must take a course of conduct in response to such situation and must receive an
Instruction from the Fund to direct its conduct, and PNC so notifies the Fund,
and the Fund fails to furnish adequate Instructions or unreasonably delays
furnishing adequate Instructions ("Response Failure"):
(i)
|
PNC
will first endeavor to utilize internal resources to determine the
appropriate course of conduct in response to the situation but will be
entitled, at the Fund's sole cost and expense, to consult with legal
counsel or other third parties reasonably determined by PNC to be
appropriate to determine the appropriate course of conduct and the Fund
will reimburse PNC for out-of-pocket expenses so incurred upon being
invoiced for same; and
|
(ii)
|
PNC
may implement a course of conduct on behalf of the Fund and PNC will have
all rights hereunder with respect to such course of conduct as if such
course of conduct was taken pursuant to and contained in Written
Instructions. The Fund will pay PNC all fees reasonably charged
by PNC, if any, for engaging in the particular course of conduct and
reimburse PNC for all reasonably related out-of-pocket expenses incurred
upon being invoiced for same.
|
11. Limitation of
Liability.
(a) Subject
to the terms of this Section 11, PNC shall be liable to the Fund (or any person
or entity claiming through the Fund) for damages only to the extent caused by
PNC’s own intentional misconduct, willful misfeasance, bad faith or negligence with
respect to its duties under this Agreement (“Standard
of
17
Care”). In the
absence of a finding to the contrary, the acceptance, processing and/or
negotiation of a fraudulent payment for the purchase of Shares shall be presumed
not to have been a failure of PNC to meet its Standard of Care.
(b) The
aggregate cumulative liability of PNC and its affiliates to the Fund, its
affiliates, and any person or entity claiming through the Fund or its affiliates
for any loss, claim, suit, controversy, breach or damage of any nature
whatsoever (including but not limited to those arising out of or related
to: (i) this Agreement; (ii) the Administration and Accounting
Services Agreement, dated as of December 30, 2009, by and between PNC and the
Fund (the “AA
Agreement”); the State Filing Services Agreement, dated as of December
30, 2009, by and between PNC and the Fund (the “ClearSky Agreement”);
(iv) the FIN 48 Tax Services Agreement, dated as of December 30, 2009, by and
between PNC and the Fund (the “FIN 48 Agreement”);
and (v) the Custodian Services Agreement, dated as of June 1, 2006, by and
between PFPC Trust Company and the Fund (the “Custody
Agreement”)(this Agreement, collectively with AA Agreement, ClearSky
Agreement, FIN 48 Agreement and Custody Agreement, the “Service Agreements”))
and regardless of the form of action or legal theory (“Loss”) shall not
exceed the fees received by PNC and its affiliates for services provided
pursuant to the Service Agreements during the twenty-four (24) months
immediately prior to the date of such Loss (“Liability
Cap”). For the purposes of clarification, in the event a Loss
occurs prior to the end of 24 months subsequent to the date of this Agreement,
the Liability Cap shall be calculated on a pro forma basis based upon the fees
actually paid to PNC and its affiliates pursuant to the Service Agreements prior
to the date of the Loss. For example, in the event a Loss occurs at
the end of six (6) months after the Effective Date, and during those six (6)
months the Fund paid one million dollars ($1,000,000) to PNC and its affiliates
for services pursuant to the Service Agreements, then the Liability Cap shall be
four million dollars ($4,000,000). Notwithstanding anything to the
contrary in this Agreement, if any Loss is incurred by the Fund, its affiliates
and any person or entity claiming through the Fund or its affiliates that is
caused by PNC’s intentional misconduct or willful misfeasance, PNC’s liability
shall be limited to the greater of the actual Loss incurred or the Liability
Cap.
(c) PNC
shall not be liable for damages (including without limitation damages caused by
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; national emergencies; public enemy; war; terrorism; riot; fire;
flood; catastrophe; sabotage; epidemics; labor disputes; civil commotion;
interruption, loss or malfunction of utilities, transportation, insurrection;
elements of nature; 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.
(d) PNC
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 PNC reasonably believes to be
genuine. PNC shall not be liable for any damages that are caused by
actions or omissions taken by PNC in accordance with Written Instructions or
advice of counsel. PNC shall not be liable for any Loss arising out of any
action, omission or conduct of any prior service provider of the Fund or for any
failure to discover any action, omission or conduct of any prior service
provider of the Fund that caused or could cause Loss.
(e) NOTWITHSTANDING
ANY OTHER PROVISION OF THE AGREEMENT, IN NO EVENT SHALL PNC, ITS AFFILIATES OR
ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE
LIABLE UNDER ANY THEORY OF TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR LOST PROFITS, FOR EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES, OR FOR ANY OTHER DAMAGES
WHICH
18
ARE NOT
DIRECT DAMAGES REGARDLESS OF WHETHER SUCH DAMAGES WERE OR SHOULD HAVE BEEN
FORESEEABLE AND REGARDLESS OF WHETHER ANY ENTITY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, ALL AND EACH OF WHICH DAMAGES IS HEREBY EXCLUDED BY
AGREEMENT OF THE PARTIES. FOR PURPOSES OF CLARIFICATION: NO OTHER
PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED TO CONDITION, LIMIT, MODIFY,
NULLIFY OR OTHERWISE PREVAIL IN WHOLE OR IN PART OVER THIS SECTION
11(e).
(f) No
party may assert a claim or cause of action (or, if applicable, commence an
arbitration or other alternate dispute resolution proceeding) against PNC or any
of its affiliates more than 36 months after the first event or occurrence
comprising the conduct or alleged conduct upon which the cause of action is
based.
(g) Each
party shall have a duty to mitigate damages for which the other party may become
responsible.
(h) This
Section 11 shall survive termination of this Agreement.
12. Indemnification.
(a) The
Fund agrees to indemnify, defend and hold harmless PNC and its affiliates,
including specifically and without limitation PFPC Trust Company in connection
with services it provides pursuant to Section 3(a)(12), and the respective
directors, trustees, officers, agents and employees of each, from any and all
Losses and all attorneys’ fees, court costs, travel costs and other reasonable
out-of-pocket costs and expenses related to the investigation, discovery,
litigation, settlement, mediation or alternative dispute resolution of any Claim
arising directly or indirectly from: (a) conduct of the Fund in connection with
activities contemplated by this Agreement, or the conduct of a Fund contractor,
subcontractor or prior service provider in connection with providing services to
the Fund; (b) conduct of PNC as agent of the Fund not constituting a breach of
its Standard of Care; (c) conduct of PNC pursuant to a Fund Communication or in
reliance on written legal analysis or advice provided PNC's performance of the
conduct shall remain subject to the Standard of Care; (d) a course of conduct
taken by PNC pursuant to Section 10(i) due to a Response Failure; and (e) a Fund
Error. PNC shall have no liability to the Fund or any person claiming
through the Fund for any Loss caused in whole or in part by any conduct
described in the preceding sentence. This Section 12(a) shall survive
termination of this Agreement.
(b) PNC
agrees to indemnify, defend and hold harmless the Fund and its affiliates, and
the respective directors, trustees, officers, agents and employees of each, from
any and all Losses and all attorneys’ fees, court costs, travel costs and other
reasonable out-of-pocket costs and expenses related to the investigation,
discovery, litigation, settlement, mediation or alternative dispute resolution
of any Claim arising directly or indirectly from PNC’s breach of its Standard of Care
set forth in this Agreement; provided, however, PNC shall have no
obligation under this Section 12(b) with respect to any Losses, attorneys’ fees,
court costs, travel costs and other reasonable out-of-pocket costs and expenses
related to the investigation, discovery, litigation, settlement, mediation or
alternative dispute resolution of any Claim arising directly or indirectly
from the Fund’s
intentional misconduct, bad faith or negligence. This Section 12(b)
shall survive the termination of this Agreement.
13. Duration
and Termination.
(a) This
Agreement shall be effective on the Effective Date and continue, unless validly
terminated pursuant to this Section 13 prior thereto, until the date which is
the third (3rd) anniversary of the Effective Date (the “Initial
Term”).
19
(b)
|
This
Agreement shall automatically renew on the final day of the Initial Term
and the final day of each Renewal Term for an additional term which will
continue until the first (1st) anniversary of such renewal date (each such
additional term being a “Renewal Term”), unless the Fund or PNC gives
written notice to the other party of its intent not to renew and such
notice is received by the other party not less than ninety (90) days prior
to the expiration of the Initial Term or the then-current Renewal Term (a
"Non-Renewal Notice"). In the event a party provides a
Non-Renewal Notice, this Agreement shall terminate at 11:59 PM (Eastern
Time) on the last day of the Initial Term or Renewal Term, as
applicable.
|
(c) If
a party materially breaches this Agreement (a “Defaulting Party”) the other
party (the “Non-Defaulting Party”) may give written notice thereof to the
Defaulting Party ("Breach Notice"), and if such material breach shall not have
been remedied within thirty (30) days after the Breach Notice is given, then the
Non Defaulting Party may terminate this Agreement by giving written notice of
termination to the Defaulting Party ("Breach Termination Notice"), in which case
this Agreement shall terminate as of 11:59 PM (Eastern Time) on the 30th day
following the date the Breach Termination Notice is given, or such later date as
may be specified in the Breach Termination Notice (but not later than the last
day of the Initial Term or then-current Renewal Term, as appropriate). 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.
(d) Notwithstanding
anything contained in this Agreement to the contrary, if in connection with a
Change in Control the Fund gives notice to PNC terminating this Agreement or
terminating it as the provider of any of the services hereunder or if the Fund
otherwise terminates this Agreement or any of such services before the
expiration of, as appropriate, the Initial Term or the then-current Renewal Term
(“Early Termination”) (in all cases, other than in accordance with Sections
13(b) or (c) above) the following terms shall apply:
(i)
|
PNC
shall, if requested by the Fund, fully cooperate with and make a good
faith effort to facilitate a conversion to the Fund’s successor service
provider; provided that PNC does not guarantee that it will be able to
effect a conversion on the date(s) requested by the
Fund.
|
(ii)
|
Before
the effective date of the Early Termination and before any conversion of
Fund records and accounts to a successor service provider, the Fund shall
pay to PNC an amount equal to one-half of all fees and other amounts
(“Early Termination Fee”) calculated as if PNC were to provide all
services hereunder until the expiration of, as appropriate, the Initial
Term or the then-current Renewal Term. The Early Termination
Fee shall be calculated using the average of the monthly fees and other
amounts due to PNC under this Agreement during the last three calendar
months before the date of the notice of Early Termination (or, if not
given, the date services are terminated
hereunder).
|
(iii)
|
The
Fund expressly acknowledges and agrees that the Early Termination Fee is
not a penalty but reasonable compensation to PNC for the termination of
services before the expiration of, as appropriate, the Initial Term or the
then-current Renewal Term.
|
(iv)
|
For
purposes of this Section 13(d), “Change in Control” means a merger,
consolidation, adoption, acquisition, change in control, re-structuring,
or re-organization of or any other similar occurrence involving the Fund
or any affiliate of the Fund other than the liquidation of a Fund or
Portfolio, the deregistration of the Fund or a Portfolio or the merger or
reorganization of the Fund or a Portfolio with and into an unaffiliated
investment company.
|
20
(v) If
the Fund gives notice of Early Termination (or an Early Termination without such
notice occurs) after expiration of the notice period specified in Section 13(b),
the references above to “expiration of, as appropriate, the Initial Term or the
then-current Renewal Term” shall be deemed to mean “expiration of the Renewal
Term immediately following, as appropriate, the Initial Term or the then-current
Renewal Term.”
(vi)
|
If
more than one-third of the Fund’s assets serviced by PNC under this
Agreement are removed from the coverage of this Agreement (based on the
fair market value as of the date such assets are removed) for any reason
other than the liquidation of a Portfolio or deregistration of the Fund or
a Portfolio (“Removed Assets”), either as a result of one event or a
series of events, and are subsequently serviced by another service
provider (including the Fund or any affiliate of the Fund): (i) the Fund
will be deemed to have caused an Early Termination with respect to such
Removed Assets as of the day immediately preceding the first such removal
of assets and (ii) at, PNC’s option, either (1) the Fund will also be
deemed to have caused an Early Termination with respect to all non-Removed
Assets as of a date selected by PNC or (2) this Agreement will remain in
full force and effect with respect to all non-Removed
Assets.
|
(e) In
the event of termination, all reasonable expenses ("Conversion Expenses")
associated with movement of records and materials and conversion thereof to a
successor transfer agent ("Conversion Actions") will be borne by the Fund and
paid to PNC prior to any such conversion, including without limitation (i)
reasonable expenses incurred by PNC associated with de-conversion to a successor
service provider, (ii) reasonable expenses associated with the transfer or
duplication of records and materials, (iii) reasonable expenses associated with
the conversion of records or materials and (iv) reasonable trailing expenses. In
addition, in the event of termination, if PNC continues to perform any
Conversion Actions or provides any other services hereunder, beyond any
termination date or time specified in any notice or in any other manner, the
Fund shall be obligated to pay PNC immediately upon being invoiced therefor, all
reasonable Conversion Expenses and all other Fees and Reimbursable Expenses
associated with the services PNC continues to provide hereunder during such
period. PNC's performance of any Conversion Actions is conditioned on
the prior full performance by the Fund, to PNC's reasonable satisfaction, of its
obligations under Section 3(a)(12)(D)(iii).
(f) Notwithstanding
any other provision of this Agreement, PNC may in its sole discretion terminate
this Agreement immediately by sending notice thereof to the Fund upon the
happening of any of the following: (i) the Fund commences as debtor any case or
proceeding under any bankruptcy, insolvency or similar law, or there is
commenced against the Fund any such case or proceeding; (ii) the Fund
commences as debtor any case or proceeding seeking the appointment of a
receiver, conservator, trustee, custodian or similar official for the Fund or
any substantial part of its property or there is commenced against the Fund any
such case or proceeding; (iii) the Fund makes a general assignment for the
benefit of creditors; or (iv) the Fund states in any medium, written, electronic
or otherwise, any communication or in any other manner its inability to pay
debts as they come due. PNC may exercise its termination right under
this Section 13(f) at any time after the occurrence of any of the foregoing
events notwithstanding that such event may cease to be continuing prior to such
exercise, and any delay in exercising this right shall not be construed as a
waiver or other extinguishment of that right. Any exercise by PNC of
its termination right under this Section 13(f) shall be without any prejudice to
any other remedies or rights available to PNC and shall not be subject to any
fee or penalty, whether monetary or equitable. Notwithstanding clause
(iii) of Section 19, notice of termination under this Section 13(f) shall be
considered given and effective when given, not when received.
14. Policies
and Procedures.
(a) The
parties acknowledge that the services described in and to be provided under this
Agreement
21
involve
processes, actions, functions, instructions, consents, choices, the exercise of
rights or performance of obligations, communications and other components, both
internal to PNC and interactive between the parties, necessitated or made
appropriate by business or by legal or regulatory considerations, or both, that
in most cases are far too numerous and minutely detailed to expressly include in
this Agreement and that, accordingly, the parties agree that PNC shall perform
the services provided for in this Agreement in accordance with the written
policies, procedures, manuals, documentation and other operational guidelines of
PNC governing the performance of the services in effect at the time the services
are performed ("Written Procedures"), that PNC may from time to time revise its
Written Procedures, and that the Written Procedures are expressly intended to
supplement the description of services provided for herein, but that the express
terms of this Agreement will always prevail in any conflict with the Written
Procedures. PNC may embody in its Written Procedures any course of conduct which
it reasonably determines is commercially reasonable or consistent with generally
accepted industry practices, principles or standards ("Industry Standard") and
in making such determination may rely on such information, data, research,
analysis and advice, including legal analysis and advice, as it reasonably
determines appropriate under the circumstances.
(b) Notwithstanding
any other provision of this Agreement, the following terms of this Section 14(b)
shall apply in the event facts, circumstances or conditions exist or events
occur, other than due to a breach by PNC of its Standard of Care, which would
require a service to be provided hereunder other than in accordance with PNC's
Written Procedures, or if PNC is requested by the Fund, or a third party
authorized to act for the Fund, to deviate from a Written Procedure in
connection with the performance of a service hereunder (collectively, "Exception
Services"):
(i)
|
PNC
shall not be obligated to perform any particular Exception
Service. However, PNC may in good faith consider developing and
implementing an Exception Service: if the Fund agrees in a prior written
authorization to reimburse PNC for all reasonable costs and expenses
incurred in consulting with and obtaining the opinions of specialists,
legal counsel or other third parties reasonably considered by PNC to be
appropriate in light of the Exception Service requested ("Exception
Research") and the costs associated with utilizing internal resources to
develop and implement the Exception Service, and to pay the fees and
charges established by PNC for performing the Exception
Service. The Fund may, in place of agreeing to reimburse PNC
for the costs of Exception Research, agree in such written authorization
to provide PNC with all Exception Research reasonably requested by PNC at
the Fund's cost and expense.
|
(ii)
|
Following
receipt of all requested Exception Research, PNC may, in its sole
discretion, as an accommodation and not pursuant to any obligation, agree
to provide an Exception Service if it receives a Written Instruction
containing terms satisfactory to it in its sole discretion, including
without limitation terms constituting additional agreements with respect
to fees, charges, and expenses, terms constituting appropriate warranties,
representations and covenants, and terms specifying with particularity the
course of conduct constituting the Exception
Service.
|
(iii)
|
PNC
reserves the right following receipt of all Exception Research and not
withstanding such receipt to continue to decline to perform the Exception
Service for a bona fide legal, commercial or business
reason.
|
(c) In
the event that Fund requests documentation, analysis or verification in
whatsoever form regarding the commercial reasonableness or industry acceptance
of conduct provided for in a Written Procedure, PNC will cooperate to furnish
such materials as it may have in its possession at the time of the request
without cost to the Fund, but the Fund agrees to reimburse PNC for all out of
pockets costs and expenses incurred, including the costs of legal or expert
advice or analysis, in obtaining additional materials in connection with the
request.
22
15. Notices. Notices permitted
or required by this Agreement shall be in writing and:
(i)
|
addressed
as follows, unless a notice provided in accordance with this Section 19
shall specify a different address or
individual:
|
|
(A)
|
if
to PNC, to PNC Global Investment Servicing (U.S.) Inc., 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President; with a copy to
PNC Global Investment Servicing (U.S.) Inc., 000 Xxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Senior Counsel – TA
& SubAccounting; and
|
(B) if
to the Fund, at 0000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000-0000, Attention:
_______________;
(ii)
|
delivered:
by hand (personal delivery by an Authorized Person to addressee); private
messenger, with signature of recipient; U.S. Postal Service (with return
receipt or other delivery verification provided); overnight national
courier service, with signature of recipient, facsimile sending device
providing for automatic confirmation of receipt;
and
|
(iii) deemed
given on the day received by the receiving party.
16. Amendments.
(a) This
Agreement, or any term thereof, including without limitation the Exhibits and
Appendices hereto, may be changed or waived only by a written amendment, signed
by the party against whom enforcement of such change or waiver is
sought.
(b) Notwithstanding
subsection (a) above, in the event an officer of the Investment Company or other
person acting with apparent authority on behalf of the Investment Company
requests that PNC perform some or all of the services provided for in this
Agreement for a Portfolio not listed on Exhibit A, as amended, and such
Portfolio accepts such services and pays amounts provided for in the Fee
Agreement as Fees and Reimbursable Expenses, then in the absence of an express
written statement to the contrary such services are provided in accordance with
the terms of this Agreement and the Portfolio shall be bound by the terms of
this Agreement with respect to all matters addressed herein, except that PNC may
terminate such amendment by convenience to this Agreement if within 60 days of
the first such acceptance of services by the Portfolio the Investment Company
and PNC do not execute an written amendment to Exhibit A on terms mutually
acceptable to PNC and the Investment Company in their respective sole
discretion. PNC and the Investment Company each reserve the right to negotiate
terms appropriate to such additional Portfolios which differ from the terms
herein.
17. Delegation;
Assignment. PNC may assign
its rights and delegate its duties hereunder to any majority-owned direct or
indirect subsidiary of PNC or of The PNC Financial Services Group, Inc.,
provided that PNC gives the Fund thirty (30) days' prior written notice of such
assignment or delegation and such assignment or delegation does not impair the
Fund's receipt of services under this Agreement in any material respect, and any
such delegation shall not relieve PNC of its liabilities
hereunder. For the avoidance of doubt, to the extent PNC assigns its
rights hereunder, PNC shall remain liable to the Fund, its affiliates and any
person or entity claiming through the Fund or its affiliates to the same extent
as PNC is liable under Section 11 and Section 12 hereof. To the
extent required by the rules and regulations of the NSCC and in order for PNC to
perform the NSCC-related services, the Fund agrees that PNC may delegate its
duties to any affiliate of PNC that is a member of the XXXX.
00
00. Facsimile
Signatures; Counterparts. This Agreement
may be executed in one more counterparts; such execution of counterparts may
occur by manual signature, facsimile signature, manual signature transmitted by
means of facsimile transmission or manual signature contained in an imaged
document attached to an email transmission; and each such counterpart executed
in accordance with the foregoing shall be deemed an original, with all such
counterparts together constituting one and the same instrument. The
exchange of executed copies of this Agreement or of executed signature pages to
this Agreement by facsimile transmission or as an imaged document attached to an
email transmission shall constitute effective execution and delivery hereof and
may be used for all purposes in lieu of a manually executed copy of this
Agreement.
19. Further
Actions. Each party agrees
to perform such further acts and execute such further documents as are necessary
to effectuate the purposes hereof.
20.
|
Miscellaneous.
|
(a) Entire
Agreement. This Agreement embodies the final, complete,
exclusive and fully integrated record of the agreement of the parties on the
subject matter herein and supersedes all prior agreements and understandings
relating to such subject matter, provided that the parties may embody in one or
more separate documents their agreement, if any, with respect to delegated
duties.
(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 PNC’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 PNC’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 PNC
employee by the Fund, the Fund’s sponsor or an affiliate of the Fund if the PNC
employee was identified by such entity solely as a result of the PNC 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 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 other Shareholder Materials or to adopt any policies
which would affect materially the obligations or responsibilities of PNC
hereunder without the prior written approval of PNC, which approval shall not be
unreasonably withheld or delayed. Such approval, if given, shall not constitute
a waiver or abridgment of any rights under this Agreement. The scope
of services to be provided by PNC 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.
(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 PNC may reasonably request in
connection with services provided by PNC to the Fund.
(f) Governing
Law. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of conflicts
of law.
(g) Partial
Invalidity. If any provision of this Agreement shall be held
or made invalid by a court
24
decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
(h) 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 with respect to those certain provisions providing for
rights of PFPC Trust or obligations of the Fund to PFPC Trust, and those certain
provisions benefitting affiliates of the parties, this Agreement is not for the
benefit of any other person or entity and (ii) there shall be no third party
beneficiaries hereof.
(i) No Representations or
Warranties. Except as expressly provided in this Agreement,
PNC 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. PNC disclaims any warranty of title or
non-infringement except as otherwise set forth in this Agreement.
(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. Certain of PNC’s affiliates are
financial institutions, and PNC may, as a matter of policy, 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. PNC may also ask (and may have
already asked) for additional identifying information, and PNC may take steps
(and may have already taken steps) to verify the authenticity and accuracy of
these data elements.
(k) Use of
"Fund". In the event "Fund" as used in this Agreement refers
to Portfolios listed on Exhibit A, notwithstanding such use, the Investment
Company bears to the extent permitted by law all responsibilities, obligations,
liabilities and duties of all such Portfolios to the extent not performed by
such Portfolios.
(l) Additional Fund
Adoption. Notwithstanding anything in this Agreement to the
contrary, if PNC is requested orally or in writing to provide services under
this Agreement to any additional new class, tier, portfolio or series of an
investment company or fund that is a party to this Agreement or any additional
investment company or fund ("Additional Fund"), and PNC provides such services
under this Agreement to such Additional Fund, then, from the date PNC commences
providing such services, such Additional Fund shall be deemed a party to and
bound by the terms and conditions of this Agreement with respect to all matters
addressed herein even in the absence of a writing by such Additional Fund
agreeing to be so bound by this Agreement.
25
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the day and year first above written.
PNC
Global Investment Servicing (U.S.)
Inc. Bridgeway
Funds, Inc.
By:
/s/Xxxxxxx
XxXxxxxx By:
/s/Xxxxxxx
Mulcahy____________
Name:
Xxxxxxx
XxXxxxxx
Name: Xxxxxxx
Mulcahy____________
Title:
Executive Vice President Title:
President___________________
EXHIBIT
A
(Dated:
February 20, 2010)
THIS
EXHIBIT A is Exhibit A to that certain Transfer Agency Services Agreement
effective as of February 20, 2010, between PNC Global Investment Servicing
(U.S.) Inc. and Bridgeway Funds, Inc.
Portfolios
Aggressive
Investors 1 Fund
Aggressive
Investors 2 Fund
Ultra-Small
Company Fund
Ultra-Small
Company Market Fund
Micro-Cap
Limited Fund
Small-Cap
Growth Fund
Small-Cap
Value Fund
Large-Cap
Growth Fund
Large-Cap
Value Fund
Blue Chip
35 Index Fund
Balanced
Fund
27
EXHIBIT
B
PNC has
agreed to perform the services described in this Agreement in accordance with
the service standards set forth on this Exhibit B. The parties agree
that such service standards may be revised, from time to time, by mutual
agreement.
In the
event PNC fails to meet a service standard in any particular month, PNC agrees
to take appropriate corrective measures within the following month in order to
be in compliance with the appropriate standard at the end of such month;
provided, however, that the foregoing requirement shall not apply in those
instances in which PNC’s failure to meet a service standard was due to
circumstances beyond its control.
Transfer
Agency & Shareholder Services – Quality Standards
|
|
ITEM
|
STANDARD
|
Financial
Transaction Quality
|
98%
accuracy rate
|
Non-Financial
Transaction Quality
|
95%
accuracy rate
|
New
Account Transaction Quality
|
95%
accuracy rate
|
Incoming
Calls
|
85%
answered in twenty (20) seconds
|
Abandon
Rate
|
Under
2.5%
|
Transfer
Agency & Shareholder Services – Timeliness
Standards
|
|
ITEM
|
STANDARD
|
Transaction
Processing
|
New
accounts (including TOA new accounts)—T
|
Purchases—T
|
|
Exchanges—T
|
|
Transfers—T
+ 2
|
|
Redemptions—T
|
|
Maintenances—T
+ 4
|
|
Correspondence/Call
Outs
|
Priority
calls (financial)—T + 1
|
Priority
letters (financial)—T+4
|
|
Non-priority
calls—T + 3
|
|
Non-priority
letters—T + 4
|
|
Transfer
of Assets letters—T+4
|
|
Adjustments
|
Processing
initiated for all items—T
|
All
items quality control—T + 1
|
|
Cancel/Rebill—T
|
|
Research
|
Priority
items (financial)—R + 2
|
Non-financial
items—R + 3
|
|
Other—To
be defined based on research material prior transfer agent
processes
|
|
Print
Output
|
Daily
Confirmations—T + 3
|
Quarterly
Statements—T + 5
|
|
Year-end
Tax Forms—45 days of calendar
year-end
|
These
service standards are subject to all of the terms of the Service
Agreement.
Days
where less than 50% of the nightly information is received prior to 5:00pm EST,
the entire day is not figured into any performance calculation.
The
required Standard (performance level) associated with a Function will be
measured by dividing the total number of times that Function was correctly
performed during the month by the total number of times that Function occurred
during the month.
28
APPENDIX
A
Definitions
As used
in this Agreement:
“1933 Act” means
the Securities Act of 1933, as
amended.
|
“1934 Act” means
the Securities Exchange Act of 1934, as
amended.
|
"1940 Act" means
Investment Company Act of 1940, as
amended.
|
“Authorized Person”
means any officer of the Fund and any other person duly authorized by the Fund
in a manner reasonably satisfactory to PNC to give Instructions on behalf of the
Fund. Any limitation on the authority of an Authorized Person to give
Instructions must be expressly set forth in a written document signed by both
parties.
"Claim" means any
claim, demand, suit, action, obligation, liability, suit, controversy, breach,
proceeding or allegation of any nature (including but not limited to those
arising out of or related to this Agreement) and regardless of the form of
action or legal theory.
"Code" means the
Internal Revenue Code of 1986, as
amended.
|
"conduct" or "course of conduct"
means a single act, two or more acts, a single instance of an action not being
taken or of forbearance given, two or more instances of an action not being
taken or of forbearance given, or any combination of the foregoing.
"Fund Error" means the
Fund or a third party acting on behalf of the Fund or conveying Fund data or
information committing an error, furnishing inaccurate, incorrect or incomplete
data or information to PNC or PFPC Trust or by other act or omission requiring
Remediation.
"Fund Shares"
(see "Shares")
|
"Instructions"
means Oral Instructions and Written Instructions considered collectively
or individually.
|
"Loss" and "Losses" means any
one, or any series of related, losses, costs, damages, expenses, awards,
judgments, assessments, fines, penalties, payments, reimbursements, adverse
consequences, liabilities or obligations arising out of any Claim
"Loss Date" means the
date of occurrence of the event or circumstance causing a particular Loss, or
the date of occurrence of the first event or circumstance in a series of events
or circumstances causing a particular Loss.
“Oral Instructions”
means oral instructions received by PNC from an Authorized Person or from a
person reasonably believed by PNC to be an Authorized Person. PNC 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.
"PFPC Trust" means
PFPC Trust Company, the parent corporation of PNC, and its lawful successors and
assigns.
29
"Portfolio"
means each separate subdivision of the Investment Company, whether
characterized or structured as a portfolio, class, tier, series or
otherwise, listed on Schedule A hereto or included within this Agreement
by virtue of the operation of Section 16(b) or
20(l).
|
"Remediation Services"
means the additional services required to be provided hereunder by PNC or PFPC
Trust in connection with a Fund Error in order to correct, remediate, adjust,
reprocess, repeat, reverse or otherwise modify conduct previously taken in
accordance with the Agreement to achieve the outcome originally intended for by
the previous conduct.
“SEC” means the
U.S. Securities and Exchange
Commission.
|
“Securities
Laws” means the 1933 Act, the 1934 Act and the 1940
Act.
|
"Shareholder
Materials" means the Fund's prospectus, statement of additional
information and any other materials relating to the Fund provided to Fund
shareholders by the Fund.
“Shares” or "Fund Shares" means
the shares or other units of beneficial interest of each Fund.
"Written Instructions"
means (i) written instructions signed by an Authorized Person (or a person
reasonably believed by PNC to be an Authorized Person), addressed to and
received by PNC, and delivered by (A) hand (personally delivery by the
Authorized Person), (B) private messenger, U.S. Postal Service or overnight
national courier which provides confirmation of receipt with respect to the
particular delivery, or (C) facsimile sending device which provides automatic
confirmation of the standard details of receipt, or (ii) trade instructions
transmitted to and received by PNC by means of an electronic transaction
reporting system which requires use of a password or other authorized identifier
in order to gain access.
|
|
|
GLOSSARY OF DEFINED
TERMS
|
Term
|
Location
|
1933
Act
|
Appendix
A
|
1934
Act
|
Appendix
A
|
1940
Act
|
Appendix
A
|
314(a)
Procedures
|
§
3(b)(4)
|
Additional
Fund
|
§
20(l)
|
AML
|
§
3(b)(l)
|
Audit
Report
|
Appendix
B, § (b)(iv)
|
Authorized
Person
|
Appendix
A
|
Appropriate
List Matching Data
|
§
2(b)(5)(C)
|
Bona
Fide Reason
|
§
10(c)
|
Breach
Notice
|
§
13(c)
|
Breach
Termination Notice
|
§
13(c)
|
Change
in Control
|
§
13(d)(iv)
|
CIP
Regulations
|
§
3(b)(3)(A)
|
Claim
|
Appendix
A
|
Code
|
Appendix
A
|
conduct
|
Appendix
A
|
Confidential
Information
|
§
4(b)
|
Comparison
Results
|
§
3(b)(4)
|
Controls
|
Appendix
B, § (b)(i)
|
Conversion
Actions
|
§
13(e)
|
Conversion
Expenses
|
§
13(e)
|
course
of conduct
|
Appendix
A
|
Covered
Account
|
Appendix
B, § (b)(i)(F)
|
Covered
Person
|
Appendix
B, § (b)(i)(D)
|
Custodian
|
§
3(a)(3)(iii)
|
Customer
|
§
3(b)(3)(A)(i)
|
Custodied
Account
|
§
3(a)(12)(D)
|
Data
Elements
|
§
3(b)(3)(A)(i)
|
Defaulting
Party
|
§
13(c)
|
Direct
Account
|
Appendix
B, § (b)(i)(E)
|
Director
|
§
2(b)(5)(A)(iii)
|
Dissolution
Event
|
§
9(g)
|
Early
Termination
|
§
13(d)
|
Early
Termination Fee
|
§
13(d)(ii)
|
Effective
Date
|
Preamble
|
Eligible
Assets
|
§
3(a)(12)(A)(i)
|
Exception
Research
|
§
14(b)(i)
|
Exception
Services
|
§
14(b)
|
External
Research
|
§
10(d)(i)
|
Fee
Agreement
|
§
9(a)
|
Fees
|
§
9(a)
|
FFI
Regulations
|
§
3(b)(2)(A)
|
Final
Distribution
|
§
9(g)
|
Final
Expenses
|
§
9(g)
|
Foreign
Financial Institution
|
§
3(b)(2)(A)(i)
|
Form
|
§
10(b)
|
Fund
|
Background
|
Fund
Communication
|
§
10(g)
|
Fund
Data
|
§
2(b)(5)(A)
|
Fund
Error
|
Appendix
A
|
Fund
Registry
|
Appendix
B, § (b)(i)(C)
|
Fund
Shares
|
Appendix
A
|
Identity
Theft
|
Appendix
B, § (b)(i)(B)
|
Industry
Standard
|
§
14(a)
|
Information
Requests
|
§
3(b)(4)
|
Initial
Term
|
§
13(a)
|
Instructions
|
Appendix
A
|
Internal
Research
|
§
10(d)(i)
|
Investment
Company
|
Preamble
|
Loss,
Losses
|
Appendix
A
|
Loss
Date
|
Appendix
A
|
Lost
Shareholder Rule
|
§
3(a)(11)(A)
|
NCCT
List
|
§
2(b)(5)(A)(ii)
|
Non-Defaulting
Party
|
§
13(c)
|
Non-Renewal
Notice
|
§
13(b)
|
Non-Standard
Instruction
|
§
10(c)
|
OFAC
|
§
2(b)(5)(A)(i)
|
OFAC
Lists
|
§
2(b)(5)(A)(i)
|
Oral
Instructions
|
Appendix
A
|
Participants
|
§
3(a)(12)(A)(ii)
|
PFPC
Trust
|
Appendix
A
|
PMLC
Determination
|
§
2(b)(5)(A)(iii)
|
PNC
|
Preamble
|
Portfolio
|
Appendix
A
|
Possible
Identity Theft
|
Appendix
B, § (b)(iii)
|
Red
Flag
|
Appendix
B, § (b)(i)(A)
|
Red
Flags Requirements
|
Appendix
B, § (c)
|
Red
Flags Section
|
Appendix
B, § (a)
|
Red
Flags Services
|
Appendix
B, § (b)
|
Registered
Owner
|
Appendix
B, § (b)(i)(C)
|
Reimbursable
Expenses
|
§
9(a)
|
Remediation
Services
|
Appendix
A
|
Removed
Assets
|
§
13(d)(vi)
|
Renewal
Term
|
§
13(b)
|
Response
Failure
|
§
10(i)
|
SEC
|
Appendix
A
|
Securities
Laws
|
Appendix
A
|
Service
Accounts
|
§
9(b)
|
Shareholder
Materials
|
Appendix
A
|
Shares
|
Appendix
A
|
Standard
Instructions
|
§
10(b)
|
Standard
of Care
|
§
11(a)
|
Tax
Favored Account
|
§
3(a)(12)(A)(iii)
|
Third
Party Institution
|
§
9(b)
|
U.S.
Government Lists
|
§
2(b)(5)(A)
|
Written
Instructions
|
Appendix
A
|
Written
Procedures
|
§
14(a)
|
30
APPENDIX
B
Red Flags
Services
(a) The
provisions of this Appendix B shall apply in the event the Fund elects to
receive Red Flags Services. Section 3(e) of the Agreement together
with this Appendix B is referred to collectively as the "Red Flags
Section".
(b) PNC
agrees to provide the Fund with the "Red Flags Services", which is hereby
defined to mean the following services:
(i)
|
PNC
will maintain written controls reasonably designed to detect the
occurrence of Red Flags (as defined below) in connection with (i) account
opening and other account activities and transactions conducted directly
through PNC with respect to Direct Accounts (as defined below), and (ii)
transactions effected directly through PNC by Covered Persons (as defined
below) in Covered Accounts (as defined below). Such controls,
as they may be revised from time to time hereunder, are referred to herein
as the "Controls". Solely for purposes of the Red Flags
Section, the capitalized terms below will have the respective meaning
ascribed to each:
|
|
(A)
|
"Red
Flag" means a pattern, practice, or specific activity or a combination of
patterns, practices or specific activities which may indicate the possible
existence of Identity Theft (as defined below) affecting a Registered
Owner (as defined below) or a Covered
Person.
|
|
(B)
|
"Identity
Theft" means a fraud committed or attempted using the identifying
information of another person without
authority.
|
|
(C)
|
"Registered
Owner" means a natural person who is the owner of record of a Direct
Account on the books and records of the Fund maintained by PNC as
registrar of the Fund (the "Fund
Registry").
|
|
(D)
|
"Covered
Person" means a natural person who is the owner of record of a Covered
Account on the Fund Registry.
|
|
(E)
|
"Direct
Account" means an account holding Fund shares established directly with
and through PNC by a natural person as a registered account on the Fund
Registry and through which the owner of record has the ability to directly
conduct account and transactional activity with and through
PNC.
|
|
(F)
|
"Covered
Account" means an account holding Fund shares established by a financial
intermediary for a natural person as the owner of record on the Fund
Registry and through which such owner of record has the ability to conduct
transactions in Fund shares directly with and through
PNC.
|
(ii) PNC
will provide the Fund with a printed copy of or Internet viewing access to the
Controls.
(iii)
|
PNC
will notify the Fund of Red Flags which it detects and reasonably
determines to indicate a significant risk of Identity Theft to a
Registered Owner or a Covered Person ("Possible Identity Theft") and
assist the Fund in determining the appropriate response of the Fund to the
Possible Identity Theft.
|
31
(iv) PNC
will (A) engage an independent auditing firm or other similar firm of
independent examiners to conduct an annual testing of the Controls and issue a
report on the results of the testing (the "Audit Report"), and (B) furnish a
copy of the Audit Report to the Fund; and
(v)
|
Upon
Fund request, issue a certification in a form determined to be appropriate
by PNC in its reasonable discretion, certifying to PNC's continuing
compliance with the Controls after the date of the most recent Audit
Report.
|
(c) The
Fund agrees it is responsible for complying with and determining the
applicability to the Fund of Section 114 of the Fair and Accurate Credit
Transaction Act of 2003 and regulations promulgated thereunder by the Federal
Trade Commission (the "Red Flags Requirements"), the extent to which the Red
Flags Services assist the Fund in complying with the Red Flags Requirements, and
for furnishing any supplementation or augmentation to the Red Flags Services it
determines to be appropriate under the Red Flags Requirements, and that PNC has
given no advice and makes no representations with respect to such
matters. This Red Flags Section shall not be interpreted in any
manner which imposes a duty on PNC to act on behalf of the Fund or otherwise,
including any duty to take any action upon the occurrence of a Red Flag, other
than as expressly provided for in this Red Flags Section. The
Controls and the Red Flags Services may be changed at any time and from time to
time by PNC in its reasonable sole discretion to include commercially reasonable
provisions appropriate to the Red Flags Requirements, as they may be constituted
from time to time. In consideration for the Red Flags Services, the
Fund will pay to PNC fee for Red Flags Services as established by PNC from time
to time by written notice. Other than the initial fee which will be
payable as of the Effective Date, the Fund will pay PNC any revised fee
commencing thirty (30) days after the Fund's receipt of the written notice
containing the revised fee. The Fund will be able to terminate the
Red Flags Services within this 30-day period by sending notice of such to PNC
but will be considered to have agreed to the revised fee if such notice is not
sent.
(d) Notwithstanding
any other provision of the Agreement:
(i) Neither
PNC nor its affiliates shall be liable for any Loss that constitutes
consequential, incidental, exemplary, punitive, special or indirect damages,
whether or not the likelihood, reasonable or otherwise, of such damages was
known by PNC or its affiliates. PNC's maximum cumulative aggregate liability to
the Fund and all persons or entities claiming through the Fund, considered as a
whole, for Loss arising out of the Red Flags Section, the recovery of which is
not barred by another provision of this Agreement, shall not exceed
$50,000.
(ii) In
the event of a material breach of this Red Flags Section by PNC, the Fund's sole
and exclusive termination right shall be to terminate the Red Flags Services by
complying with the procedural provisions of Section 13(c). For
clarification: this clause (ii) shall be interpreted to limit only the Fund's
termination remedy in the event of a material breach of the Red Flags Section
shall not be interpreted to modify or nullify any other remedy available to the
Fund under the Agreement.
32
APPENDIX
C
SEC
Rule 22c-2 Services
1. Services and
Fees. In connection with the obligations of the Fund under
Rule 22c-2 of the 1940 Act (“Rule 22c-2”), PNC shall provide to the Fund the
services set forth in this Schedule C and in Attachment 1 attached to this
Schedule C ("22c-2 Services"). The Fund will enter into information
sharing agreements ("ISAs") with financial intermediaries (“Financial
Intermediaries”) providing for the Financial Intermediaries to respond to
instructions from the Fund or PNC to deliver data to PNC pursuant to Rule 22c-2
relating to transactions in the Fund's shares. Such instructions will be
provided substantially in the form of Attachment 2 to this Schedule
C. PNC shall not be liable to the Fund, its shareholders or investors
or any agents of the Fund, including its investment advisors, for (i) any errors
or omissions in any data provided to PNC by a Financial Intermediary, or (ii)
compliance by the Fund with SEC Rule 22c-2. PNC’s sole obligation
under this Schedule C shall be to provide the Fund with access, in accordance
with Attachment 1 to this Schedule C, to information provided to PNC by
Financial Intermediaries pursuant to ISAs.
2. Systems. In providing
the 22c-2 Services, PNC may, pursuant to a license or other agreement (“License
Agreement”) with one or more unrelated parties (“Third Party Providers”),
utilize information, data, technology and systems (“Third Party Systems”)
licensed or otherwise provided to PNC by such Third Party Providers. The Fund
will not use or disclose any information relating to Third Party
Systems. The Fund's use and access to such Third Party Systems shall
be subject to such terms of use, restrictions, limitations and indemnities made
applicable by the Third Party Providers to users of the Third Party Systems
generally or which are applicable to PNC under the License
Agreements.
3. Indemnification. In
addition to the obligations of the Fund provided for in Section __ of the
Agreement, the Fund agrees to indemnify, defend and hold harmless PNC 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, rules and regulations of the
United States (including SEC Rule 22c-2) or of any state and any foreign
country) arising directly or indirectly from any action or omission to act which
PNC takes or fails to take in connection with the provision of 22c-2 Services or
arising directly or indirectly from the Fund's use or operation of the Third
Party Systems or PNC systems made available for use in connection with the 22c-2
Services or any or the software, firmware, hardware, or network associated
therewith which occurs in a manner other than that provided for in the
applicable documentation. Notwithstanding the foregoing, neither PNC, nor any of
its affiliates, shall be indemnified against any liability (or any expenses
incident to such liability) caused by PNC's or its affiliates' own intentional
misconduct, willful misfeasance, bad faith, negligence or reckless disregard in
its or their performance of the 22c-2 Services. This Section 3 shall survive any
termination of the Agreement or the 22c-2 Services.
4. Limitation of
Liability. PNC 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 Amendment. PNC shall be
liable only for any damages arising out of PNC's failure to perform its duties
under this Schedule C to the extent such damages arise out of PNC's intentional
misconduct, willful misfeasance, bad faith, negligence or reckless disregard of
such duties. Notwithstanding any other provision of this Agreement: (i) in
connection with providing the 22c-2 Services, neither PNC nor its affiliates
shall not be liable for (A) 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; war;
terrorism; fire; flood; sabotage; interruption, loss or malfunction of
utilities, computer or communications capabilities; natural catastrophes; or
non-performance by a third party, or (B) consequential, exemplary, punitive,
special or indirect losses or damages arising in connection
with
33
the 22c-2
Services, whether or not the likelihood of such losses or damages was known by
PNC or its affiliates or was foreseeable to any extent; and (ii) PNC's
cumulative liability to the Fund for all losses, claims, suits, controversies,
breaches or damages arising out of or related to the 22c-2 Services and
regardless of the form of action or legal theory shall not exceed the fees
received by PNC for 22c-2 Services provided hereunder during the twelve (12)
months immediately prior to the date of such loss or damage. This Section 4
shall survive any termination of the Agreement or the 22c-2
Services.
34
Attachment 1 to Appendix
C
Services
·
|
The
PNC 22c-2 system (the “22c-2 System”) is intended to enable the Fund to
manage data requests to, and to access and analyze data provided by,
Financial Intermediaries as required by SEC Rule
22c-2.
|
·
|
Pursuant
to the ISAs, Financial Intermediaries may deliver to PNC, in electronic
format, information on transactions effected in Fund
shares.
|
·
|
The
Fund may use the 22c-2 System to access data that is provided to PNC by
Financial Intermediaries or that is otherwise available to PNC through
NSCC for Financial Intermediaries that are NSCC members. The
Fund may also use the 22c-2 System to request data from non-NSCC
members.
|
·
|
The
22c-2 System is intended to be generally available to the Fund from 8:00
am to 6:00 pm Eastern Time during regular trading days, subject to
periodic unavailability due to maintenance, upgrades, testing and
potential 22c-2 System failures.
|
·
|
PNC
will work with the Fund as necessary to develop an implementation program
with respect to the 22c-2 Services, with the objective of launching the
22c-2 System on a mutually agreed upon date. The implementation
program will seek to identify and access sources of relevant data,
including identification of omnibus accounts, Financial Intermediaries,
NSCC 22c-2 membership status, CUSIPs, Fund shareholder accounts and Fund
trading and redemption policies as set forth in the Fund’s SEC
registration statement and prospectuses. Designated
representatives of the Fund will have access to the 22c-2 System. The
22c-2 System will be tested and de-bugged as
necessary.
|
·
|
The
22c-2 System implementation schedule will vary depending on the profile
and requirements of the Fund, but is estimated to take at least 6-10
weeks. PNC will provide project oversight and coordination,
planning and review. PNC will also assist the Fund in testing the 22c-2
System and training designated Fund representatives in the use of the
22c-2 System.
|
·
|
PNC
will consider enhancements and improvements upon request, with fees at
rates to be negotiated.
|
38