CUSTODIAN SERVICES AGREEMENT
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THIS AGREEMENT is made as of February 22, 2001, by and between PFPC
TRUST COMPANY ("PFPC Trust") and SAGE ADVISORS, INC. ("Sage").
W I T N E S S E T H:
WHEREAS, Sage Life Investment Trust (the "Fund") is registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, Sage wishes to retain PFPC Trust to provide custodian services
for the Fund, and PFPC Trust wishes to furnish custodian services for the Fund,
either directly or through an affiliate or affiliates, as more fully described
herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Definitions. As Used in This Agreement:
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(a) "1933 Act" means the Securities Act of 1933, as amended.
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(b) "1934 Act" means the Securities Exchange Act of 1934, as
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amended.
(c) "Authorized Person" means any officer of the Fund and any
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other person authorized by the Fund to give Oral or Written
Instructions on behalf of the Fund. An Authorized Person's
scope of authority may be limited by setting forth such
limitation in a written document signed by both parties
hereto.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry
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system for United States and federal agency securities, its
successor or successors, and its
nominee or nominees and any book-entry system maintained by
an exchange registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
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(f) "Change of Control" means a change in ownership or control
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(not including transactions between wholly-owned direct or
indirect subsidiaries of a common parent) of 25% or more of
the beneficial ownership of the shares of common stock or
shares of beneficial interest of an entity or its parent(s).
(g) "Oral Instructions" mean oral instructions received by PFPC
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Trust from an Authorized Person or from a person reasonably
believed by PFPC Trust to be an Authorized Person. PFPC Trust
may, in its sole discretion in each separate instance,
consider and rely upon instructions it receives from an
Authorized Person via electronic mail as Oral Instructions.
(h) "PFPC Trust" means PFPC Trust Company or a subsidiary or
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affiliate of PFPC Trust Company.
(i) "SEC" means the Securities and Exchange Commission.
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(j) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940
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Act and the CEA.
(k) "Shares" mean the shares of beneficial interest of any series
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or class of the Fund.
(l) "Property" means:
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(i) any and all securities and other investment items
which the Fund may from time to time deposit, or
cause to be deposited, with PFPC Trust or which PFPC
Trust may from time to time hold for the Fund;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities
or investment items; and
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(iv) all proceeds of the sale of securities issued by the
Fund, which are received by PFPC Trust from time to
time, from or on behalf of the Fund.
(m) "Written Instructions" mean (i) written instructions signed by
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two Authorized Persons and received by PFPC Trust or (ii)
trade instructions transmitted by means of an electronic
transaction reporting system which requires the use of a
password or other authorized identifier in order to gain
access. The instructions may be delivered electronically or by
hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. Appointment. Sage hereby appoints PFPC Trust to provide custodian
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services to the Fund, on behalf of each of its investment portfolios
(each, a "Portfolio"), and PFPC Trust accepts such appointment and
agrees to furnish such services.
3. Delivery of Documents. Sage has provided or, where applicable, will
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provide PFPC Trust with the following:
(a) at PFPC Trust's request, certified or authenticated copies of
the resolutions of the Fund's Board of Trustees, approving the
appointment of PFPC Trust or its affiliates to provide
services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution/underwriting agreement with respect
to each class of Shares;
(e) a copy of each Portfolio's administration agreement;
(f) copies of any distribution and/or shareholder servicing plans
and agreements made in respect of the Fund or a Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
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4. Compliance with Laws.
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PFPC Trust undertakes to comply with applicable requirements of the
Securities Laws and laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be
performed by PFPC Trust hereunder. Except as specifically set forth
herein, PFPC Trust assumes no responsibility for such compliance by the
Fund or any other entity.
5. Instructions.
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(a) Unless otherwise provided in this Agreement, PFPC Trust shall
act only upon Oral Instructions or Written Instructions.
(b) Unless PFPC Trust knows or reasonably should have known
otherwise, PFPC Trust shall be entitled to rely upon any Oral
Instruction or Written Instruction it receives from an
Authorized Person (or from a person reasonably believed by
PFPC Trust to be an Authorized Person) pursuant to this
Agreement. PFPC Trust may assume that any Oral Instructions or
Written Instructions received hereunder are not in any way
inconsistent with the provisions of organizational documents
of the Fund or of any vote, resolution or proceeding of the
Fund's Board of Trustees or of the Fund's shareholders, unless
and until PFPC Trust receives Written Instructions to the
contrary.
(c) Sage agrees that the Fund will forward to PFPC Trust Written
Instructions confirming Oral Instructions (except where such
Oral Instructions are given by PFPC Trust or its affiliates)
so that PFPC Trust receives the Written Instructions by the
close of business on the same day that such Oral Instructions
are received.
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The fact that such confirming Written Instructions are not
received by PFPC Trust or differ from the Oral Instructions
shall in no way invalidate the transactions or
enforceability of the transactions authorized by the Oral
Instructions or PFPC Trust's ability to rely upon such Oral
Instructions. Where Oral Instructions or Written
Instructions reasonably appear to have been received from an
Authorized Person, PFPC Trust shall incur no liability in
acting upon such Oral Instructions or Written Instructions
provided that PFPC Trust's actions comply with the other
provisions of this Agreement.
6. Right to Receive Advice.
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(a) Advice of the Fund. If PFPC Trust is in doubt as to any action
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it should or should not take, PFPC Trust may request
directions or advice, including Oral Instructions or Written
Instructions, from the Fund.
(b) Advice of Counsel. If PFPC Trust shall be in doubt as to any
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question of law pertaining to any action it should or should
not take, PFPC Trust may request advice from counsel of its
own choosing (who may be counsel for the Fund, Sage or PFPC
Trust, at the option of PFPC Trust).
(c) Conflicting Advice. In the event of a conflict between
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directions or advice or Oral Instructions or Written
Instructions PFPC Trust receives from the Fund, and the advice
it receives from counsel, PFPC Trust shall be entitled to rely
upon and follow the advice of counsel.
(d) Protection of PFPC Trust. PFPC Trust shall be protected in
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any action it takes or does not take in reliance upon
directions or advice or Oral Instructions or Written
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Instructions it receives from the Fund or from counsel and
which PFPC Trust believes, in good faith, to be consistent
with those directions or advice or Oral Instructions or
Written Instructions. Nothing in this section shall be
construed so as to impose an obligation upon PFPC Trust,
unless otherwise required to do so under the terms of this
Agreement, (i) to seek such directions or advice or Oral
Instructions or Written Instructions, or (ii) to act in
accordance with such directions or advice or Oral
Instructions or Written Instructions unless, under the terms
of other provisions of this Agreement, the same is a
condition of PFPC Trust's properly taking or not taking such
action.
7. Records; Visits. The books and records pertaining to the Fund and any
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Portfolio, which are in the possession or under the control of PFPC
Trust, shall be the property of the Fund. Such books and records shall
be prepared and maintained as required by the 1940 Act and other
applicable Securities Laws, rules and regulations. The Fund and
Authorized Persons shall have access to such books and records at all
times during PFPC Trust's normal business hours. Upon the reasonable
request of the Fund, copies of any such books and records shall be
provided by PFPC Trust to the Fund or to an authorized representative
of the Fund, at the Fund's expense.
8. Confidentiality. Each party shall keep confidential any information
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relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information
that is competitively sensitive material, and not generally known to
the public, including, but not limited to, information about product
plans, marketing strategies, finances, operations, customer
relationships, customer profiles, customer lists,
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sales estimates, business plans, and internal performance results
relating to the past, present or future business activities of Sage,
the Fund or PFPC Trust, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them; (b)
any scientific or technical information, design, process, procedure,
formula, or improvement that is commercially valuable and secret in
the sense that its confidentiality affords the Fund or PFPC Trust a
competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential.
Notwithstanding the foregoing, information shall not be subject to
such confidentiality obligations if it: (a) is already known to the
receiving party at the time it is obtained; (b) is or becomes publicly
known or available through no wrongful act of the receiving party; (c)
is rightfully received from a third party who, to the best of the
receiving party's knowledge, is not under a duty of confidentiality;
(d) is released by the protected party to a third party without
restriction; (e) is required to be disclosed by the receiving party
pursuant to a requirement of a court order, subpoena, governmental or
regulatory agency or law (provided the receiving party will provide
the other party written notice of such requirement, to the extent such
notice is permitted); (f) is relevant to the defense of any claim or
cause of action asserted against the receiving party; or (g) has been
or is independently developed or obtained by the receiving party.
9. Cooperation with Accountants. PFPC Trust shall cooperate with the
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Fund's independent public accountants and shall take all reasonable
action to make any requested
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information available to such accountants as reasonably requested by
Sage or the Fund.
10. PFPC System. PFPC Trust shall retain title to and ownership of any and
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all data bases, computer programs, screen formats, report formats,
interactive design techniques, derivative works, inventions,
discoveries, patentable or copyrightable matters, concepts, expertise,
patents, copyrights, trade secrets, and other related legal rights
utilized by PFPC Trust in connection with the services provided by
PFPC Trust to the Fund.
11. Disaster Recovery. PFPC Trust shall enter into and shall maintain in
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effect with appropriate parties one or more agreements making
reasonable provisions for emergency use of electronic data processing
equipment to the extent appropriate equipment is available. In the
event of equipment failures, PFPC Trust shall, at no additional
expense to the Fund, take reasonable steps to minimize service
interruptions. PFPC Trust shall have no liability with respect to the
loss of data or service interruptions caused by equipment failure
provided such loss or interruption is not caused by PFPC Trust's own
willful misfeasance, bad faith, gross negligence or reckless disregard
of its duties or obligations under this Agreement.
12. Compensation. As compensation for custody services rendered by PFPC
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Trust during the term of this Agreement, Sage, on behalf of each of
the Portfolios, will pay to PFPC Trust a fee or fees as may be agreed
to in writing from time to time by the Fund and PFPC Trust. Sage
acknowledges that PFPC Trust may receive float benefits in connection
with maintaining certain accounts required to provide services under
this Agreement.
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13. Indemnification. Sage, on behalf of each Portfolio, agrees to
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indemnify and hold harmless PFPC Trust and its affiliates from all
taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, attorneys' fees and disbursements and
liabilities arising under the Securities Laws and any state and
foreign securities and blue sky laws) arising directly or indirectly
from any action or omission to act which PFPC Trust takes in
connection with the provision of services to the Fund. Neither PFPC
Trust, nor any of its affiliates, shall be indemnified against any
liability (or any expenses incident to such liability) caused by PFPC
Trust's or its affiliates' own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties and obligations under
this Agreement.
14. Responsibility of PFPC Trust.
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(a) PFPC Trust shall be under no duty to take any action
hereunder on behalf of the Fund or any Portfolio except as
specifically set forth herein or as may be specifically
agreed to by PFPC Trust and the Fund in a written amendment
hereto, unless the failure to take any action would
constitute willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations on the part of PFPC
Trust. PFPC Trust shall be obligated to exercise care and
diligence in the performance of its duties hereunder and to
act in good faith in performing services provided for under
this Agreement. PFPC Trust shall be liable only for any
damages arising out of PFPC Trust's failure to perform its
duties under this Agreement to the extent such damages arise
out of PFPC Trust's willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties under
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this Agreement.
(b) Without limiting the generality of the foregoing or of any
other provision of this Agreement, (i) PFPC Trust shall not
be liable for losses beyond its control, including without
limitation (subject to Section 11), delays or errors or loss
of data occurring by reason of circumstances beyond PFPC
Trust's control, provided that PFPC Trust has acted in
accordance with the standard set forth in Section 14(a)
above; and (ii) PFPC Trust shall not be under any duty or
obligation to inquire into and shall not be liable for the
validity or invalidity or authority or lack thereof of any
Oral Instruction or Written Instruction, notice or other
instrument which PFPC Trust reasonably believes to be
genuine.
(c) Notwithstanding anything in this Agreement to the contrary,
neither party to this Agreement nor any of its affiliates
shall be liable for any consequential, special or indirect
losses or damages, whether or not the likelihood of such
losses or damages was known by such party or its affiliates.
(d) Each party shall have a duty to mitigate damages for which
the other party may become responsible.
15. Description of Services.
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(a) Delivery of the Property. Sage will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the
Portfolios for which PFPC Trust acts as custodian, including
cash received as a result of the distribution of Shares,
during the term of this Agreement. PFPC Trust will not be
responsible for such property until actual receipt.
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(b) Receipt and Disbursement of Money. PFPC Trust, acting upon
---------------------------------
Written Instructions, shall open and maintain separate
accounts in the Fund's name using all cash received from or
for the account of the Fund, subject to the terms of this
Agreement. In addition, upon Written Instructions, PFPC
Trust shall open separate custodial accounts for each
separate Portfolio of the Fund (collectively, the
"Accounts") and shall hold in the Accounts all cash received
from or for the Accounts of the Fund specifically designated
to each separate Portfolio. PFPC Trust shall make cash
payments from or for the Accounts of a Portfolio only for:
(i) purchases of securities in the name of a Portfolio,
PFPC Trust, PFPC Trust's nominee or a sub-custodian
or nominee thereof as provided in sub-section (j) and
for which PFPC Trust has received a copy of the
broker's or dealer's confirmation or payee's invoice,
as appropriate;
(ii) purchase or redemption of Shares of the Fund
delivered to PFPC Trust;
(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting,
distribution, advisory and management fees which are
to be borne by a Portfolio;
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent for
the shareholders, of an amount equal to the amount of
dividends and distributions stated in the Written
Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying
the Fund's transfer agent, PFPC Trust may arrange for
the direct payment of cash dividends and
distributions to shareholders in accordance with
procedures mutually agreed upon from time to time by
and among the Fund, PFPC Trust and the Fund's
transfer agent.
(v) payments, upon receipt of Written Instructions, in
connection with the conversion, exchange or surrender
of securities owned or subscribed to by the Fund and
held by or delivered to PFPC Trust;
(vi) payments of the amounts of dividends received with
respect to securities sold short;
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(vii) payments to PFC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(ix) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian
for the Accounts.
(c) Receipt of Securities; Subcustodians.
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(i) PFPC Trust shall hold all securities received by it
for the Accounts in a separate account that
physically segregates such securities from those of
any other persons, firms or corporations, except for
securities held in a Book-Entry System. All such
securities shall be held or disposed of only upon
Oral Instructions or Written Instructions of the Fund
pursuant to the terms of this Agreement. PFPC Trust
shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such
securities or investment, except upon the express
terms of this Agreement or upon Written Instructions
authorizing the transaction. In no case may any
member of the Fund's Board of Trustees, or any
officer, employee or agent of the Fund withdraw any
securities.
At PFPC Trust's own expense and for its own
convenience, PFPC Trust may enter into sub-custodian
agreements with other banks or trust companies to
perform duties described in this sub-section (c) with
respect to domestic assets. Such bank or trust
company shall have an aggregate capital, surplus and
undivided profits, according to its last published
report, of at least one million dollars ($1,000,000),
if it is a subsidiary or affiliate of PFPC Trust, or
at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or
affiliate of PFPC Trust. In addition, such bank or
trust company must be qualified to act as custodian
and agree to comply with the relevant provisions of
applicable Securities Laws, rules and regulations and
the terms of this Agreement. Any such arrangement
will not be entered into without prior written
consent of Sage (or as otherwise provided in the 1940
Act).
In addition, PFPC Trust may enter into arrangements
with sub-custodians with respect to services
regarding foreign assets. Any such arrangement will
be entered into with prior written notice to the Fund
(or as otherwise provided in the 1940 Act).
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PFPC Trust shall remain responsible for the
performance of all of its duties as described in this
Agreement and shall hold the Fund and each Portfolio
harmless from its own acts or omissions, under the
standards of care provided for herein, or the acts
and omissions of any sub-custodian chosen by PFPC
Trust under the terms of this sub-section (c).
(d) Transactions Requiring Instructions. Upon receipt of Oral
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Instructions or Written Instructions and not otherwise, PFPC
Trust, directly or through the use of the Book-Entry System,
shall:
(i) deliver any securities held for a Portfolio against the
receipt of payment for the sale of such securities;
(ii) execute and deliver to such persons as may be
designated in such Oral Instructions or Written
Instructions, proxies, consents, authorizations, and
any other instruments whereby the authority of a
Portfolio as owner of any securities may be exercised;
(iii) deliver any securities to the issuer thereof, or its
agent, when such securities are called, redeemed,
retired or otherwise become payable at the option of
the holder; provided that, in any such case, the cash
or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any securities held for a Portfolio against
receipt of other securities or cash issued or paid in
connection with the liquidation, reorganization,
refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise of
any conversion privilege;
(v) deliver any securities held for a Portfolio to any
protective committee, reorganization committee or other
person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of
deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such
delivery;
(vi) make such transfer or exchanges of the assets of the
Portfolios and take such other steps as shall be stated
in said Oral Instructions or Written Instructions to be
for the purpose of effectuating a duly authorized plan
of liquidation, reorganization, merger, consolidation
or recapitalization of the Fund;
(vii) release securities belonging to a Portfolio to any
bank or trust company for
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the purpose of a pledge or hypothecation to secure any
loan incurred by the Fund on behalf of that Portfolio;
provided, however, that securities shall be released
only upon payment to PFPC Trust of the monies borrowed,
except that in cases where additional collateral is
required to secure a borrowing already made subject to
proper prior authorization, further securities may be
released for that purpose; and repay such loan upon
redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or
notes evidencing the loan;
(viii) release and deliver securities owned by a Portfolio
in connection with any repurchase agreement entered
into on behalf of the Fund, but only on receipt of
payment therefor; and pay out moneys of the Fund in
connection with such repurchase agreements, but only
upon the delivery of the securities;
(ix) release and deliver or exchange securities owned by the
Fund in connection with any conversion of such
securities, pursuant to their terms, into other
securities;
(x) release and deliver securities to a broker in
connection with the broker's custody of margin
collateral relating to futures and options
transactions;
(xi) release and deliver securities owned by the Fund for
the purpose of redeeming in kind shares of the Fund
upon delivery thereof to PFPC Trust; and
(xii) release and deliver or exchange securities owned by
the Fund for other purposes.
PFPC Trust must also receive a certified resolution
describing the nature of the corporate purpose and
the name and address of the person(s) to whom
delivery shall be made when such action is pursuant
to sub-paragraph d(xii).
(e) Use of Book-Entry System. PFPC Trust is authorized and
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instructed, on a continuous basis, to deposit in the
Book-Entry System all securities belonging to the Portfolios
eligible for deposit therein and to utilize the Book-Entry
System to the extent possible in connection with settlements
of purchases and sales of securities by the Portfolios, and
deliveries and returns of securities loaned, subject
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to repurchase agreements or used as collateral in connection
with borrowings. PFPC Trust shall continue to perform such
duties until it receives Written Instructions or Oral
Instructions authorizing contrary actions.
PFPC Trust shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which
are maintained in the Book-Entry System, the records
of PFPC Trust shall identify by Book-Entry or
otherwise those securities belonging to each
Portfolio.
(ii) Assets of each Portfolio deposited in the Book-Entry
System will at all times be segregated from any
assets and cash controlled by PFPC Trust in other
than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities.
PFPC Trust will provide the Fund with such reports on its own
system of internal control as the Fund may reasonably request
from time to time.
(f) Registration of Securities. All Securities held for a
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Portfolio which are issued or issuable only in bearer form,
except such securities held in the Book-Entry System, shall
be held by PFPC Trust in bearer form; all other securities
held for a Portfolio may be registered in the name of the
Fund on behalf of that Portfolio, PFPC Trust, the Book-Entry
System, a sub-custodian, or any duly appointed nominee of
the Fund, PFPC Trust, Book-Entry System or sub-custodian.
The Fund reserves the right to instruct PFPC Trust as to the
method of registration and safekeeping of the securities of
the Fund. The Fund agrees to furnish to PFPC Trust
appropriate instruments to enable PFPC Trust to hold or
deliver in proper form for transfer, or to register in the
name of its nominee or in the name of the Book-Entry System
or in the name of another appropriate entity, any securities
which it may hold for the Accounts and which may from time
to time be
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registered in the name of the Fund on behalf of a Portfolio.
(g) Voting and Other Action. Neither PFPC Trust nor its nominee
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shall vote any of the securities held pursuant to this
Agreement by or for the account of a Portfolio, except in
accordance with Written Instructions. PFPC Trust, directly or
through the use of the Book-Entry System, shall execute in
blank and promptly deliver all notices, proxies and proxy
soliciting materials received by PFPC Trust as custodian of
the Property to the registered holder of such securities. If
the registered holder is not the Fund on behalf of a
Portfolio, then Written Instructions or Oral Instructions must
designate the person who owns such securities.
(h) Transactions Not Requiring Instructions. In the absence of
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contrary Written Instructions, PFPC Trust is authorized to
take the following actions:
(i) Collection of Income and Other Payments.
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(A) collect and receive for the account of each
Portfolio, all income, dividends,
distributions, coupons, option premiums,
other payments and similar items, included
or to be included in the Property, and, in
addition, promptly advise each Portfolio of
such receipt and credit such income, as
collected, to each Portfolio's custodian
account;
(B) endorse and deposit for collection, in the
name of the Fund, checks, drafts, or other
orders for the payment of money;
(C) receive and hold for the account of each
Portfolio all securities received as a
distribution on the Portfolio's securities
as a result of a stock dividend, share
split-up or reorganization,
recapitalization, readjustment or other
rearrangement or distribution of rights or
similar securities issued with respect to
any securities belonging to a Portfolio and
held by PFPC Trust hereunder;
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(D) present for payment and collect the amount
payable upon all securities which may mature
or be, on a mandatory basis, called,
redeemed, or retired, or otherwise become
payable on the date such securities become
payable; and
(E) take any action which may be necessary and
proper in connection with the collection and
receipt of such income and other payments
and the endorsement for collection of
checks, drafts, and other negotiable
instruments.
(ii) Miscellaneous Transactions.
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(A) PFPC Trust is authorized to deliver or cause
to be delivered Property against payment or
other consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or
dealer selling for the account of a
Portfolio in accordance with street
delivery custom;
(2) for the exchange of interim receipts
or temporary securities for
definitive securities; and
(3) for transfer of securities into the
name of the Fund on behalf of a
Portfolio or PFPC Trust or a
sub-custodian or a nominee of one of
the foregoing, or for exchange of
securities for a different number of
bonds, certificates, or other
evidence, representing the same
aggregate face amount or number of
units bearing the same interest
rate, maturity date and call
provisions, if any; provided that,
in any such case, the new securities
are to be delivered to PFPC Trust.
(B) unless and until PFPC Trust receives Oral
Instructions or Written Instructions to the
contrary, PFPC Trust shall:
(1) pay all income items held by it
which call for payment upon
presentation and hold the cash
received by it upon such payment for
the account of each Portfolio;
(2) collect interest and cash dividends
received, with notice to the
Fund, to the account of each
Portfolio;
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(3) hold for the account of each
Portfolio all stock dividends,
rights and similar securities issued
with respect to any securities held
by PFPC Trust; and
(4) execute as agent on behalf of the
Fund all necessary ownership
certificates required by the
Internal Revenue Code or the Income
Tax Regulations of the United States
Treasury Department or under the
laws of any state now or hereafter
in effect, inserting the Fund's
name, on behalf of a Portfolio, on
such certificate as the owner of the
securities covered thereby, to the
extent it may lawfully do so.
(i) Segregated Accounts.
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(i) PFPC Trust shall upon receipt of Written Instructions
or Oral Instructions establish and maintain
segregated accounts on its records for and on behalf
of each Portfolio. Such accounts may be used to
transfer cash and securities, including securities in
the Book-Entry System:
(A) for the purposes of compliance by the Fund
with the procedures required by a securities
or option exchange, providing such
procedures comply with the 1940 Act and any
releases of the SEC relating to the
maintenance of segregated accounts by
registered investment companies; and
(B) upon receipt of Written Instructions, for
other purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX
custodian accounts for such shareholders holding
Shares through XXX accounts, in accordance with the
Fund's prospectuses, the Internal Revenue Code of
1986, as amended (including regulations promulgated
thereunder), and with such other procedures as are
mutually agreed upon from time to time by and among
the Fund, PFPC Trust and the Fund's transfer agent.
(j) Purchases of Securities. PFPC Trust shall settle purchased
-----------------------
securities upon receipt of Oral Instructions or Written
Instructions that specify:
(i) the name of the issuer and the title of the
securities, including CUSIP number if applicable;
(ii) the number of shares or the principal amount
purchased and accrued interest, if any;
18
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker
through whom the purchase was made. PFPC Trust shall
upon receipt of securities purchased by or for a
Portfolio pay out of the moneys held for the account
of the Portfolio the total amount payable to the
person from whom or the broker through whom the
purchase was made, provided that the same conforms to
the total amount payable as set forth in such Oral
Instructions or Written Instructions.
(k) Sales of Securities. PFPC Trust shall settle sold securities
-------------------
upon receipt of Oral Instructions or Written Instructions that
specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and
accrued interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to
whom the sale was made;
(vii) the location to which the security must be delivered
and delivery deadline, if any; and
(viii) the Portfolio involved.
PFPC Trust shall deliver the securities upon receipt of the total
amount payable to the Portfolio upon such sale, provided that the total
amount payable is the same as was set forth in the Oral Instructions or
Written Instructions. Notwithstanding the other
19
provisions thereof, PFPC Trust may accept payment in such form as
shall be satisfactory to it, and may deliver securities and arrange
for payment in accordance with the customs prevailing among dealers in
securities.
(l) Reports; Proxy Materials.
------------------------
(i) PFPC Trust shall furnish to Sage and the Fund the
following reports:
(A) such periodic and special reports as the
Fund may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the account of
each portfolio, listing each portfolio
security belonging to each Portfolio with
the adjusted average cost of each issue and
the market value at the end of such month
and stating the cash account of each
Portfolio including disbursements;
(C) the reports required to be furnished to the
Fund pursuant to Rule 17f-4 of the 1940 Act;
and
(D) such other information as may be agreed upon
from time to time between the Fund and PFPC
Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any
proxy statement, proxy material, notice of a call or
conversion or similar communication received by it as
custodian of the Property. PFPC Trust shall be under
no other obligation to inform the Fund as to such
actions or events. For clarification, upon
termination of this Agreement PFPC Trust shall have
no responsibility to transmit such material or to
inform the Fund or any other reason of such actions
or events.
(m) Crediting of Accounts. If PFPC Trust in its sole discretion
---------------------
credits an Account with respect to (a) income, dividends,
distributions, coupons, option premiums, other payments or
similar items on a contractual payment date or otherwise in
20
advance of PFPC Trust's actual receipt of the amount due,
(b) the proceeds of any sale or other disposition of assets
on the contractual settlement date or otherwise in advance
of PFPC Trust's actual receipt of the amount due or (c)
provisional crediting of any amounts due, and (i) PFPC Trust
is subsequently unable to collect full and final payment for
the amounts so credited within a reasonable time period
using reasonable efforts or (ii) pursuant to standard
industry practice, law or regulation PFPC Trust is required
to repay to a third party such amounts so credited, or if
any Property has been incorrectly credited, PFPC Trust shall
have the absolute right in its sole discretion without
demand to reverse any such credit or payment, to debit or
deduct the amount of such credit or payment from the
Account, and to otherwise pursue recovery of any such
amounts so credited from the Fund. Nothing herein or
otherwise shall require PFPC Trust to make any advances or
to credit any amounts until PFPC Trust's actual receipt
thereof. The Fund hereby grants a first priority contractual
possessory security interest in and a right of setoff
against the assets maintained in an Account hereunder in the
amount necessary to secure the return and payment to PFPC
Trust of any advance or credit made by PFPC Trust (including
charges related thereto) to such Account.
(n) Collections. All collections of monies or other property in
-----------
respect, or which are to become part, of the Property (but
not the safekeeping thereof upon receipt by PFPC Trust)
shall be at the sole risk of the Fund. If payment is not
received by PFPC Trust within a reasonable time after proper
demands have been made, PFPC Trust shall notify the Fund in
writing, including copies of all demand letters, any
21
written responses and memoranda of all oral responses and
shall await instructions from the Fund. PFPC Trust shall not
be obliged to take legal action for collection unless and
until it receives Written Instructions from the Fund. PFPC
Trust shall also notify the Fund as soon as reasonably
practicable whenever income due on securities is not
collected in due course and shall provide the Fund with
periodic status reports of such income collected after a
reasonable time.
16. Duration and Termination.
------------------------
(a) This Agreement shall be effective on the date first written
above and shall continue for a period of two (2) years (the
"Initial Term"). Upon the expiration of the Initial Term, this
Agreement shall automatically renew for successive terms of
two (2) years ("Renewal Terms") each, unless Sage or PFPC
Trust provides written notice to the other of its intent not
to renew. Such notice must be received not less than sixty
(60) days and not more than one-hundred eighty (180) days
prior to the expiration of the Initial Term or the then
current Renewal Term.
(b) In the event this Agreement is terminated (pending appointment
of a successor to PFPC Trust or vote of the shareholders of
the Fund to dissolve or to function without a custodian of
its cash, securities or other property), PFPC Trust shall
not deliver cash, securities or other property of the
Portfolios to the Fund. It may deliver them to a bank or
trust company of PFPC Trust's choice and reasonably
acceptable to Sage, having an aggregate capital, surplus and
undivided profits, as shown by its last published report, of
not less than twenty million dollars ($20,000,000), as a
custodian for the Fund to be held under terms similar to
those
22
of this Agreement. PFPC Trust shall not be required to make
any delivery or payment of assets upon termination until
full payment shall have been made to PFPC Trust of all of
its fees, compensation, costs and expenses (such expenses
include, without limitation, expenses associated with
movement (or duplication) of records and materials and
conversion thereof to a successor service provider, or to a
bank or trust company pending appointment of such successor,
and all trailing expenses incurred by PFPC Trust). PFPC
Trust shall have a security interest in and shall have a
right of setoff against the Property in an amount equal to
such fees, compensation, costs and expenses.
(c) If a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party")
the other party (the "Non-Defaulting Party") may give
written notice thereof to the Defaulting Party, and if such
material breach shall not have been remedied within thirty
(30) days after such written notice is given, then the
Non-Defaulting Party may terminate this Agreement by giving
thirty (30) days written notice of such termination to the
Defaulting Party. If PFPC Trust is the Non-Defaulting Party,
its termination of this Agreement shall not constitute a
waiver of any other rights or remedies of PFPC Trust with
respect to services performed prior to such termination of
rights of PFPC Trust to be reimbursed for out-of-pocket
expenses. 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.
23
17. Notices. Notices shall be addressed (a) if to PFPC Trust at 8800
-------
Tinicum Xxxxxxxxx, 0xx Xxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000, Attention: Xxx Xxxxxxxx; (b) if to Sage, at 000 Xxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx, 00000, Attention: Xxxxxxx
Xxxxxx; or (c) if to neither of the foregoing, at such other address
as shall have been given by like notice to the sender of any such
notice or other communication by the other party. If notice is sent by
confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given immediately. If notice is sent by
first-class mail, it shall be deemed to have been given five days
after it has been mailed. If notice is sent by messenger, it shall be
deemed to have been given on the day it is delivered.
18. Amendments. This Agreement, or any term hereof, may be changed or
----------
waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
19. Delegation; Assignment. PFPC Trust may assign its rights and delegate
----------------------
its duties hereunder to any affiliate of PFPC Trust or of The PNC
Financial Services Group, Inc., provided that PFPC Trust gives the
Fund 60 days' prior written notice of such assignment or delegation.
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. Further Actions. Each party agrees to perform such further acts and
---------------
execute such further documents as are necessary to effectuate the
purposes hereof.
24
22. Miscellaneous.
-------------
(a) Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to
delegated duties.
(b) No Representations or Warranties. Except as expressly provided
--------------------------------
in this Agreement, PFPC Trust hereby disclaims all
representations and warranties, express or implied, made to
Sage or any other person, including, without limitation, any
warranties regarding quality, suitability, merchantability,
fitness for a particular purpose or otherwise (irrespective of
any course of dealing, custom or usage of trade), of any
services or any goods provided incidental to services provided
under this Agreement. PFPC Trust disclaims any warranty of
title or non-infringement except as otherwise set forth in
this Agreement.
(c) 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.
(d) 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; provided, however, that
this Agreement shall at all times be interpreted in a manner
that is consistent with the Securities Laws.
25
(e) Partial Invalidity. If any provision of this Agreement shall
------------------
be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not be
affected thereby.
(f) Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(g) Facsimile Signatures. The facsimile signature of any party to
--------------------
this Agreement shall constitute the valid and binding
execution hereof by such party.
(h) All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against
the Fund as neither the Trustees, officers, agents or
shareholders assume any personal liability for obligations
entered into on behalf of the Fund.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By:
-----------------------------------------
Title:
--------------------------------------
SAGE ADVISORS, INC.
By:
-----------------------------------------
Title:
--------------------------------------
27
