EXHIBIT (g)
Custodian Agreement
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of June 3, 2005 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and SIT U.S. GOVERNMENT SECURITIES FUND, INC., a Minnesota
corporation (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other person
authorized by the Fund to give 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.
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(d) "BOOK-ENTRY SYSTEM" means the Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor
or successors, and its nominee or nominees and any book-entry system
or clearing agency registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC Trust from
an Authorized Person or from a person reasonably believed by PFPC
Trust to be an Authorized Person. PFPC Trust may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic mail
as Oral Instructions.
(g) "PFPC TRUST" means PFPC Trust Company or a subsidiary or affiliate of
PFPC Trust Company.
(h) "SEC" means the Securities and Exchange Commission.
(i) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(j) "SHARES" mean the shares of beneficial interest of any series or class
of the Fund.
(k) "PROPERTY" means:
(i) any and all securities and other investment items which the Fund
may from time to time deposit, or cause to be deposited, with
PFPC Trust or which PFPC Trust may from time to time hold for the
Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or investment
items; and
(iv) all proceeds of the sale of securities issued by the Fund, which
are received by PFPC Trust from time to time, from or on behalf
of the Fund.
(l) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by two
Authorized Persons (or persons reasonably believed by PFPC Trust to be
Authorized Persons) and received by PFPC Trust or (ii) trade
instructions transmitted by means of an electronic transaction
reporting system which requires the use of a password or other
authorized identifier in order to gain access. The instructions may be
delivered electronically (with respect to
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sub-item (ii) above) or by hand, mail or facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund as set forth herein and PFPC Trust accepts such
appointment and agrees to furnish such services.
3. COMPLIANCE WITH LAWS. PFPC Trust undertakes to comply with material
applicable requirements of the Securities Laws and material laws, rules and
regulations of governmental authorities having jurisdiction with respect to
the duties to be performed by PFPC Trust hereunder. Except as specifically
set forth herein, PFPC Trust assumes no responsibility for such compliance
by the Fund or any other entity.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives pursuant to this Agreement. PFPC Trust
may assume that any Oral Instructions or Written Instructions received
hereunder are not in any way inconsistent with the provisions of
organizational documents of the Fund or of any vote, resolution or
proceeding of the Fund's Board of Directors or of the Fund's
shareholders, unless and until PFPC Trust receives Written
Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions from Authorized Persons so that PFPC
Trust receives the Written Instructions by the close of business on
the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC Trust or
differ from the Oral Instructions shall in no way invalidate the
transactions or enforceability of the transactions authorized by the
Oral Instructions or PFPC Trust's
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ability to rely upon such Oral Instructions.
5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC Trust may request directions or
advice, including Oral Instructions or Written Instructions, from
the Fund.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any
question of law pertaining to any action it should or should not
take, PFPC Trust may request advice from counsel of its own
reasonable choosing (who may be counsel for the Fund, the Fund's
investment adviser or PFPC Trust, at the option of PFPC Trust).
(c) CONFLICTING ADVICE. In the event of a conflict between directions
or advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel,
PFPC Trust shall be entitled to rely upon and follow the advice
of counsel.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be indemnified by the
Fund and without liability for any action PFPC Trust takes or
does not take in reliance upon directions or advice or Oral
Instructions or Written Instructions PFPC Trust receives from or
on behalf of the Fund or in reliance upon advice from counsel
reasonably chosen by PFPC Trust and which PFPC Trust believes, in
good faith, to be consistent with those directions or advice or
Oral Instructions or Written Instructions. Nothing in this
section shall be construed so as to impose an obligation upon
PFPC Trust (i) to seek such directions or advice or Oral
Instructions or Written Instructions, or (ii) to act in
accordance with such directions or advice or Oral Instructions or
Written Instructions.
6. RECORDS; VISITS. The books and records pertaining to the Fund, which are in
the possession or under the control of PFPC Trust, shall be the property of
the Fund. Such books and records shall be prepared and maintained as
required by the 1940 Act and other applicable securities laws,
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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.
7. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer
profiles, customer lists, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Fund or PFPC Trust, their respective subsidiaries and
affiliated companies; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable
and secret in the sense that its confidentiality affords the Fund or PFPC
Trust a competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential. Notwithstanding
the foregoing, information shall not be Confidential Information and shall
not be subject to such confidentiality obligations if: (a) it is already
known to the receiving party at the time it is obtained; (b) it is or
becomes publicly known or available through no wrongful act of the
receiving party; (c) it is rightfully received from a third party who, to
the best of the receiving party's knowledge, is not under a duty of
confidentiality; (d) it is released by the protected party to a third party
without restriction; (e) it is requested or required to be disclosed by the
receiving party pursuant to a court order, subpoena, governmental or
regulatory agency request or law (provided the receiving party will provide
the other party written notice of the same, to the extent such notice is
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permitted); (f) release of such information by PFPC Trust is necessary or
desirable in connection with the provision of services under this
Agreement; (g) it is relevant to the defense of any claim or cause of
action asserted against the receiving party; or (h) it has been or is
independently developed or obtained by the receiving party.
8. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the Fund's
independent public accountants and shall take all reasonable action to make
any requested information available to such accountants as reasonably
requested by the Fund.
9. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC Trust in
connection with the services provided by PFPC Trust to the Fund.
10. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC Trust's own bad faith, negligence or reckless disregard of
its duties or obligations under this Agreement.
11. COMPENSATION.
(a) As compensation for custody services rendered by PFPC Trust during the
term of this Agreement, the Fund will pay to PFPC Trust a fee or fees
as may be agreed to in writing from time to time by the Fund and PFPC
Trust. The Fund acknowledges that PFPC Trust may receive float
benefits in connection with maintaining certain accounts required
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to provide services under this Agreement.
(b) The undersigned hereby represents and warrants to PFPC Trust that (i)
the terms of this Agreement, (ii) the fees and expenses associated
with this Agreement, and (iii) any benefits accruing to PFPC Trust or
to the adviser or sponsor to the Fund in connection with this
Agreement, including but not limited to any fee waivers, conversion
cost reimbursements, up front payments, signing payments or periodic
payments made or to be made by PFPC Trust to such adviser or sponsor
or any affiliate of the Fund relating to this Agreement have been
fully disclosed to the Board of Directors of the Fund and that, if
required by applicable law, such Board of Directors has approved or
will approve the terms of this Agreement, any such fees and expenses,
and any such benefits.
12. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend and hold harmless PFPC Trust
(including its officers, directors, agents and employees) from all
taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, reasonable attorneys' fees and
disbursements) arising from any action or omission to act which PFPC
Trust takes in connection with the provision of services to the Fund;
provided that PFPC Trust shall not be indemnified, defended or held
harmless against any liability (or any expenses incident to such
liability) caused by PFPC Trust's own bad faith, negligence or
reckless disregard in the performance of PFPC Trust's activities under
this Agreement.
(b) PFPC Trust agrees to indemnify, defend and hold harmless the Fund
(including its officers, directors and employees) from all taxes,
charges, expenses, assessments, claims and liabilities (including,
without limitation, reasonable attorneys' fees and disbursements)
arising out of PFPC Trust's failure to perform its duties under this
Agreement but only to the extent such taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
reasonable attorneys' fees and disbursements)
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arise out of PFPC Trust's bad faith, negligence or reckless disregard
of its duties under this Agreement; provided that the Fund shall not
be indemnified, defended or held harmless against any liability (or
any expenses incident to such liability) caused by the Fund's own bad
faith, negligence or reckless disregard relating to the activities to
which this Agreement relates.
(c) The provisions of this Section 12 shall survive termination of this
Agreement.
13. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the Fund except as specifically set forth herein or as may
be specifically agreed to by PFPC Trust and the Fund in a written
amendment hereto. PFPC Trust shall be obligated to exercise 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 and shall be required to
indemnify, defend and hold harmless the Fund (including its officers,
directors and employees) only from any taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
reasonable attorneys' fees and disbursements) arising out of PFPC
Trust's failure to perform its duties under this Agreement and only to
the extent such taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, reasonable attorneys' fees
and disbursements) arise out of PFPC Trust's bad faith, negligence or
reckless disregard of its duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
Trust shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion;
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interruption, loss or malfunction of utilities, transportation,
computer or communications capabilities; insurrection; elements of
nature; or non-performance by a third party; and (ii) PFPC Trust shall
not be under any duty or obligation to inquire into and shall not be
liable for the validity or invalidity, authority or lack thereof, or
truthfulness or accuracy or lack thereof, of any instruction,
direction, notice, instrument or other information which PFPC Trust
reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, (i)
neither PFPC Trust nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or not
the likelihood of such losses or damages was known by PFPC Trust or
its affiliates, (ii) PFPC Trust's cumulative liability to the Fund for
all losses, claims, suits, controversies, breaches or damages for any
cause whatsoever (including but not limited to those arising out of or
related to this Agreement) and regardless of the form of action or
legal theory shall not exceed the greater of $250,000 or the fees
received by PFPC Trust for services provided hereunder during the 12
months immediately prior to the date of such loss or damage (provided
that, while the dollar amount of any loss or damage caused by PFPC
Trust's fraud or gross negligence shall be included in calculating
whether the dollar limitations set forth in the foregoing damage cap
specified in this sub-section (ii) have been reached, the foregoing
damage cap specified in this sub-section (ii) shall not otherwise
limit PFPC Trust's liability for loss or damage shown to be caused by
PFPC Trust's fraud or gross negligence) and (iii) PFPC Trust shall not
have any responsibility with respect to the acts, omissions or
operations of any Book-Entry System or other depository (unless the
same arise out of PFPC Trust's bad faith, negligence or reckless
disregard of its duties under this Agreement).
(d) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
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(e) For all purposes under this Agreement, reasonableness shall be
determined under the facts and circumstances prevailing in the market
where performance is rendered.
(f) Notwithstanding anything in this Agreement to the contrary (other than
as specifically provided in Section 14(h)(ii)(B)(4) and Section
14(h)(iii)(A) of this Agreement), the Fund shall be responsible for
all filings, tax returns and reports on any transactions undertaken
pursuant to this Agreement, or in respect of the Property or any
collections undertaken pursuant to this Agreement, which may be
requested by any relevant authority. In addition, the Fund shall be
solely responsible for the payment of all taxes and similar items
(including without limitation penalties and interest related thereto.
(g) The provisions of this Section 13 shall survive termination of this
Agreement.
(h) Notwithstanding anything in this Agreement to the contrary, PFPC Trust
shall have no liability either for any error or omission of any of its
predecessors as servicer on behalf of the Fund or for any failure to
discover any such error or omission.
14. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Fund will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Fund, including
cash received as a result of the distribution of Shares, during the
term of this Agreement. PFPC Trust will not be responsible for any
assets until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust, acting upon Written
Instructions, shall open and maintain a separate account for the Fund
(the "Account") and shall maintain in the Account all cash and other
assets received from or for the Fund. PFPC Trust shall make cash
payments from or for the Account only for:
(i) purchases of securities in the name of the Fund, PFPC Trust, PFPC
Trust's nominee or a sub-custodian or nominee thereof as provided
in sub-section (j) and for which PFPC Trust has received a copy
of the broker's or dealer's confirmation or payee's invoice, as
appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PFPC
Trust;
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(iii) payment of, subject to Written Instructions, interest, taxes
(provided that tax which PFPC Trust considers is required to be
deducted or withheld "at source" will be governed by Section
14(h)(iii)(B) of this Agreement), administration, accounting,
distribution, advisory and management fees which are to be borne
by the Fund;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, of an
amount equal to the amount of dividends and distributions stated
in the Written Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying the Fund's
transfer agent, PFPC Trust may arrange for the direct payment of
cash dividends and distributions to shareholders in accordance
with procedures mutually agreed upon from time to time by and
among the Fund, PFPC Trust and the Fund's transfer agent;
(v) payments, upon receipt of Written Instructions, in connection
with the conversion, exchange or surrender of securities owned or
subscribed to by the Fund and held by or delivered to PFPC Trust;
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(ix) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the
Account.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PFPC Trust shall hold all securities received by it for the
Account in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry System
or through a sub-custodian or depository. All such securities
shall be held or disposed of only upon Written Instructions or
otherwise pursuant to the terms of this Agreement. PFPC Trust
shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any such securities or investment, except
upon the express terms of this Agreement or upon Written
Instructions authorizing the transaction. In no case may any
member of the Fund's Board of Directors, or any officer, employee
or agent of the Fund withdraw any securities.
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
have aggregate shall 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
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qualified to act as custodian and agree to comply with the
relevant provisions of applicable rules and regulations. Any such
arrangement will not be entered into without prior written notice
to the Fund (or as otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign
assets. Any such arrangement will not be entered into without
prior written notice to the Fund (or as otherwise provided in
the 1940 Act). The Fund agrees that it will not hold foreign
assets with any sub-custodian not currently selected by PFPC
Trust in relation to the Fund.
PFPC Trust shall remain responsible for the acts and omissions
of any sub-custodian chosen by PFPC Trust under the terms of
this sub-section (c) to the same extent that PFPC Trust is
responsible for its own acts and omissions under this
Agreement; provided that, so long as PFPC Trust has chosen
such a sub-custodian (both initially and on an ongoing basis)
in the exercise of reasonable care, prudence and diligence,
PFPC Trust shall have no responsibility relating to the
insolvency of any such sub-custodian.
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral Instructions
or Written Instructions and not otherwise, PFPC Trust shall:
(i) deliver any securities held for the Fund against the receipt of
payment for the sale of such securities or otherwise in
accordance with standard market practice;
(ii) execute and deliver to such persons as may be designated in such
Oral Instructions or Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the authority
of the Fund as owner of any securities may be exercised;
(iii) deliver any securities to the issuer thereof, or its agent, when
such securities are called, redeemed, retired or otherwise become
payable at the option of the holder; provided that, in any such
case, the cash or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(v) deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any 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 Fund and
take such other
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steps as shall be stated in said Oral Instructions or Written
Instructions to be for the purpose of effectuating a duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(vii) release securities belonging to the Fund to any bank or trust
company for the purpose of a pledge or hypothecation to secure
any loan incurred by the Fund; provided, however, that securities
shall be released only upon payment to PFPC Trust of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made subject to proper
prior authorization, further securities may be released for that
purpose; and repay such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon surrender of
the note or notes evidencing the loan;
(viii) release and deliver securities owned by the Fund in connection
with any repurchase agreement entered into by the Fund, but only
on receipt of payment therefor; and pay out monies of the Fund in
connection with such repurchase agreements, but only upon the
delivery of the securities;
(ix) release and deliver or exchange securities owned by the Fund in
connection with any conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities to a broker in connection with the
broker's custody of margin collateral relating to futures and
options transactions;
(xi) release and deliver securities owned by the Fund for the purpose
of redeeming in kind shares of the Fund upon delivery thereof to
PFPC Trust; and
(xii) release and deliver or exchange securities owned by the Fund for
other purposes.
PFPC Trust must also receive a certified resolution describing
the nature of the corporate purpose and the name and address of
the person(s) to whom delivery shall be made when such action is
pursuant to sub-paragraph d(xii).
(e) USE OF BOOK-ENTRY SYSTEM OR OTHER DEPOSITORY. PFPC Trust will deposit
in Book-Entry Systems and other depositories all securities belonging
to the Fund eligible for deposit therein and will utilize Book-Entry
Systems and other depositories to the extent possible in connection
with settlements of purchases and sales of securities by the Fund, and
deliveries and returns of securities loaned, subject to repurchase
agreements or used as collateral in connection with borrowings. PFPC
Trust shall continue to perform such duties until it receives Written
Instructions or Oral Instructions authorizing contrary actions.
Notwithstanding anything in this Agreement to the contrary, PFPC
Trust's use
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of a Book-Entry System shall comply with the requirements of Rule
17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other depository as
follows:
(i) With respect to securities of the Fund which are maintained in a
Book-Entry System or another depository, the records of PFPC
Trust shall identify by book-entry or otherwise those securities
as belonging to the Fund.
(ii) Assets of the Fund deposited in a Book-Entry System or another
depository will (to the extent consistent with applicable law and
standard practice) at all times be segregated from any assets and
cash controlled by PFPC Trust in other than a fiduciary or
custodian capacity but may be commingled with other assets held
in such capacities.
PFPC Trust will provide the Fund with such reports on its own system
of internal control as the Fund may reasonably request from time to
time.
(f) REGISTRATION OF SECURITIES. All securities held for the Fund which are
issued or issuable only in bearer form, except such securities
maintained in the Book-Entry System or in another depository, shall be
held by PFPC Trust in bearer form; all other securities maintained for
the Fund may be registered in the name of the Fund, PFPC Trust, a
Book-Entry System, another depository, a sub-custodian, or any duly
appointed nominee of the Fund, PFPC Trust, Book-Entry System,
depository or sub-custodian. The Fund reserves the right to instruct
PFPC Trust as to the method of registration and safekeeping of the
securities of the Fund. The Fund agrees to furnish to PFPC Trust
appropriate instruments to enable PFPC Trust to maintain or deliver in
proper form for transfer, or to register in the name of its nominee or
in the name of the Book-Entry System or in the name of another
appropriate entity, any securities which it may maintain for the
Account. With respect to uncertificated securities which are
registered in the name of the Fund (or a nominee thereof), PFPC Trust
will reflect such securities on its records based upon the holdings
information provided to it by the issuer of such securities, but
notwithstanding anything in this Agreement to the contrary PFPC Trust
shall not be obligated to safekeep
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such securities or to perform other duties with respect to such
securities other than to make payment for the purchase of such
securities upon receipt of Oral or Written Instructions, accept in
sale proceeds received by PFPC Trust upon the sale of such securities
of which PFPC Trust is informed pursuant to Oral or Written
Instructions, and accept in other distributions received by PFPC Trust
with respect to such securities or reflect on its records any
reinvested distributions with respect to such securities of which it
is informed by the issuer of the securities.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall vote
any of the securities held pursuant to this Agreement by or for the
account of the Fund, except in accordance with Written Instructions.
PFPC Trust, directly or through the use of another entity, shall
execute in blank and promptly deliver all notices, proxies and proxy
soliciting materials received by PFPC Trust as custodian of the
Property to the registered holder of such securities. If the
registered holder is not the Fund, then Written Instructions or Oral
Instructions must designate the person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. Notwithstanding anything in
this Agreement requiring instructions in order to take a particular
action, in the absence of a contrary Written Instruction, PFPC Trust
is authorized to take the following actions without the need for
instructions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of the Fund, all income,
dividends, distributions, coupons, option premiums, other
payments and similar items, included or to be included in
the Property, and, in addition, promptly advise the Fund of
such receipt and credit such income to the Fund's custodian
account;
(B) endorse and deposit for collection, in the name of the Fund,
checks, drafts, or other orders for the payment of money;
(C) receive and hold for the account of the Fund all securities
received as a distribution on the Fund's securities as a
result of a stock dividend, share split-up or
reorganization, recapitalization, readjustment or other
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rearrangement or distribution of rights or similar
securities issued with respect to any securities belonging
to the Fund and held by PFPC Trust hereunder;
(D) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed, retired
or otherwise become payable (on a mandatory basis) on the
date such securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such income
and other payments and the endorsement for collection of
checks, drafts, and other negotiable instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause to be delivered
Property against payment or other consideration or written
receipt therefor in the following cases:
(1) for examination by a broker or dealer selling for the
account of the Fund 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 or
PFPC Trust or a sub-custodian or a nominee of one of
the foregoing, or for exchange of securities for a
different number of bonds, certificates, or other
evidence, representing the same aggregate face amount
or number of units bearing the same interest rate,
maturity date and call provisions, if any; provided
that, in any such case, the new securities are to be
delivered to PFPC Trust.
(B) PFPC Trust shall:
(1) pay all income items held by it which call for payment
upon presentation and hold the cash received by it upon
such payment for the account of the Fund;
(2) collect interest and cash dividends received, with
notice to the Fund, to the account of the Fund;
(3) hold for the account of the Fund all stock dividends,
rights and similar securities issued with respect to
any securities held by PFPC Trust; and
(4) subject to receipt of such documentation and
information as PFPC Trust may request, execute as agent
on behalf of the Fund
16
all necessary ownership certificates required by a
national governmental taxing authority or under the
laws of any U.S. state now or hereafter in effect,
inserting the Fund's name on such certificate as the
owner of the securities covered thereby, to the extent
it may lawfully do so.
(iii) OTHER MATTERS.
(A) subject to receipt of such documentation and information
as PFPC Trust may request, PFPC Trust will, in such
jurisdictions as PFPC Trust may agree from time to time,
seek to reclaim or obtain a reduction with respect to any
withholdings or other taxes relating to assets maintained
hereunder (provided that PFPC Trust will not be liable for
failure to obtain any particular relief in a particular
jurisdiction); and
(B) PFPC Trust is authorized to deduct or withhold any sum in
respect of tax which PFPC Trust considers is required to be
deducted or withheld "at source" by any relevant law or
practice.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or Oral
Instructions establish and maintain segregated accounts on its
records for and on behalf of the Fund. Such accounts may be used
to transfer cash and securities, including securities in a
Book-Entry System or other depository:
(A) for the purposes of compliance by the Fund with the
procedures required by a securities or option exchange,
providing such procedures comply with the 1940 Act and any
releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies; and
(B) upon receipt of Written Instructions, for other purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX custodian
accounts for such shareholders holding Shares through XXX
accounts, in accordance with the Fund's 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;
17
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase; and
(vi) the name of the person from whom or the broker through whom the
purchase was made. PFPC Trust shall upon receipt of securities
purchased by or for the Fund (or otherwise in accordance with
standard market practice) pay out of the monies held for the
account of the Fund the total amount payable to the person from
whom or the broker through whom the purchase was made, provided
that the same conforms to the total amount payable as set forth
in such Oral Instructions or Written Instructions.
(k) SALES OF SECURITIES. PFPC Trust shall settle sold securities upon
receipt of Oral Instructions or Written Instructions that specify:
(i) the name of the issuer and the title of the security, including
CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made; and
(vii) the location to which the security must be delivered and
delivery deadline, if any.
PFPC Trust shall deliver the securities upon receipt of the total amount
payable to the Fund upon such sale, provided that the total amount payable
is the same as was set forth in the Oral Instructions or Written
Instructions. Notwithstanding anything to the contrary in this Agreement,
PFPC Trust may accept payment in such form as is consistent with standard
industry practice and may deliver assets and arrange for payment in
accordance with standard market practice.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the Fund the following reports:
18
(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 the Fund, listing each portfolio security
belonging to the Fund (with the corresponding security
identification number) held at the end of such month and
stating the cash balance of the Fund at the end of such
month.
(C) the reports required to be furnished to the Fund pursuant to
Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time to
time between the Fund and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any proxy
statement, proxy material, notice of a call or conversion or
similar communication received by it as custodian of the
Property. PFPC Trust shall be under no other obligation to inform
the Fund as to such actions or events. For clarification, upon
termination of this Agreement PFPC Trust shall have no
responsibility to transmit such material or to inform the Fund or
any other person of such actions or events.
(m) CREDITING OF ACCOUNTS. PFPC Trust may in its sole discretion credit
the Account with respect to income, dividends, distributions, coupons,
option premiums, other payments or similar items prior to PFPC Trust's
actual receipt thereof, and in addition PFPC Trust may in its sole
discretion credit or debit the assets in the Account on a contractual
settlement date with respect to any sale, exchange or purchase
applicable to the Account; provided that nothing herein or otherwise
shall require PFPC Trust to make any advances or to credit any amounts
until PFPC Trust's actual receipt thereof. If PFPC Trust credits the
Account with respect to (a) income, dividends, distributions, coupons,
option premiums, other payments or similar items on a contractual
payment date or otherwise in advance of PFPC Trust's actual receipt of
the amount due, (b) the proceeds of any sale or other disposition of
assets on the contractual settlement date or otherwise in advance of
PFPC Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is subsequently
unable to collect full and final payment for the amounts so credited
within a reasonable time period using reasonable efforts or (ii)
pursuant to standard industry practice, law or regulation PFPC Trust
is required to repay to a third party such amounts so credited, or if
any Property has been incorrectly credited, PFPC Trust shall have the
absolute right in its sole discretion without demand to reverse any
such credit or payment, to debit or deduct the amount of such credit
or payment from the Account, and to otherwise pursue recovery of any
such amounts so credited from the Fund. The Fund hereby grants to PFPC
Trust and to each sub-custodian utilized by PFPC Trust in connection
with providing services to the Fund a first priority contractual
possessory security interest in and a right of
19
setoff against the assets maintained in the Account hereunder in the
amount necessary to secure the return and payment to PFPC Trust and to
each such sub-custodian of any advance or credit made by PFPC Trust
and/or by such sub-custodian (including charges related thereto) to
such Account. Notwithstanding anything in this Agreement to the
contrary, PFPC Trust shall be entitled to assign any rights it has
under this sub-section (m) to any sub-custodian utilized by PFPC Trust
in connection with providing services to the Fund which sub-custodian
makes any credits or advances with respect to the Fund.
(n) COLLECTIONS. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PFPC Trust) shall be at the sole risk of the
Fund. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Fund in writing, including copies of all demand letters, any written
responses and memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to take
legal action for collection unless and until reasonably indemnified to
its satisfaction. PFPC Trust shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Fund with periodic
status reports of such income collected after a reasonable time.
(o) EXCESS CASH SWEEP. PFPC Trust will, consistent with applicable law,
sweep any net excess cash balances daily into an investment vehicle or
other instrument designated in writing by the Fund, so long as the
investment vehicle or instrument is acceptable to PFPC Trust, subject
to a fee, paid to PFPC Trust for such service, to be agreed between
the parties. Such investment vehicle or instrument may be offered by
an affiliate of PFPC Trust or by a PFPC Trust client and PFPC Trust
may receive compensation therefrom.
(p) FOREIGN EXCHANGE. PFPC Trust and/or sub-custodians may enter into or
arrange foreign exchange transactions (at such rates as they may
consider appropriate) in order to facilitate transactions under this
Agreement, and such entities and/or their affiliates may receive
compensation in connection with such foreign exchange transactions.
PFPC Trust will not have responsibility for an entity (including a
sub-custodian) which the Fund instructs it to use in connection with a
foreign exchange transaction.
20
15. DURATION AND TERMINATION.
(a) This Agreement shall be effective on the date first written above and
shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to Section 15(c) or 15(d) of this
Agreement. After the Initial Term, this Agreement shall automatically
be renewed for successive terms of three (3) years ("Renewal Terms")
each, unless notice is provided pursuant to Section 15(b) of this
Agreement or unless earlier terminated pursuant to Section 15(c) or
15(d) of this Agreement.
(b) Either party may terminate this Agreement at the end of the Initial
Term or at the end of any subsequent Renewal Term upon not than less
than ninety (90) days or more than one hundred-eighty (180) days prior
written notice to the other party.
(c) If a party hereto is guilty of a material failure to perform its
duties and obligations under this Agreement or under any other
custodian services agreement between PFPC Trust and a registered
investment company for which Sit Investment Associates, Inc. (or a
successor thereto) serves as the investment adviser which other
agreement provides for the same or substantially similar services as
this Agreement (a "Defaulting Party"), which material failure results
in a material loss to the other party (i.e., either PFPC Trust on one
hand, or the Fund or such other registered investment company on the
other hand), such other party (the "Non-Defaulting Party") may give
written notice thereof to the Defaulting Party, and if such material
breach shall not have been remedied within thirty (30) days after such
written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such
termination to the Defaulting Party. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this
Agreement or otherwise against the Defaulting Party.
(d) Notwithstanding anything contained in the foregoing provisions of this
Section 15 to the contrary, the Fund may terminate this Agreement for
any reason, or no reason, upon
21
ninety (90) days written notice to PFPC Trust.
(e) In the event of any termination of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term (including
termination pursuant to Section 15(d) of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term but not
including termination pursuant to Section 15(c) of this Agreement),
the Fund shall immediately pay to PFPC Trust the amount of $76,000.
(f) In the event this Agreement is terminated (pending appointment of a
successor to PFPC Trust or vote of the shareholders of the Fund to
dissolve or to function without a custodian of its cash, securities or
other property), PFPC Trust shall not deliver cash, securities or
other property of the Fund to the Fund. It may deliver them to a bank
or trust company of PFPC Trust's choice, having aggregate capital,
surplus and undivided profits, as shown by its last published report,
of not less than twenty million dollars ($20,000,000), as a custodian
for the Fund to be held under terms similar to those of this
Agreement. PFPC Trust shall not be required to make any delivery or
payment of assets upon termination until full payment shall have been
made to PFPC Trust of all of its fees, compensation, costs, expenses
and other amounts owing to it under Section 15 of this Agreement
(including without limitation fees and expenses associated with
deconversion or conversion to another service provider and other
trailing expenses incurred by PFPC Trust). PFPC Trust shall have a
first priority contractual possessory security interest in and shall
have a right of setoff against the Property as security for the
payment of such fees, compensation, costs, expenses and other amounts
owing to it under Section 15 of this Agreement.
16. NOTICES. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxx; (b) if to the Fund, at 3300 IDS Center, 00 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: President; or (c)
22
if to neither of the foregoing, at such other address as shall have been
given by like notice to the sender of any such notice or other
communication by the other party. If notice is sent by confirming
electronic delivery, hand or facsimile sending device, it shall be deemed
to have been given immediately. If notice is sent by first-class mail, it
shall be deemed to have been given five days after it has been mailed. If
notice is sent by messenger, it shall be deemed to have been given on the
day it is delivered.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. ASSIGNMENT. PFPC Trust may assign this Agreement to any affiliate of PFPC
Trust or of The PNC Financial Services Group, Inc., provided that PFPC
Trust gives the Fund 30 days' prior written notice of such assignment.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
20. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties.
(b) NO REPRESENTATIONS OR WARRANTIES. Except as expressly provided in this
Agreement, PFPC Trust hereby disclaims all representations and
warranties, express or implied, made to the Fund or any other person,
including, without limitation, any warranties regarding quality,
suitability, merchantability, fitness for a particular purpose or
otherwise (irrespective of any course of dealing, custom or usage of
trade), of any
23
services or any goods provided incidental to services provided under
this Agreement. PFPC Trust disclaims any warranty of title or
non-infringement except as otherwise set forth in this Agreement.
(c) NO CHANGES THAT MATERIALLY AFFECT OBLIGATIONS. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees not to
make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of PFPC Trust hereunder without the prior written
approval of PFPC Trust, which approval shall not be unreasonably
withheld or delayed.
(d) CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(e) INFORMATION. The Fund will provide such information and documentation
as PFPC Trust may reasonably request in connection with services
provided by PFPC Trust to the Fund.
(f) GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(g) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(i) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(j) CUSTOMER IDENTIFICATION PROGRAM NOTICE. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify, and
record certain information that identifies each person
24
who initially opens an account with that financial institution on or
after October 1, 2003. Consistent with this requirement, PFPC Trust
may request (or may have already requested) the Fund's name, address
and taxpayer identification number or other government-issued
identification number, and, if such party is a natural person, that
party's date of birth. PFPC Trust may also ask (and may have already
asked) for additional identifying information, and PFPC Trust may take
steps (and may have already taken steps) to verify the authenticity
and accuracy of these data elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx, XX
---------------------------------------
Title: Vice President
-------------------------------------
SIT U.S. GOVERNMENT SECURITIES FUND, INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------------
Title: Vice President
-------------------------------------
25
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of June 3, 2005 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and SIT MUTUAL FUNDS II, INC., a Minnesota corporation (the
"Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other person
authorized by the Fund to give 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.
26
(d) "BOOK-ENTRY SYSTEM" means the Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor
or successors, and its nominee or nominees and any book-entry system
or clearing agency registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC Trust from
an Authorized Person or from a person reasonably believed by PFPC
Trust to be an Authorized Person. PFPC Trust may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic mail
as Oral Instructions.
(g) "PFPC TRUST" means PFPC Trust Company or a subsidiary or affiliate of
PFPC Trust Company.
(h) "SEC" means the Securities and Exchange Commission.
(i) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(j) "SHARES" mean the shares of beneficial interest of any series or class
of the Fund.
(k) "PROPERTY" means:
(i) any and all securities and other investment items which the Fund
may from time to time deposit, or cause to be deposited, with
PFPC Trust or which PFPC Trust may from time to time hold for the
Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or investment
items; and
(iv) all proceeds of the sale of securities issued by the Fund, which
are received by PFPC Trust from time to time, from or on behalf
of the Fund.
(l) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by two
Authorized Persons (or persons reasonably believed by PFPC Trust to be
Authorized Persons) and received by PFPC Trust or (ii) trade
instructions transmitted by means of an electronic transaction
27
reporting system which requires the use of a password or other
authorized identifier in order to gain access. The instructions may be
delivered electronically (with respect to sub-item (ii) above) or by
hand, mail or facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund as set forth herein, on behalf of each of its
investment portfolios (each, a "Portfolio"), and PFPC Trust accepts such
appointment and agrees to furnish such services.
3. COMPLIANCE WITH LAWS. PFPC Trust undertakes to comply with material
applicable requirements of the Securities Laws and material laws, rules and
regulations of governmental authorities having jurisdiction with respect to
the duties to be performed by PFPC Trust hereunder. Except as specifically
set forth herein, PFPC Trust assumes no responsibility for such compliance
by the Fund or any other entity.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives pursuant to this Agreement. PFPC Trust
may assume that any Oral Instructions or Written Instructions received
hereunder are not in any way inconsistent with the provisions of
organizational documents of the Fund or of any vote, resolution or
proceeding of the Fund's Board of Directors or of the Fund's
shareholders, unless and until PFPC Trust receives Written
Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions from Authorized Persons so that PFPC
Trust receives the Written Instructions by the close of business on
the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC
28
Trust or differ from the Oral Instructions shall in no way invalidate
the transactions or enforceability of the transactions authorized by
the Oral Instructions or PFPC Trust's ability to rely upon such Oral
Instructions.
5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC Trust may request directions or
advice, including Oral Instructions or Written Instructions, from the
Fund.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any question
of law pertaining to any action it should or should not take, PFPC
Trust may request advice from counsel of its own reasonable choosing
(who may be counsel for the Fund, the Fund's investment adviser or
PFPC Trust, at the option of PFPC Trust).
(c) CONFLICTING ADVICE. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel, PFPC
Trust shall be entitled to rely upon and follow the advice of counsel.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be indemnified by the Fund
and without liability for any action PFPC Trust takes or does not take
in reliance upon directions or advice or Oral Instructions or Written
Instructions PFPC Trust receives from or on behalf of the Fund or in
reliance upon advice from counsel reasonably chosen by PFPC Trust and
which PFPC Trust believes, in good faith, to be consistent with those
directions or advice or Oral Instructions or Written Instructions.
Nothing in this section shall be construed so as to impose an
obligation upon PFPC Trust (i) to seek such directions or advice or
Oral Instructions or Written Instructions, or (ii) to act in
accordance with such directions or advice or Oral Instructions or
Written Instructions.
29
6. RECORDS; VISITS. The books and records pertaining to the Fund and any
Portfolio, which are in the possession or under the control of PFPC Trust,
shall be the property of the Fund. Such books and records shall be prepared
and maintained as required by the 1940 Act 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.
7. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer
profiles, customer lists, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Fund or PFPC Trust, their respective subsidiaries and
affiliated companies; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable
and secret in the sense that its confidentiality affords the Fund or PFPC
Trust a competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential. Notwithstanding
the foregoing, information shall not be Confidential Information and shall
not be subject to such confidentiality obligations if: (a) it is already
known to the receiving party at the time it is obtained; (b) it is or
becomes publicly known or available through no wrongful act of the
receiving party; (c) it is rightfully received from a third party who, to
the best of the receiving party's knowledge, is not under a duty of
confidentiality; (d) it is released by the protected party to a third party
without restriction; (e) it is requested or required to be disclosed by the
receiving party pursuant to a
30
court order, subpoena, governmental or regulatory agency request or law
(provided the receiving party will provide the other party written notice
of the same, to the extent such notice is permitted); (f) release of such
information by PFPC Trust is necessary or desirable in connection with the
provision of services under this Agreement; (g) it is relevant to the
defense of any claim or cause of action asserted against the receiving
party; or (h) it has been or is independently developed or obtained by the
receiving party.
8. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the Fund's
independent public accountants and shall take all reasonable action to make
any requested information available to such accountants as reasonably
requested by the Fund.
9. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC Trust in
connection with the services provided by PFPC Trust to the Fund.
10. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC Trust's own bad faith, negligence or reckless disregard of
its duties or obligations under this Agreement.
11. COMPENSATION.
(a) As compensation for custody services rendered by PFPC Trust during the
term of this Agreement, the Fund, on behalf of each of the Portfolios,
will pay to PFPC Trust a fee or
31
fees as may be agreed to in writing from time to time by the Fund and
PFPC Trust. The Fund acknowledges that PFPC Trust may receive float
benefits in connection with maintaining certain accounts required to
provide services under this Agreement.
(b) The undersigned hereby represents and warrants to PFPC Trust that (i)
the terms of this Agreement, (ii) the fees and expenses associated
with this Agreement, and (iii) any benefits accruing to PFPC Trust or
to the adviser or sponsor to the Fund in connection with this
Agreement, including but not limited to any fee waivers, conversion
cost reimbursements, up front payments, signing payments or periodic
payments made or to be made by PFPC Trust to such adviser or sponsor
or any affiliate of the Fund relating to this Agreement have been
fully disclosed to the Board of Directors of the Fund and that, if
required by applicable law, such Board of Directors has approved or
will approve the terms of this Agreement, any such fees and expenses,
and any such benefits.
12. INDEMNIFICATION.
(a) The Fund, on behalf of each Portfolio, agrees to indemnify, defend and
hold harmless PFPC Trust (including its officers, directors, agents
and employees) from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, reasonable attorneys'
fees and disbursements) arising from any action or omission to act
which PFPC Trust takes in connection with the provision of services to
the Fund; provided that PFPC Trust shall not be indemnified, defended
or held harmless against any liability (or any expenses incident to
such liability) caused by PFPC Trust's own bad faith, negligence or
reckless disregard in the performance of PFPC Trust's activities under
this Agreement. Any amounts payable by the Fund hereunder shall be
satisfied only against the relevant Portfolio's assets and not against
the assets of any other Portfolio.
32
(b) PFPC Trust agrees to indemnify, defend and hold harmless the Fund
(including its officers, directors and employees) from all taxes,
charges, expenses, assessments, claims and liabilities (including,
without limitation, reasonable attorneys' fees and disbursements)
arising out of PFPC Trust's failure to perform its duties under this
Agreement but only to the extent such taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
reasonable attorneys' fees and disbursements) arise out of PFPC
Trust's bad faith, negligence or reckless disregard of its duties
under this Agreement; provided that the Fund shall not (nor shall any
Portfolio) be indemnified, defended or held harmless against any
liability (or any expenses incident to such liability) caused by the
Fund's or any Portfolio's own bad faith, negligence or reckless
disregard relating to the activities to which this Agreement relates.
(c) The provisions of this Section 12 shall survive termination of this
Agreement.
13. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the 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. 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 and shall be
required to indemnify, defend and hold harmless the Fund (including
its officers, directors and employees) only from any taxes, charges,
expenses, assessments, claims and liabilities (including, without
limitation, reasonable attorneys' fees and disbursements) arising out
of PFPC Trust's failure to perform its duties under this Agreement and
only to the extent such taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, reasonable attorneys'
fees and disbursements) arise out of PFPC Trust's bad faith,
negligence or reckless disregard of its
33
duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
Trust shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion; interruption,
loss or malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature; or
non-performance by a third party; and (ii) PFPC Trust shall not be
under any duty or obligation to inquire into and shall not be liable
for the validity or invalidity, authority or lack thereof, or
truthfulness or accuracy or lack thereof, of any instruction,
direction, notice, instrument or other information which PFPC Trust
reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, (i)
neither PFPC Trust nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or not
the likelihood of such losses or damages was known by PFPC Trust or
its affiliates, (ii) PFPC Trust's cumulative liability to the Fund for
all losses, claims, suits, controversies, breaches or damages for any
cause whatsoever (including but not limited to those arising out of or
related to this Agreement) and regardless of the form of action or
legal theory shall not exceed the greater of $250,000 or the fees
received by PFPC Trust for services provided hereunder during the 12
months immediately prior to the date of such loss or damage (provided
that, while the dollar amount of any loss or damage caused by PFPC
Trust's fraud or gross negligence shall be included in calculating
whether the dollar limitations set forth in the foregoing damage cap
specified in this sub-section (ii) have been reached, the foregoing
damage cap specified in this sub-section (ii) shall not otherwise
limit PFPC Trust's liability for loss or damage shown to be caused by
34
PFPC Trust's fraud or gross negligence) and (iii) PFPC Trust shall not
have any responsibility with respect to the acts, omissions or
operations of any Book-Entry System or other depository (unless the
same arise out of PFPC Trust's bad faith, negligence or reckless
disregard of its duties under this Agreement).
(d) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(e) For all purposes under this Agreement, reasonableness shall be
determined under the facts and circumstances prevailing in the market
where performance is rendered.
(f) Notwithstanding anything in this Agreement to the contrary (other than
as specifically provided in Section 14(h)(ii)(B)(4) and Section
14(h)(iii)(A) of this Agreement), the Fund shall be responsible for
all filings, tax returns and reports on any transactions undertaken
pursuant to this Agreement, or in respect of the Property or any
collections undertaken pursuant to this Agreement, which may be
requested by any relevant authority. In addition, the Fund shall be
solely responsible for the payment of all taxes and similar items
(including without limitation penalties and interest related thereto).
(g) The provisions of this Section 13 shall survive termination of this
Agreement.
(h) Notwithstanding anything in this Agreement to the contrary, PFPC Trust
shall have no liability either for any error or omission of any of its
predecessors as servicer on behalf of the Fund or for any failure to
discover any such error or omission.
14. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Fund will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Portfolios,
including cash received as a result of the distribution of Shares,
during the term of this Agreement. PFPC Trust will not be responsible
for any assets until actual receipt.
35
(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust, acting upon Written
Instructions, shall open and maintain a separate account for each
separate Portfolio of the Fund (each an "Account") and shall maintain
in the Account of a particular Portfolio all cash and other assets
received from or for the Fund specifically designated to such Account.
PFPC Trust shall make cash payments from or for the Account of a
Portfolio only for:
(i) purchases of securities in the name of a Portfolio, PFPC Trust,
PFPC Trust's nominee or a sub-custodian or nominee thereof as
provided in sub-section (j) and for which PFPC Trust has received
a copy of the broker's or dealer's confirmation or payee's
invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PFPC
Trust;
(iii) payment of, subject to Written Instructions, interest, taxes
(provided that tax which PFPC Trust considers is required to be
deducted or withheld "at source" will be governed by Section
14(h)(iii)(B) of this Agreement), administration, accounting,
distribution, advisory and management fees which are to be borne
by a Portfolio;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, of an
amount equal to the amount of dividends and distributions stated
in the Written Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying the Fund's
transfer agent, PFPC Trust may arrange for the direct payment of
cash dividends and distributions to shareholders in accordance
with procedures mutually agreed upon from time to time by and
among the Fund, PFPC Trust and the Fund's transfer agent;
(v) payments, upon receipt of Written Instructions, in connection
with the conversion, exchange or surrender of securities owned or
subscribed to by the Fund and held by or delivered to PFPC Trust;
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in sub-
section (c) of this Section; and
(ix) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the
Accounts.
36
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PFPC Trust shall hold all securities received by it for the
Accounts in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry System
or through a sub-custodian or depository. All such securities
shall be held or disposed of only upon Written Instructions or
otherwise pursuant to the terms of this Agreement. PFPC Trust
shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any such securities or investment, except
upon the express terms of this Agreement or upon Written
Instructions authorizing the transaction. In no case may any
member of the Fund's Board of Directors, or any officer, employee
or agent of the Fund withdraw any securities.
At PFPC Trust's own expense and for its own convenience, PFPC
Trust may enter into sub-custodian agreements with other banks or
trust companies to perform duties described in this sub-section
(c) with respect to domestic assets. Such bank or trust company
shall have aggregate capital, surplus and undivided profits,
according to its last published report, of at least one million
dollars ($1,000,000), if it is a subsidiary or affiliate of PFPC
Trust, or at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or affiliate of PFPC
Trust. In addition, such bank or trust company must be qualified
to act as custodian and agree to comply with the relevant
provisions of applicable rules and regulations. Any such
arrangement will not be entered into without prior written notice
to the Fund (or as otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign assets.
Any such arrangement will not be entered into without prior
written notice to the Fund (or as otherwise provided in the 1940
Act). The Fund agrees that it will not hold foreign assets with
any sub-custodian not currently selected by PFPC Trust in
relation to the Fund.
PFPC Trust shall remain responsible for the acts and omissions of
any sub-custodian chosen by PFPC Trust under the terms of this
sub-section (c) to the same extent that PFPC Trust is responsible
for its own acts and omissions under this Agreement; provided
that, so long as PFPC Trust has chosen such a sub-custodian (both
initially and on an ongoing basis) in the exercise of reasonable
care, prudence and diligence, PFPC Trust shall have no
responsibility relating to the insolvency of any such
sub-custodian.
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral Instructions
or Written Instructions and not otherwise, PFPC Trust shall:
(i) deliver any securities held for a Portfolio against the receipt
of payment for the sale of such securities or otherwise in
accordance with standard market practice;
(ii) execute and deliver to such persons as may be designated in such
Oral Instructions or Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the authority
of a Portfolio as owner of any securities
37
may be exercised;
(iii) deliver any securities to the issuer thereof, or its agent, when
such securities are called, redeemed, retired or otherwise become
payable at the option of the holder; provided that, in any such
case, the cash or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any securities held for a Portfolio against receipt of
other securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(v) deliver any securities held for a Portfolio to any protective
committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(vi) make such transfer or exchanges of the assets of the Portfolios
and take such other steps as shall be stated in said Oral
Instructions or Written Instructions to be for the purpose of
effectuating a duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund;
(vii) release securities belonging to a Portfolio to any bank or trust
company for the purpose of a pledge or hypothecation to secure
any loan incurred by the Fund on behalf of that Portfolio;
provided, however, that securities shall be released only upon
payment to PFPC Trust of the monies borrowed, except that in
cases where additional collateral is required to secure a
borrowing already made subject to proper prior authorization,
further securities may be released for that purpose; and repay
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities owned by a Portfolio in
connection with any repurchase agreement entered into by the Fund
on behalf of that Portfolio, but only on receipt of payment
therefor; and pay out monies of the Fund in connection with such
repurchase agreements, but only upon the delivery of the
securities;
(ix) release and deliver or exchange securities owned by the Fund in
connection with any conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities to a broker in connection with the
broker's custody of margin collateral relating to futures and
options transactions;
(xi) release and deliver securities owned by the Fund for the purpose
of redeeming in kind shares of the Fund upon delivery thereof to
PFPC Trust; and
(xii) release and deliver or exchange securities owned by the Fund for
other purposes.
38
PFPC Trust must also receive a certified resolution describing
the nature of the corporate purpose and the name and address of
the person(s) to whom delivery shall be made when such action is
pursuant to sub-paragraph d(xii).
(e) USE OF BOOK-ENTRY SYSTEM OR OTHER DEPOSITORY. PFPC Trust will deposit
in Book-Entry Systems and other depositories all securities belonging
to the Portfolios eligible for deposit therein and will utilize
Book-Entry Systems and other depositories to the extent possible in
connection with settlements of purchases and sales of securities by
the Portfolios, and deliveries and returns of securities loaned,
subject to repurchase agreements or used as collateral in connection
with borrowings. PFPC Trust shall continue to perform such duties
until it receives Written Instructions or Oral Instructions
authorizing contrary actions. Notwithstanding anything in this
Agreement to the contrary, PFPC Trust's use of a Book-Entry System
shall comply with the requirements of Rule 17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other depository as
follows:
(i) With respect to securities of each Portfolio which are maintained
in a Book-Entry System or another depository, the records of PFPC
Trust shall identify by book-entry or otherwise those securities
as belonging to each Portfolio.
(ii) Assets of each Portfolio deposited in a Book-Entry System or
another depository will (to the extent consistent with applicable
law and standard practice) at all times be segregated from any
assets and cash controlled by PFPC Trust in other than a
fiduciary or custodian capacity but may be commingled with other
assets held in such capacities.
PFPC Trust will provide the Fund with such reports on its own system
of internal control as the Fund may reasonably request from time to
time.
(f) REGISTRATION OF SECURITIES. All securities held for a Portfolio which
are issued or issuable only in bearer form, except such securities
maintained in the Book-Entry System or in another depository, shall be
held by PFPC Trust in bearer form; all other securities maintained for
a Portfolio may be registered in the name of the Fund on behalf of
that
39
Portfolio, PFPC Trust, a Book-Entry System, another depository, a
sub-custodian, or any duly appointed nominee of the Fund, PFPC Trust,
Book-Entry System, depository or sub-custodian. The Fund reserves the
right to instruct PFPC Trust as to the method of registration and
safekeeping of the securities of the Fund. The Fund agrees to furnish
to PFPC Trust appropriate instruments to enable PFPC Trust to maintain
or deliver in proper form for transfer, or to register in the name of
its nominee or in the name of the Book-Entry System or in the name of
another appropriate entity, any securities which it may maintain for
the Accounts. With respect to uncertificated securities which are
registered in the name of the Fund or a Portfolio (or a nominee
thereof), PFPC Trust will reflect such securities on its records based
upon the holdings information provided to it by the issuer of such
securities, but notwithstanding anything in this Agreement to the
contrary PFPC Trust shall not be obligated to safekeep such securities
or to perform other duties with respect to such securities other than
to make payment for the purchase of such securities upon receipt of
Oral or Written Instructions, accept in sale proceeds received by PFPC
Trust upon the sale of such securities of which PFPC Trust is informed
pursuant to Oral or Written Instructions, and accept in other
distributions received by PFPC Trust with respect to such securities
or reflect on its records any reinvested distributions with respect to
such securities of which it is informed by the issuer of the
securities.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall vote
any of the securities held pursuant to this Agreement by or for the
account of a Portfolio, except in accordance with Written
Instructions. PFPC Trust, directly or through the use of another
entity, shall execute in blank and promptly deliver all notices,
proxies and proxy soliciting materials received by PFPC Trust as
custodian of the Property to the registered holder of such securities.
If the registered holder is not the Fund on behalf of a Portfolio,
40
then Written Instructions or Oral Instructions must designate the
person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. Notwithstanding anything in
this Agreement requiring instructions in order to take a particular
action, in the absence of a contrary Written Instruction, PFPC Trust
is authorized to take the following actions without the need for
instructions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of each Portfolio, all
income, dividends, distributions, coupons, option premiums,
other payments and similar items, included or to be included
in the Property, and, in addition, promptly advise each
Portfolio of such receipt and credit such income to each
Portfolio's custodian account;
(B) endorse and deposit for collection, in the name of the Fund,
checks, drafts, or other orders for the payment of money;
(C) receive and hold for the account of each Portfolio all
securities received as a distribution on the Portfolio's
securities as a result of a stock dividend, share split-up
or reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar
securities issued with respect to any securities belonging
to a Portfolio and held by PFPC Trust hereunder;
(D) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed, retired
or otherwise become payable (on a mandatory basis) on the
date such securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such income
and other payments and the endorsement for collection of
checks, drafts, and other negotiable instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause to be delivered
Property against payment or other consideration or written
receipt therefor in the following cases:
(1) for examination by a broker or dealer selling for the
account of a Portfolio in accordance with street
delivery custom;
41
(2) for the exchange of interim receipts or temporary
securities for definitive securities; and
(3) for transfer of securities into the name of the Fund on
behalf of a Portfolio or PFPC Trust or a sub-custodian
or a nominee of one of the foregoing, or for exchange
of securities for a different number of bonds,
certificates, or other evidence, representing the same
aggregate face amount or number of units bearing the
same interest rate, maturity date and call provisions,
if any; provided that, in any such case, the new
securities are to be delivered to PFPC Trust.
(B) PFPC Trust shall:
(1) pay all income items held by it which call for payment
upon presentation and hold the cash received by it upon
such payment for the account of each Portfolio;
(2) collect interest and cash dividends received, with
notice to the Fund, to the account of each Portfolio;
(3) hold for the account of each Portfolio all stock
dividends, rights and similar securities issued with
respect to any securities held by PFPC Trust; and
(4) subject to receipt of such documentation and
information as PFPC Trust may request, execute as agent
on behalf of the Fund all necessary ownership
certificates required by a national governmental taxing
authority or under the laws of any U.S. state now or
hereafter in effect, inserting the Fund's name, on
behalf of a Portfolio, on such certificate as the owner
of the securities covered thereby, to the extent it may
lawfully do so.
(iii) OTHER MATTERS.
(A) subject to receipt of such documentation and information as
PFPC Trust may request, PFPC Trust will, in such
jurisdictions as PFPC Trust may agree from time to time,
seek to reclaim or obtain a reduction with respect to any
withholdings or other taxes relating to assets maintained
hereunder (provided that PFPC Trust will not be liable for
failure to obtain any particular relief in a particular
jurisdiction); and
(B) PFPC Trust is authorized to deduct or withhold any sum in
respect of tax which PFPC Trust considers is required to be
deducted or withheld "at source" by any relevant law or
practice.
42
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or
Oral Instructions establish and maintain segregated accounts
on its records for and on behalf of each Portfolio. Such
accounts may be used to transfer cash and securities,
including securities in a Book-Entry System or other
depository:
(A) for the purposes of compliance by the 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;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through whom the
purchase was made. PFPC Trust shall upon receipt of securities
purchased by or for a Portfolio (or otherwise in accordance with
standard market practice) pay out of the monies held for the
account of the Portfolio the total amount payable to the person
from whom or the broker through whom the purchase was made,
provided that the same conforms to the total amount payable as
set forth in such Oral Instructions or Written Instructions.
43
(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 anything to the contrary in this Agreement,
PFPC Trust may accept payment in such form as is consistent with standard
industry practice and may deliver assets and arrange for payment in
accordance with standard market practice.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the Fund the following reports:
(A) such periodic and special reports as the Fund may reasonably
request;
(B) a monthly statement summarizing all transactions and entries
for the account of each Portfolio, listing each portfolio
security belonging to each Portfolio (with the corresponding
security identification number) held at the end of such
month and stating the cash balance of each Portfolio at the
end of such month.
(C) the reports required to be furnished to the Fund pursuant to
Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time to
time between the Fund and PFPC Trust.
44
(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 person of such actions or events.
(m) CREDITING OF ACCOUNTS. PFPC Trust may in its sole discretion credit an
Account with respect to income, dividends, distributions, coupons,
option premiums, other payments or similar items prior to PFPC Trust's
actual receipt thereof, and in addition PFPC Trust may in its sole
discretion credit or debit the assets in an Account on a contractual
settlement date with respect to any sale, exchange or purchase
applicable to the Account; provided that nothing herein or otherwise
shall require PFPC Trust to make any advances or to credit any amounts
until PFPC Trust's actual receipt thereof. If PFPC Trust credits an
Account with respect to (a) income, dividends, distributions, coupons,
option premiums, other payments or similar items on a contractual
payment date or otherwise in advance of PFPC Trust's actual receipt of
the amount due, (b) the proceeds of any sale or other disposition of
assets on the contractual settlement date or otherwise in advance of
PFPC Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is subsequently
unable to collect full and final payment for the amounts so credited
within a reasonable time period using reasonable efforts or (ii)
pursuant to standard industry practice, law or regulation PFPC Trust
is required to repay to a third party such amounts so credited, or if
any Property has been incorrectly credited, PFPC Trust shall have the
absolute right in its sole discretion without demand to reverse any
such credit or payment, to debit or deduct the amount of such credit
or payment from the Account, and to otherwise pursue recovery of any
such amounts so credited from the Fund. The Fund hereby grants to PFPC
Trust and to each sub-custodian utilized by PFPC Trust in connection
with providing services to the Fund a first priority contractual
possessory security interest in and a right of setoff against the
assets maintained in an Account hereunder in the amount necessary to
secure the return and payment to PFPC Trust and to each such
sub-custodian of any advance or credit made by PFPC Trust and/or by
such sub-custodian (including charges related thereto) to such
Account. Notwithstanding anything in this Agreement to the contrary,
PFPC Trust shall be entitled to assign any rights it has under this
sub-section (m) to any sub-custodian utilized by PFPC Trust in
connection with providing services to the Fund which sub-custodian
makes any credits or advances with respect to the Fund.
(n) COLLECTIONS. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PFPC Trust) shall be at the sole risk of the
Fund. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Fund in writing, including copies of all demand letters, any written
responses and
45
memoranda of all oral responses and shall await instructions from
the Fund. PFPC Trust shall not be obliged to take legal action
for collection unless and until reasonably indemnified to its
satisfaction. PFPC Trust shall a lso 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 areasonable time.
(o) EXCESS CASH SWEEP. PFPC Trust will, consistent with applicable law,
sweep any net excess cash balances daily into an investment vehicle or
other instrument designated in writing by the Fund, so long as the
investment vehicle or instrument is acceptable to PFPC Trust, subject
to a fee, paid to PFPC Trust for such service, to be agreed between
the parties. Such investment vehicle or instrument may be offered by
an affiliate of PFPC Trust or by a PFPC Trust client and PFPC Trust
may receive compensation therefrom.
(p) FOREIGN EXCHANGE. PFPC Trust and/or sub-custodians may enter into or
arrange foreign exchange transactions (at such rates as they may
consider appropriate) in order to facilitate transactions under this
Agreement, and such entities and/or their affiliates may receive
compensation in connection with such foreign exchange transactions.
PFPC Trust will not have responsibility for an entity (including a
sub-custodian) which the Fund instructs it to use in connection with a
foreign exchange transaction.
15. DURATION AND TERMINATION.
(a) This Agreement shall be effective on the date first written above and
shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to Section 15(c) or 15(d) of this
Agreement. After the Initial Term, this Agreement shall automatically
be renewed for successive terms of three (3) years ("Renewal Terms")
each, unless notice is provided pursuant to Section 15(b) of this
Agreement or unless earlier terminated pursuant to Section 15(c) or
15(d) of this Agreement.
(b) Either party may terminate this Agreement at the end of the Initial
Term or at the end of any subsequent Renewal Term upon not than less
than ninety (90) days or more than one hundred-eighty (180) days prior
written notice to the other party.
46
(c) If a party hereto is guilty of a material failure to perform its
duties and obligations under this Agreement or under any other
custodian services agreement between PFPC Trust and a registered
investment company for which Sit Investment Associates, Inc. (or a
successor thereto) serves as the investment adviser which other
agreement provides for the same or substantially similar services as
this Agreement (a "Defaulting Party"), which material failure results
in a material loss to the other party (i.e., either PFPC Trust on one
hand, or the Fund or such other registered investment company on the
other hand), such other party (the "Non-Defaulting Party") may give
written notice thereof to the Defaulting Party, and if such material
breach shall not have been remedied within thirty (30) days after such
written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such
termination to the Defaulting Party. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this
Agreement or otherwise against the Defaulting Party.
(d) Notwithstanding anything contained in the foregoing provisions of this
Section 15 to the contrary, the Fund may terminate this Agreement for
any reason, or no reason, upon ninety (90) days written notice to PFPC
Trust.
(e) In the event of any termination of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term (including
termination pursuant to Section 15(d) of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term but not
including termination pursuant to Section 15(c) of this Agreement),
the Fund shall immediately pay to PFPC Trust the amount of $169,000.
(f) 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,
47
securities or other property of the Portfolios to the Fund. It may
deliver them to a bank or trust company of PFPC Trust's choice, having
aggregate capital, surplus and undivided profits, as shown by its last
published report, of not less than twenty million dollars
($20,000,000), as a custodian for the Fund to be held under terms
similar to those of this Agreement. PFPC Trust shall not be required
to make any delivery or payment of assets upon termination until full
payment shall have been made to PFPC Trust of all of its fees,
compensation, costs, expenses and other amounts owing to it under
Section 15 of this Agreement (including without limitation fees and
expenses associated with deconversion or conversion to another service
provider and other trailing expenses incurred by PFPC Trust). PFPC
Trust shall have a first priority contractual possessory security
interest in and shall have a right of setoff against the Property as
security for the payment of such fees, compensation, costs, expenses
and other amounts owing to it under Section 15 of this Agreement.
16. NOTICES. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxx; (b) if to the Fund, at 3300 IDS Center, 00 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: President; or (c) if to
neither of the foregoing, at such other address as shall have been given by
like notice to the sender of any such notice or other communication by the
other party. If notice is sent by confirming electronic delivery, hand or
facsimile sending device, it shall be deemed to have been given
immediately. If notice is sent by first-class mail, it shall be deemed to
have been given five days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day it is
delivered.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
48
18. ASSIGNMENT. PFPC Trust may assign this Agreement to any affiliate of PFPC
Trust or of The PNC Financial Services Group, Inc., provided that PFPC
Trust gives the Fund 30 days' prior written notice of such assignment.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
20. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties.
(b) NO REPRESENTATIONS OR WARRANTIES. Except as expressly provided in this
Agreement, PFPC Trust hereby disclaims all representations and
warranties, express or implied, made to the Fund or any other person,
including, without limitation, any warranties regarding quality,
suitability, merchantability, fitness for a particular purpose or
otherwise (irrespective of any course of dealing, custom or usage of
trade), of any services or any goods provided incidental to services
provided under this Agreement. PFPC Trust disclaims any warranty of
title or non-infringement except as otherwise set forth in this
Agreement.
(c) NO CHANGES THAT MATERIALLY AFFECT OBLIGATIONS. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees not to
make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of PFPC Trust hereunder without the prior written
approval of PFPC Trust, which approval shall not be unreasonably
withheld or delayed.
(d) CAPTIONS. The captions in this Agreement are included for convenience
of reference only
49
and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(e) INFORMATION. The Fund will provide such information and documentation
as PFPC Trust may reasonably request in connection with services
provided by PFPC Trust to the Fund.
(f) GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(g) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(i) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(j) CUSTOMER IDENTIFICATION PROGRAM NOTICE. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify, and
record certain information that identifies each person who initially
opens an account with that financial institution on or after October
1, 2003. Consistent with this requirement, PFPC Trust may request (or
may have already requested) the Fund's name, address and taxpayer
identification number or other government-issued identification
number, and, if such party is a natural person, that party's date of
birth. PFPC Trust may also ask (and may have already asked) for
additional identifying information, and PFPC Trust may take steps (and
may have already taken steps) to verify the authenticity and accuracy
of these data elements.
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx, XX
---------------------------------------
Title: Vice President
-------------------------------------
SIT MUTUAL FUNDS II, INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------------
Title: Vice President
-------------------------------------
51
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of June 3, 2005 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and SIT MONEY MARKET FUND, INC., a Minnesota corporation (the
"Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other person
authorized by the Fund to give 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.
52
(d) "BOOK-ENTRY SYSTEM" means the Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor
or successors, and its nominee or nominees and any book-entry system
or clearing agency registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC Trust from
an Authorized Person or from a person reasonably believed by PFPC
Trust to be an Authorized Person. PFPC Trust may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic mail
as Oral Instructions.
(g) "PFPC TRUST" means PFPC Trust Company or a subsidiary or affiliate of
PFPC Trust Company.
(h) "SEC" means the Securities and Exchange Commission.
(i) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(j) "SHARES" mean the shares of beneficial interest of any series or class
of the Fund.
(k) "PROPERTY" means:
(i) any and all securities and other investment items which the Fund
may from time to time deposit, or cause to be deposited, with
PFPC Trust or which PFPC Trust may from time to time hold for the
Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or investment
items; and
(iv) all proceeds of the sale of securities issued by the Fund, which
are received by PFPC Trust from time to time, from or on behalf
of the Fund.
(l) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by two
Authorized Persons (or persons reasonably believed by PFPC Trust to be
Authorized Persons) and received by PFPC Trust or (ii) trade
instructions transmitted by means of an electronic transaction
reporting system which requires the use of a password or other
authorized identifier in
53
order to gain access. The instructions may be delivered electronically
(with respect to sub-item (ii) above) or by hand, mail or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund as set forth herein and PFPC Trust accepts such
appointment and agrees to furnish such services.
3. COMPLIANCE WITH LAWS. PFPC Trust undertakes to comply with material
applicable requirements of the Securities Laws and material laws, rules and
regulations of governmental authorities having jurisdiction with respect to
the duties to be performed by PFPC Trust hereunder. Except as specifically
set forth herein, PFPC Trust assumes no responsibility for such compliance
by the Fund or any other entity.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives pursuant to this Agreement. PFPC Trust
may assume that any Oral Instructions or Written Instructions received
hereunder are not in any way inconsistent with the provisions of
organizational documents of the Fund or of any vote, resolution or
proceeding of the Fund's Board of Directors or of the Fund's
shareholders, unless and until PFPC Trust receives Written
Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions from Authorized Persons so that PFPC
Trust receives the Written Instructions by the close of business on
the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC Trust or
differ from the Oral Instructions shall in no way invalidate the
transactions or
54
enforceability of the transactions authorized by the Oral Instructions
or PFPC Trust's ability to rely upon such Oral Instructions.
5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC Trust may request directions or
advice, including Oral Instructions or Written Instructions, from the
Fund.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any question
of law pertaining to any action it should or should not take, PFPC
Trust may request advice from counsel of its own reasonable choosing
(who may be counsel for the Fund, the Fund's investment adviser or
PFPC Trust, at the option of PFPC Trust).
(c) CONFLICTING ADVICE. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel, PFPC
Trust shall be entitled to rely upon and follow the advice of counsel.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be indemnified by the Fund
and without liability for any action PFPC Trust takes or does not take
in reliance upon directions or advice or Oral Instructions or Written
Instructions PFPC Trust receives from or on behalf of the Fund or in
reliance upon advice from counsel reasonably chosen by PFPC Trust and
which PFPC Trust believes, in good faith, to be consistent with those
directions or advice or Oral Instructions or Written Instructions.
Nothing in this section shall be construed so as to impose an
obligation upon PFPC Trust (i) to seek such directions or advice or
Oral Instructions or Written Instructions, or (ii) to act in
accordance with such directions or advice or Oral Instructions or
Written Instructions.
6. RECORDS; VISITS. The books and records pertaining to the Fund, which are in
the possession or under the control of PFPC Trust, shall be the property of
the Fund. Such books and records shall
55
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.
7. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer
profiles, customer lists, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Fund or PFPC Trust, their respective subsidiaries and
affiliated companies; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable
and secret in the sense that its confidentiality affords the Fund or PFPC
Trust a competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential. Notwithstanding
the foregoing, information shall not be Confidential Information and shall
not be subject to such confidentiality obligations if: (a) it is already
known to the receiving party at the time it is obtained; (b) it is or
becomes publicly known or available through no wrongful act of the
receiving party; (c) it is rightfully received from a third party who, to
the best of the receiving party's knowledge, is not under a duty of
confidentiality; (d) it is released by the protected party to a third party
without restriction; (e) it is requested or required to be disclosed by the
receiving party pursuant to a court order, subpoena, governmental or
regulatory agency request or law (provided the receiving
56
party will provide the other party written notice of the same, to the
extent such notice is permitted); (f) release of such information by PFPC
Trust is necessary or desirable in connection with the provision of
services under this Agreement; (g) it is relevant to the defense of any
claim or cause of action asserted against the receiving party; or (h) it
has been or is independently developed or obtained by the receiving party.
8. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the Fund's
independent public accountants and shall take all reasonable action to make
any requested information available to such accountants as reasonably
requested by the Fund.
9. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC Trust in
connection with the services provided by PFPC Trust to the Fund.
10. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC Trust's own bad faith, negligence or reckless disregard of
its duties or obligations under this Agreement.
11. COMPENSATION.
(a) As compensation for custody services rendered by PFPC Trust during the
term of this Agreement, the Fund will pay to PFPC Trust a fee or fees
as may be agreed to in writing from time to time by the Fund and PFPC
Trust. The Fund acknowledges that PFPC
57
Trust may receive float benefits in connection with maintaining
certain accounts required to provide services under this Agreement.
(b) The undersigned hereby represents and warrants to PFPC Trust that (i)
the terms of this Agreement, (ii) the fees and expenses associated
with this Agreement, and (iii) any benefits accruing to PFPC Trust or
to the adviser or sponsor to the Fund in connection with this
Agreement, including but not limited to any fee waivers, conversion
cost reimbursements, up front payments, signing payments or periodic
payments made or to be made by PFPC Trust to such adviser or sponsor
or any affiliate of the Fund relating to this Agreement have been
fully disclosed to the Board of Directors of the Fund and that, if
required by applicable law, such Board of Directors has approved or
will approve the terms of this Agreement, any such fees and expenses,
and any such benefits.
12. INDEMNIFICATION.
(a) The Fund agrees to indemnify, defend and hold harmless PFPC Trust
(including its officers, directors, agents and employees) from all
taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, reasonable attorneys' fees and
disbursements) arising from any action or omission to act which PFPC
Trust takes in connection with the provision of services to the Fund;
provided that PFPC Trust shall not be indemnified, defended or held
harmless against any liability (or any expenses incident to such
liability) caused by PFPC Trust's own bad faith, negligence or
reckless disregard in the performance of PFPC Trust's activities under
this Agreement.
(b) PFPC Trust agrees to indemnify, defend and hold harmless the Fund
(including its officers, directors and employees) from all taxes,
charges, expenses, assessments, claims and liabilities (including,
without limitation, reasonable attorneys' fees and disbursements)
arising out of PFPC Trust's failure to perform its duties under this
Agreement but only to the extent such taxes, charges, expenses,
assessments, claims and
58
liabilities (including, without limitation, reasonable attorneys' fees
and disbursements) arise out of PFPC Trust's bad faith, negligence or
reckless disregard of its duties under this Agreement; provided that
the Fund shall not be indemnified, defended or held harmless against
any liability (or any expenses incident to such liability) caused by
the Fund's own bad faith, negligence or reckless disregard relating to
the activities to which this Agreement relates.
(c) The provisions of this Section 12 shall survive termination of this
Agreement.
13. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the Fund except as specifically set forth herein or as may
be specifically agreed to by PFPC Trust and the Fund in a written
amendment hereto. PFPC Trust shall be obligated to exercise 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 and shall be required to
indemnify, defend and hold harmless the Fund (including its officers,
directors and employees) only from any taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
reasonable attorneys' fees and disbursements) arising out of PFPC
Trust's failure to perform its duties under this Agreement and only to
the extent such taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, reasonable attorneys' fees
and disbursements) arise out of PFPC Trust's bad faith, negligence or
reckless disregard of its duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
Trust shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy;
59
war; terrorism; riot; fire; flood; sabotage; epidemics; labor
disputes; civil commotion; interruption, loss or malfunction of
utilities, transportation, computer or communications capabilities;
insurrection; elements of nature; or non-performance by a third party;
and (ii) PFPC Trust shall not be under any duty or obligation to
inquire into and shall not be liable for the validity or invalidity,
authority or lack thereof, or truthfulness or accuracy or lack
thereof, of any instruction, direction, notice, instrument or other
information which PFPC Trust reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, (i)
neither PFPC Trust nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or not
the likelihood of such losses or damages was known by PFPC Trust or
its affiliates, (ii) PFPC Trust's cumulative liability to the Fund for
all losses, claims, suits, controversies, breaches or damages for any
cause whatsoever (including but not limited to those arising out of or
related to this Agreement) and regardless of the form of action or
legal theory shall not exceed the greater of $250,000 or the fees
received by PFPC Trust for services provided hereunder during the 12
months immediately prior to the date of such loss or damage (provided
that, while the dollar amount of any loss or damage caused by PFPC
Trust's fraud or gross negligence shall be included in calculating
whether the dollar limitations set forth in the foregoing damage cap
specified in this sub-section (ii) have been reached, the foregoing
damage cap specified in this sub-section (ii) shall not otherwise
limit PFPC Trust's liability for loss or damage shown to be caused by
PFPC Trust's fraud or gross negligence) and (iii) PFPC Trust shall not
have any responsibility with respect to the acts, omissions or
operations of any Book-Entry System or other depository (unless the
same arise out of PFPC Trust's bad faith, negligence or reckless
disregard of its duties under this Agreement).
(d) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
60
(e) For all purposes under this Agreement, reasonableness shall be
determined under the facts and circumstances prevailing in the market
where performance is rendered.
(f) Notwithstanding anything in this Agreement to the contrary (other than
as specifically provided in Section 14(h)(ii)(B)(4) and Section
14(h)(iii)(A) of this Agreement), the Fund shall be responsible for
all filings, tax returns and reports on any transactions undertaken
pursuant to this Agreement, or in respect of the Property or any
collections undertaken pursuant to this Agreement, which may be
requested by any relevant authority. In addition, the Fund shall be
solely responsible for the payment of all taxes and similar items
(including without limitation penalties and interest related thereto).
(g) The provisions of this Section 13 shall survive termination of this
Agreement.
(h) Notwithstanding anything in this Agreement to the contrary, PFPC Trust
shall have no liability either for any error or omission of any of its
predecessors as servicer on behalf of the Fund or for any failure to
discover any such error or omission.
14. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Fund will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Fund, including
cash received as a result of the distribution of Shares, during the
term of this Agreement. PFPC Trust will not be responsible for any
assets until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust, acting upon Written
Instructions, shall open and maintain a separate account for the Fund
(the "Account") and shall maintain in the Account all cash and other
assets received from or for the Fund.
PFPC Trust shall make cash payments from or for the Account only for:
(i) purchases of securities in the name of the Fund, PFPC Trust, PFPC
Trust's nominee or a sub-custodian or nominee thereof as provided
in sub-section (j) and for which PFPC Trust has received a copy
of the broker's or dealer's
61
confirmation or payee's invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PFPC
Trust;
(iii) payment of, subject to Written Instructions, interest, taxes
(provided that tax which PFPC Trust considers is required to be
deducted or withheld "at source" will be governed by Section
14(h)(iii)(B) of this Agreement), administration, accounting,
distribution, advisory and management fees which are to be borne
by the Fund;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, of an
amount equal to the amount of dividends and distributions stated
in the Written Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying the Fund's
transfer agent, PFPC Trust may arrange for the direct payment of
cash dividends and distributions to shareholders in accordance
with procedures mutually agreed upon from time to time by and
among the Fund, PFPC Trust and the Fund's transfer agent;
(v) payments, upon receipt of Written Instructions, in connection
with the conversion, exchange or surrender of securities owned or
subscribed to by the Fund and held by or delivered to PFPC Trust;
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(ix) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the
Account.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PFPC Trust shall hold all securities received by it for the
Account in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry System
or through a sub-custodian or depository. All such securities
shall be held or disposed of only upon Written Instructions or
otherwise pursuant to the terms of this Agreement. PFPC Trust
shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any such securities or investment, except
upon the express terms of this Agreement or upon Written
Instructions authorizing the transaction. In no case may any
member of the Fund's Board of Directors, or any officer, employee
or agent of the Fund withdraw any securities.
62
At PFPC Trust's own expense and for its own convenience, PFPC
Trust may enter into sub-custodian agreements with other banks or
trust companies to perform duties described in this sub-section
(c) with respect to domestic assets. Such bank or trust company
shall have aggregate capital, surplus and undivided profits,
according to its last published report, of at least one million
dollars ($1,000,000), if it is a subsidiary or affiliate of PFPC
Trust, or at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or affiliate of PFPC
Trust. In addition, such bank or trust company must be qualified
to act as custodian and agree to comply with the relevant
provisions of applicable rules and regulations. Any such
arrangement will not be entered into without prior written notice
to the Fund (or as otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign assets.
Any such arrangement will not be entered into without prior
written notice to the Fund (or as otherwise provided in the 1940
Act). The Fund agrees that it will not hold foreign assets with
any sub-custodian not currently selected by PFPC Trust in
relation to the Fund.
PFPC Trust shall remain responsible for the acts and omissions of
any sub-custodian chosen by PFPC Trust under the terms of this
sub-section (c) to the same extent that PFPC Trust is responsible
for its own acts and omissions under this Agreement; provided
that, so long as PFPC Trust has chosen such a sub-custodian (both
initially and on an ongoing basis) in the exercise of reasonable
care, prudence and diligence, PFPC Trust shall have no
responsibility relating to the insolvency of any such
sub-custodian.
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral Instructions
or Written Instructions and not otherwise, PFPC Trust shall:
(i) deliver any securities held for the Fund against the receipt of
payment for the sale of such securities or otherwise in
accordance with standard market practice;
(ii) execute and deliver to such persons as may be designated in such
Oral Instructions or Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the authority
of the Fund as owner of any securities may be exercised;
(iii) deliver any securities to the issuer thereof, or its agent, when
such securities are called, redeemed, retired or otherwise become
payable at the option of the holder; provided that, in any such
case, the cash or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer, merger,
consolidation or recapitalization of any corporation, or the
63
exercise of any conversion privilege;
(v) deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any 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 Fund and
take such other steps as shall be stated in said Oral
Instructions or Written Instructions to be for the purpose of
effectuating a duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund;
(vii) release securities belonging to the Fund to any bank or trust
company for the purpose of a pledge or hypothecation to secure
any loan incurred by the Fund; provided, however, that securities
shall be released only upon payment to PFPC Trust of the monies
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made subject to proper
prior authorization, further securities may be released for that
purpose; and repay such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon surrender of
the note or notes evidencing the loan;
(viii) release and deliver securities owned by the Fund in connection
with any repurchase agreement entered into by the Fund, but only
on receipt of payment therefor; and pay out monies of the Fund in
connection with such repurchase agreements, but only upon the
delivery of the securities;
(ix) release and deliver or exchange securities owned by the Fund in
connection with any conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities to a broker in connection with
the broker's custody of margin collateral relating to futures and
options transactions;
(xi) release and deliver securities owned by the Fund for the purpose
of redeeming in kind shares of the Fund upon delivery thereof to
PFPC Trust; and
(xii) release and deliver or exchange securities owned by the Fund for
other purposes.
PFPC Trust must also receive a certified resolution describing
the nature of the corporate purpose and the name and address of
the person(s) to whom delivery shall be made when such action is
pursuant to sub-paragraph d(xii).
(e) USE OF BOOK-ENTRY SYSTEM OR OTHER DEPOSITORY. PFPC Trust will deposit
in Book-Entry Systems and other depositories all securities belonging
to the Fund eligible for deposit therein and will utilize Book-Entry
Systems and other depositories to the extent possible in connection
with settlements of purchases and sales of securities by the Fund, and
64
deliveries and returns of securities loaned, subject to repurchase
agreements or used as collateral in connection with borrowings. PFPC
Trust shall continue to perform such duties until it receives Written
Instructions or Oral Instructions authorizing contrary actions.
Notwithstanding anything in this Agreement to the contrary, PFPC
Trust's use of a Book-Entry System shall comply with the requirements
of Rule 17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other depository as
follows:
(i) With respect to securities of the Fund which are maintained in a
Book-Entry System or another depository, the records of PFPC
Trust shall identify by book-entry or otherwise those securities
as belonging to the Fund.
(ii) Assets of the Fund deposited in a Book-Entry System or another
depository will (to the extent consistent with applicable law and
standard practice) at all times be segregated from any assets and
cash controlled by PFPC Trust in other than a fiduciary or
custodian capacity but may be commingled with other assets held
in such capacities.
PFPC Trust will provide the Fund with such reports on its own system
of internal control as the Fund may reasonably request from time
to time.
(f) REGISTRATION OF SECURITIES. All securities held for the Fund which are
issued or issuable only in bearer form, except such securities
maintained in the Book-Entry System or in another depository, shall be
held by PFPC Trust in bearer form; all other securities maintained for
the Fund may be registered in the name of the Fund, PFPC Trust, a
Book-Entry System, another depository, a sub-custodian, or any duly
appointed nominee of the Fund, PFPC Trust, Book-Entry System,
depository or sub-custodian. The Fund reserves the right to instruct
PFPC Trust as to the method of registration and safekeeping of the
securities of the Fund. The Fund agrees to furnish to PFPC Trust
appropriate instruments to enable PFPC Trust to maintain or deliver in
proper form for transfer, or to register in the name of its nominee or
in the name of the Book-Entry System or in the name of another
appropriate entity, any securities which it may maintain for the
Account.
65
With respect to uncertificated securities which are registered in the
name of the Fund (or a nominee thereof), PFPC Trust will reflect such
securities on its records based upon the holdings information provided
to it by the issuer of such securities, but notwithstanding anything
in this Agreement to the contrary PFPC Trust shall not be obligated to
safekeep such securities or to perform other duties with respect to
such securities other than to make payment for the purchase of such
securities upon receipt of Oral or Written Instructions, accept in
sale proceeds received by PFPC Trust upon the sale of such securities
of which PFPC Trust is informed pursuant to Oral or Written
Instructions, and accept in other distributions received by PFPC Trust
with respect to such securities or reflect on its records any
reinvested distributions with respect to such securities of which it
is informed by the issuer of the securities.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall vote
any of the securities held pursuant to this Agreement by or for the
account of the Fund, except in accordance with Written Instructions.
PFPC Trust, directly or through the use of another entity, shall
execute in blank and promptly deliver all notices, proxies and proxy
soliciting materials received by PFPC Trust as custodian of the
Property to the registered holder of such securities. If the
registered holder is not the Fund, then Written Instructions or Oral
Instructions must designate the person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. Notwithstanding anything in
this Agreement requiring instructions in order to take a particular
action, in the absence of a contrary Written Instruction, PFPC Trust
is authorized to take the following actions without the need for
instructions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of the Fund, all income,
dividends, distributions, coupons, option premiums, other
payments and similar items, included or to be included in
the Property, and, in addition,
66
promptly advise the Fund of such receipt and credit such
income to the Fund's custodian account;
(B) endorse and deposit for collection, in the name of the Fund,
checks, drafts, or other orders for the payment of money;
(C) receive and hold for the account of the Fund all securities
received as a distribution on the Fund's securities as a
result of a stock dividend, share split-up or
reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar
securities issued with respect to any securities belonging
to the Fund and held by PFPC Trust hereunder;
(D) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed, retired
or otherwise become payable (on a mandatory basis) on the
date such securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such income
and other payments and the endorsement for collection of
checks, drafts, and other negotiable instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause to be delivered
Property against payment or other consideration or written
receipt therefor in the following cases:
(1) for examination by a broker or dealer selling for the
account of the Fund 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 or
PFPC Trust or a sub-custodian or a nominee of one of
the foregoing, or for exchange of securities for a
different number of bonds, certificates, or other
evidence, representing the same aggregate face amount
or number of units bearing the same interest rate,
maturity date and call provisions, if any; provided
that, in any such case, the new securities are to be
delivered to PFPC Trust.
(B) PFPC Trust shall:
(1) pay all income items held by it which call for payment
upon presentation and hold the cash received by it upon
such payment for the account of the Fund;
(2) collect interest and cash dividends received, with
notice to the
67
Fund, to the account of the Fund;
(3) hold for the account of the Fund all stock dividends,
rights and similar securities issued with respect to
any securities held by PFPC Trust; and
(4) subject to receipt of such documentation and
information as PFPC Trust may request, execute as agent
on behalf of the Fund all necessary ownership
certificates required by a national governmental taxing
authority or under the laws of any U.S. state now or
hereafter in effect, inserting the Fund's name on such
certificate as the owner of the securities covered
thereby, to the extent it may lawfully do so.
(iii) OTHER MATTERS.
(A) subject to receipt of such documentation and information as
PFPC Trust may request, PFPC Trust will, in such
jurisdictions as PFPC Trust may agree from time to time,
seek to reclaim or obtain a reduction with respect to any
withholdings or other taxes relating to assets maintained
hereunder (provided that PFPC Trust will not be liable for
failure to obtain any particular relief in a particular
jurisdiction); and
(B) PFPC Trust is authorized to deduct or withhold any sum in
respect of tax which PFPC Trust considers is required to be
deducted or withheld "at source" by any relevant law or
practice.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or Oral
Instructions establish and maintain segregated accounts on its
records for and on behalf of the Fund. Such accounts may be used
to transfer cash and securities, including securities in a
Book-Entry System or other depository:
(A) for the purposes of compliance by the Fund with the
procedures required by a securities or option exchange,
providing such procedures comply with the 1940 Act and any
releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies; and
(B) upon receipt of Written Instructions, for other purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX custodian
accounts for such shareholders holding Shares through XXX
accounts, in accordance with the Fund's 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.
68
(j) PURCHASES OF SECURITIES. PFPC Trust shall settle purchased securities
upon receipt of Oral Instructions or Written Instructions that
specify:
(i) the name of the issuer and the title of the securities, including
CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase; and
(vi) the name of the person from whom or the broker through whom the
purchase was made. PFPC Trust shall upon receipt of securities
purchased by or for the Fund (or otherwise in accordance with
standard market practice) pay out of the monies held for the
account of the Fund the total amount payable to the person from
whom or the broker through whom the purchase was made, provided
that the same conforms to the total amount payable as set forth
in such Oral Instructions or Written Instructions.
(k) SALES OF SECURITIES. PFPC Trust shall settle sold securities upon
receipt of Oral Instructions or Written Instructions that specify:
(i) the name of the issuer and the title of the security, including
CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made; and
(vii) the location to which the security must be delivered and
delivery deadline, if any.
PFPC Trust shall deliver the securities upon receipt of the total
amount payable to the Fund upon such sale, provided that the total
amount payable is the same as was set forth
69
in the Oral Instructions or Written Instructions. Notwithstanding
anything to the contrary in this Agreement, PFPC Trust may accept
payment in such form as is consistent with standard industry practice
and may deliver assets and arrange for payment in accordance with
standard market practice.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the 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 the Fund, listing each portfolio security
belonging to the Fund (with the corresponding security
identification number) held at the end of such month and
stating the cash balance of the Fund at the end of such
month.
(C) the reports required to be furnished to the Fund pursuant to
Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time to
time between the Fund and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any proxy
statement, proxy material, notice of a call or conversion or
similar communication received by it as custodian of the
Property. PFPC Trust shall be under no other obligation to inform
the Fund as to such actions or events. For clarification, upon
termination of this Agreement PFPC Trust shall have no
responsibility to transmit such material or to inform the Fund or
any other person of such actions or events.
(m) CREDITING OF ACCOUNTS. PFPC Trust may in its sole discretion credit
the Account with respect to income, dividends, distributions, coupons,
option premiums, other payments or similar items prior to PFPC Trust's
actual receipt thereof, and in addition PFPC Trust may in its sole
discretion credit or debit the assets in the Account on a contractual
settlement date with respect to any sale, exchange or purchase
applicable to the Account; provided that nothing herein or otherwise
shall require PFPC Trust to make any advances or to credit any amounts
until PFPC Trust's actual receipt thereof. If PFPC Trust credits the
Account with respect to (a) income, dividends, distributions, coupons,
option premiums, other payments or similar items on a contractual
payment date or otherwise in advance of PFPC Trust's actual receipt of
the amount due, (b) the proceeds of any sale or other disposition of
70
assets on the contractual settlement date or otherwise in advance of
PFPC Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is subsequently
unable to collect full and final payment for the amounts so credited
within a reasonable time period using reasonable efforts or (ii)
pursuant to standard industry practice, law or regulation PFPC Trust
is required to repay to a third party such amounts so credited, or if
any Property has been incorrectly credited, PFPC Trust shall have the
absolute right in its sole discretion without demand to reverse any
such credit or payment, to debit or deduct the amount of such credit
or payment from the Account, and to otherwise pursue recovery of any
such amounts so credited from the Fund. The Fund hereby grants to PFPC
Trust and to each sub-custodian utilized by PFPC Trust in connection
with providing services to the Fund a first priority contractual
possessory security interest in and a right of setoff against the
assets maintained in the Account hereunder in the amount necessary to
secure the return and payment to PFPC Trust and to each such
sub-custodian of any advance or credit made by PFPC Trust and/or by
such sub-custodian (including charges related thereto) to such
Account. Notwithstanding anything in this Agreement to the contrary,
PFPC Trust shall be entitled to assign any rights it has under this
sub-section (m) to any sub-custodian utilized by PFPC Trust in
connection with providing services to the Fund which sub-custodian
makes any credits or advances with respect to the Fund.
(n) COLLECTIONS. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PFPC Trust) shall be at the sole risk of the
Fund. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Fund in writing, including copies of all demand letters, any written
responses and memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to take
legal action for collection unless and until reasonably indemnified to
its satisfaction. PFPC Trust shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Fund with periodic
status reports of such income collected after a reasonable time.
(o) EXCESS CASH SWEEP. PFPC Trust will, consistent with applicable law,
sweep any net excess cash balances daily into an investment vehicle or
other instrument designated in writing by the Fund, so long as the
investment vehicle or instrument is acceptable to PFPC Trust, subject
to a fee, paid to PFPC Trust for such service, to be agreed between
the parties. Such investment vehicle or instrument may be offered by
an affiliate of PFPC Trust or by a PFPC Trust client and PFPC Trust
may receive compensation therefrom.
(p) FOREIGN EXCHANGE. PFPC Trust and/or sub-custodians may enter into or
arrange foreign
71
exchange transactions (at such rates as they may consider appropriate)
in order to facilitate transactions under this Agreement, and such
entities and/or their affiliates may receive compensation in
connection with such foreign exchange transactions. PFPC Trust will
not have responsibility for an entity (including a sub-custodian)
which the Fund instructs it to use in connection with a foreign
exchange transaction.
15. DURATION AND TERMINATION.
(a) This Agreement shall be effective on the date first written above and
shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to Section 15(c) or 15(d) of this
Agreement. After the Initial Term, this Agreement shall automatically
be renewed for successive terms of three (3) years ("Renewal Terms")
each, unless notice is provided pursuant to Section 15(b) of this
Agreement or unless earlier terminated pursuant to Section 15(c) or
15(d) of this Agreement.
(b) Either party may terminate this Agreement at the end of the Initial
Term or at the end of any subsequent Renewal Term upon not than less
than ninety (90) days or more than one hundred-eighty (180) days prior
written notice to the other party.
(c) If a party hereto is guilty of a material failure to perform its
duties and obligations under this Agreement or under any other
custodian services agreement between PFPC Trust and a registered
investment company for which Sit Investment Associates, Inc. (or a
successor thereto) serves as the investment adviser which other
agreement provides for the same or substantially similar services as
this Agreement (a "Defaulting Party"), which material failure results
in a material loss to the other party (i.e., either PFPC Trust on one
hand, or the Fund or such other registered investment company on the
other hand), such 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
72
terminate this Agreement by giving thirty (30) days written notice of
such termination to the Defaulting Party. In all cases, termination by
the Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this
Agreement or otherwise against the Defaulting Party.
(d) Notwithstanding anything contained in the foregoing provisions of this
Section 15 to the contrary, the Fund may terminate this Agreement for
any reason, or no reason, upon ninety (90) days written notice to PFPC
Trust.
(e) In the event of any termination of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term (including
termination pursuant to Section 15(d) of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term but not
including termination pursuant to Section 15(c) of this Agreement),
the Fund shall immediately pay to PFPC Trust the amount of $15,000.
(f) In the event this Agreement is terminated (pending appointment of a
successor to PFPC Trust or vote of the shareholders of the Fund to
dissolve or to function without a custodian of its cash, securities or
other property), PFPC Trust shall not deliver cash, securities or
other property of the Fund to the Fund. It may deliver them to a bank
or trust company of PFPC Trust's choice, having aggregate capital,
surplus and undivided profits, as shown by its last published report,
of not less than twenty million dollars ($20,000,000), as a custodian
for the Fund to be held under terms similar to those of this
Agreement. PFPC Trust shall not be required to make any delivery or
payment of assets upon termination until full payment shall have been
made to PFPC Trust of all of its fees, compensation, costs, expenses
and other amounts owing to it under Section 15 of this Agreement
(including without limitation fees and expenses associated with
deconversion or conversion to another service provider and other
trailing expenses incurred by PFPC Trust). PFPC Trust shall have a
first priority contractual possessory security interest in
73
and shall have a right of setoff against the Property as security for
the payment of such fees, compensation, costs, expenses and other
amounts owing to it under Section 15 of this Agreement.
16. NOTICES. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxx; (b) if to the Fund, at 3300 IDS Center, 00 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: President; or (c) if to
neither of the foregoing, at such other address as shall have been given by
like notice to the sender of any such notice or other communication by the
other party. If notice is sent by confirming electronic delivery, hand or
facsimile sending device, it shall be deemed to have been given
immediately. If notice is sent by first-class mail, it shall be deemed to
have been given five days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day it is
delivered.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. ASSIGNMENT. PFPC Trust may assign this Agreement to any affiliate of PFPC
Trust or of The PNC Financial Services Group, Inc., provided that PFPC
Trust gives the Fund 30 days' prior written notice of such assignment.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
20. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate
74
documents their agreement, if any, with respect to delegated duties.
(b) NO REPRESENTATIONS OR WARRANTIES. Except as expressly provided in this
Agreement, PFPC Trust hereby disclaims all representations and
warranties, express or implied, made to the Fund or any other person,
including, without limitation, any warranties regarding quality,
suitability, merchantability, fitness for a particular purpose or
otherwise (irrespective of any course of dealing, custom or usage of
trade), of any services or any goods provided incidental to services
provided under this Agreement. PFPC Trust disclaims any warranty of
title or non-infringement except as otherwise set forth in this
Agreement.
(c) NO CHANGES THAT MATERIALLY AFFECT OBLIGATIONS. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees not to
make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of PFPC Trust hereunder without the prior written
approval of PFPC Trust, which approval shall not be unreasonably
withheld or delayed.
(d) CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(e) INFORMATION. The Fund will provide such information and documentation
as PFPC Trust may reasonably request in connection with services
provided by PFPC Trust to the Fund.
(f) GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(g) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the
75
benefit of the parties hereto and their respective successors and
permitted assigns.
(i) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(j) CUSTOMER IDENTIFICATION PROGRAM NOTICE. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify, and
record certain information that identifies each person who initially
opens an account with that financial institution on or after October
1, 2003. Consistent with this requirement, PFPC Trust may request (or
may have already requested) the Fund's name, address and taxpayer
identification number or other government-issued identification
number, and, if such party is a natural person, that party's date of
birth. PFPC Trust may also ask (and may have already asked) for
additional identifying information, and PFPC Trust may take steps (and
may have already taken steps) to verify the authenticity and accuracy
of these data elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx, XX
---------------------------------------
Title: Vice President
-------------------------------------
SIT MONEY MARKET FUND, INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------------------
Title: Vice President
-------------------------------------
76
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of June 3, 2005 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and SIT MUTUAL FUNDS TRUST, a Delaware statutory trust (the
"Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other person
authorized by the Fund to give 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.
77
(d) "BOOK-ENTRY SYSTEM" means the Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor
or successors, and its nominee or nominees and any book-entry system
or clearing agency registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC Trust from
an Authorized Person or from a person reasonably believed by PFPC
Trust to be an Authorized Person. PFPC Trust may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic mail
as Oral Instructions.
(g) "PFPC TRUST" means PFPC Trust Company or a subsidiary or affiliate of
PFPC Trust Company.
(h) "SEC" means the Securities and Exchange Commission.
(i) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(j) "SHARES" mean the shares of beneficial interest of any series or class
of the Fund.
(k) "PROPERTY" means:
(i) any and all securities and other investment items which the Fund
may from time to time deposit, or cause to be deposited, with
PFPC Trust or which PFPC Trust may from time to time hold for the
Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or investment
items; and
(iv) all proceeds of the sale of securities issued by the Fund, which
are received by PFPC Trust from time to time, from or on behalf
of the Fund.
(l) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by two
Authorized Persons (or persons reasonably believed by PFPC Trust to be
Authorized Persons) and received by PFPC Trust or (ii) trade
instructions transmitted by means of an electronic transaction
reporting system which requires the use of a password or other
authorized identifier in order to gain access. The instructions may be
delivered electronically (with respect to sub-item (ii) above) or by
hand, mail or facsimile sending device.
78
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund as set forth herein, on behalf of each of its
investment portfolios (each, a "Portfolio"), and PFPC Trust accepts such
appointment and agrees to furnish such services.
3. COMPLIANCE WITH LAWS.
PFPC Trust undertakes to comply with material applicable requirements of
the Securities Laws and material laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to
be performed by PFPC Trust hereunder. Except as specifically set forth
herein, PFPC Trust assumes no responsibility for such compliance by the
Fund or any other entity.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives pursuant to this Agreement. PFPC Trust
may assume that any Oral Instructions or Written Instructions received
hereunder are not in any way inconsistent with the provisions of
organizational documents of the Fund or of any vote, resolution or
proceeding of the Fund's Board of Trustees or of the Fund's
shareholders, unless and until PFPC Trust receives Written
Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions from Authorized Persons so that PFPC
Trust receives the Written Instructions by the close of business on
the same day that such Oral Instructions are received. The fact that
such confirming Written Instructions are not received by PFPC Trust or
differ from the Oral Instructions shall in no way invalidate the
transactions or enforceability of the transactions authorized by the
Oral Instructions or PFPC Trust's ability to rely upon such Oral
Instructions.
5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC
79
Trust may request directions or advice, including Oral Instructions or
Written Instructions, from the Fund.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any question
of law pertaining to any action it should or should not take, PFPC
Trust may request advice from counsel of its own reasonable choosing
(who may be counsel for the Fund, the Fund's investment adviser or
PFPC Trust, at the option of PFPC Trust).
(c) CONFLICTING ADVICE. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel, PFPC
Trust shall be entitled to rely upon and follow the advice of counsel.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be indemnified by the Fund
and without liability for any action PFPC Trust takes or does not take
in reliance upon directions or advice or Oral Instructions or Written
Instructions PFPC Trust receives from or on behalf of the Fund or in
reliance upon advice from counsel reasonably chosen by PFPC Trust and
which PFPC Trust believes, in good faith, to be consistent with those
directions or advice or Oral Instructions or Written Instructions.
Nothing in this section shall be construed so as to impose an
obligation upon PFPC Trust (i) to seek such directions or advice or
Oral Instructions or Written Instructions, or (ii) to act in
accordance with such directions or advice or Oral Instructions or
Written Instructions.
6. RECORDS; VISITS. The books and records pertaining to the Fund and any
Portfolio, which are in the possession or under the control of PFPC Trust,
shall be the property of the Fund. Such books and records shall be prepared
and maintained as required by the 1940 Act 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.
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7. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer
profiles, customer lists, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Fund or PFPC Trust, their respective subsidiaries and
affiliated companies; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable
and secret in the sense that its confidentiality affords the Fund or PFPC
Trust a competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential. Notwithstanding
the foregoing, information shall not be Confidential Information and shall
not be subject to such confidentiality obligations if: (a) it is already
known to the receiving party at the time it is obtained; (b) it is or
becomes publicly known or available through no wrongful act of the
receiving party; (c) it is rightfully received from a third party who, to
the best of the receiving party's knowledge, is not under a duty of
confidentiality; (d) it is released by the protected party to a third party
without restriction; (e) it is requested or required to be disclosed by the
receiving party pursuant to a court order, subpoena, governmental or
regulatory agency request or law (provided the receiving party will provide
the other party written notice of the same, to the extent such notice is
permitted); (f) release of such information by PFPC Trust is necessary or
desirable in connection with the provision of services under this
Agreement; (g) it is relevant to the defense of any claim or cause of
action asserted against the receiving party; or (h) it has been or is
independently developed or obtained by the receiving party.
8. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the Fund's
independent public accountants and shall take all reasonable action to make
any requested information available to such
81
accountants as reasonably requested by the Fund.
9. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC Trust in
connection with the services provided by PFPC Trust to the Fund.
10. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC Trust's own bad faith, negligence or reckless disregard of
its duties or obligations under this Agreement.
11. COMPENSATION.
(a) As compensation for custody services rendered by PFPC Trust during the
term of this Agreement, the Fund, on behalf of each of the Portfolios,
will pay to PFPC Trust a fee or fees as may be agreed to in writing
from time to time by the Fund and PFPC Trust. The Fund acknowledges
that PFPC Trust may receive float benefits in connection with
maintaining certain accounts required to provide services under this
Agreement.
(b) The undersigned hereby represents and warrants to PFPC Trust that (i)
the terms of this Agreement, (ii) the fees and expenses associated
with this Agreement, and (iii) any benefits accruing to PFPC Trust or
to the adviser or sponsor to the Fund in connection with this
Agreement, including but not limited to any fee waivers, conversion
cost reimbursements, up front payments, signing payments or periodic
payments made or to be made by PFPC Trust to such adviser or sponsor
or any affiliate of the Fund relating to this Agreement have been
fully disclosed to the Board of Trustees of the Fund
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and that, if required by applicable law, such Board of Trustees has
approved or will approve the terms of this Agreement, any such fees
and expenses, and any such benefits.
12. INDEMNIFICATION.
(a) The Fund, on behalf of each Portfolio, agrees to indemnify, defend and
hold harmless PFPC Trust (including its officers, directors, agents
and employees) from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, reasonable attorneys'
fees and disbursements) arising from any action or omission to act
which PFPC Trust takes in connection with the provision of services to
the Fund; provided that PFPC Trust shall not be indemnified, defended
or held harmless against any liability (or any expenses incident to
such liability) caused by PFPC Trust's own bad faith, negligence or
reckless disregard in the performance of PFPC Trust's activities under
this Agreement. Any amounts payable by the Fund hereunder shall be
satisfied only against the relevant Portfolio's assets and not against
the assets of any other Portfolio.
(b) PFPC Trust agrees to indemnify, defend and hold harmless the Fund
(including its officers, trustees and employees) from all taxes,
charges, expenses, assessments, claims and liabilities (including,
without limitation, reasonable attorneys' fees and disbursements)
arising out of PFPC Trust's failure to perform its duties under this
Agreement but only to the extent such taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
reasonable attorneys' fees and disbursements) arise out of PFPC
Trust's bad faith, negligence or reckless disregard of its duties
under this Agreement; provided that the Fund shall not (nor shall any
Portfolio) be indemnified, defended or held harmless against any
liability (or any expenses incident to such liability) caused by the
Fund's or any Portfolio's own bad faith, negligence or reckless
disregard relating to the activities to which this Agreement relates.
(c) The provisions of this Section 12 shall survive termination of this
Agreement.
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13. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the Fund or any Portfolio except as specifically set forth
herein or as may be specifically agreed to by PFPC Trust and the Fund
in a written amendment hereto. PFPC Trust shall be obligated to
exercise care and diligence in the performance of its duties hereunder
and to act in good faith in performing services provided for under
this Agreement. PFPC Trust shall be liable only for and shall be
required to indemnify, defend and hold harmless the Fund (including
its officers, trustees and employees) only from any taxes, charges,
expenses, assessments, claims and liabilities (including, without
limitation, reasonable attorneys' fees and disbursements) arising out
of PFPC Trust's failure to perform its duties under this Agreement and
only to the extent such taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, reasonable attorneys'
fees and disbursements) arise out of PFPC Trust's bad faith,
negligence or reckless disregard of its duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
Trust shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion; interruption,
loss or malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature; or
non-performance by a third party; and (ii) PFPC Trust shall not be
under any duty or obligation to inquire into and shall not be liable
for the validity or invalidity, authority or lack thereof, or
truthfulness or accuracy or lack thereof, of any instruction,
direction, notice, instrument or other information which PFPC Trust
reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, (i)
neither PFPC Trust nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or not
the
84
likelihood of such losses or damages was known by PFPC Trust or its
affiliates, (ii) PFPC Trust's cumulative liability to the Fund for all
losses, claims, suits, controversies, breaches or damages for any
cause whatsoever (including but not limited to those arising out of or
related to this Agreement) and regardless of the form of action or
legal theory shall not exceed the greater of $250,000 or the fees
received by PFPC Trust for services provided hereunder during the 12
months immediately prior to the date of such loss or damage (provided
that, while the dollar amount of any loss or damage caused by PFPC
Trust's fraud or gross negligence shall be included in calculating
whether the dollar limitations set forth in the foregoing damage cap
specified in this sub-section (ii) have been reached, the foregoing
damage cap specified in this sub-section (ii) shall not otherwise
limit PFPC Trust's liability for loss or damage shown to be caused by
PFPC Trust's fraud or gross negligence) and (iii) PFPC Trust shall not
have any responsibility with respect to the acts, omissions or
operations of any Book-Entry System or other depository (unless the
same arise out of PFPC Trust's bad faith, negligence or reckless
disregard of its duties under this Agreement).
(d) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(e) For all purposes under this Agreement, reasonableness shall be
determined under the facts and circumstances prevailing in the market
where performance is rendered.
(f) Notwithstanding anything in this Agreement to the contrary (other than
as specifically provided in Section 14(h)(ii)(B)(4) and Section
14(h)(iii)(A) of this Agreement), the Fund shall be responsible for
all filings, tax returns and reports on any transactions undertaken
pursuant to this Agreement, or in respect of the Property or any
collections undertaken pursuant to this Agreement, which may be
requested by any relevant authority. In addition, the Fund shall be
solely responsible for the payment of all taxes and similar items
(including without limitation penalties and interest related thereto).
(g) The provisions of this Section 13 shall survive termination of this
Agreement.
85
(h) Notwithstanding anything in this Agreement to the contrary, PFPC Trust
shall have no liability either for any error or omission of any of its
predecessors as servicer on behalf of the Fund or for any failure to
discover any such error or omission.
14. DESCRIPTION OF SERVICES.
(a) Delivery of the Property. The Fund will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Portfolios,
including cash received as a result of the distribution of Shares,
during the term of this Agreement. PFPC Trust will not be responsible
for any assets until actual receipt.
(b) Receipt and Disbursement of Money. PFPC Trust, acting upon Written
Instructions, shall open and maintain a separate account for each
separate Portfolio of the Fund (each an "Account") and shall maintain
in the Account of a particular Portfolio all cash and other assets
received from or for the Fund specifically designated to such Account.
PFPC Trust shall make cash payments from or for the Account of a
Portfolio only for:
(i) purchases of securities in the name of a Portfolio, PFPC Trust,
PFPC Trust's nominee or a sub-custodian or nominee thereof as
provided in sub-section (j) and for which PFPC Trust has received
a copy of the broker's or dealer's confirmation or payee's
invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PFPC
Trust;
(iii) payment of, subject to Written Instructions, interest, taxes
(provided that tax which PFPC Trust considers is required to be
deducted or withheld "at source" will be governed by Section
14(h)(iii)(B) of this Agreement), administration, accounting,
distribution, advisory and management fees which are to be borne
by a Portfolio;
(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;
86
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to provisions in
sub-section (c) of this Section; and
(ix) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian
for the Accounts.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PFPC Trust shall hold all securities received by it for the
Accounts in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry System
or through a sub-custodian or depository. All such securities
shall be held or disposed of only upon Written Instructions or
otherwise pursuant to the terms of this Agreement. PFPC Trust
shall have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any such securities or investment, except
upon the express terms of this Agreement or upon Written
Instructions authorizing the transaction. In no case may any
member of the Fund's Board of 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 aggregate capital, surplus and undivided profits,
according to its last published report, of at least one million
dollars ($1,000,000), if it is a subsidiary or affiliate of PFPC
Trust, or at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or affiliate of PFPC
Trust. In addition, such bank or trust company must be qualified
to act as custodian and agree to comply with the relevant
provisions of applicable rules and regulations. Any such
arrangement will not be entered into without prior written notice
to the Fund (or as otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign assets.
Any such arrangement will not be entered into without prior
written notice to the Fund (or as otherwise provided in the 1940
Act). The Fund agrees that it will not hold foreign assets with
any sub-custodian not currently selected by PFPC Trust in
relation to the Fund.
PFPC Trust shall remain responsible for the acts and omissions of
any sub-custodian chosen by PFPC Trust under the terms of this
sub-section (c) to the same extent that PFPC Trust is responsible
for its own acts and omissions under this Agreement; provided
that, so long as PFPC Trust has chosen such a sub-custodian (both
initially and on an ongoing basis) in the
87
exercise of reasonable care, prudence and diligence, PFPC Trust
shall have no responsibility relating to the insolvency of any
such sub-custodian.
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral Instructions
or Written Instructions and not otherwise, PFPC Trust shall:
(i) deliver any securities held for a Portfolio against the receipt
of payment for the sale of such securities or otherwise in
accordance with standard market practice;
(ii) execute and deliver to such persons as may be designated in
such Oral Instructions or Written Instructions, proxies,
consents, authorizations, and any other instruments whereby the
authority of a Portfolio as owner of any securities may be
exercised;
(iii) deliver any securities to the issuer thereof, or its agent, when
such securities are called, redeemed, retired or otherwise become
payable at the option of the holder; provided that, in any such
case, the cash or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any securities held for a Portfolio against receipt of
other securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(v) deliver any securities held for a Portfolio to any protective
committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(vi) make such transfer or exchanges of the assets of the Portfolios
and take such other steps as shall be stated in said Oral
Instructions or Written Instructions to be for the purpose of
effectuating a duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund;
(vii) release securities belonging to a Portfolio to any bank or trust
company for the purpose of a pledge or hypothecation to secure
any loan incurred by the Fund on behalf of that Portfolio;
provided, however, that securities shall be released only upon
payment to PFPC Trust of the monies borrowed, except that in
cases where additional collateral is required to secure a
borrowing already made subject to proper prior authorization,
further securities may be released for that purpose; and repay
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities owned by a Portfolio in connection
with any repurchase agreement entered into by the Fund on behalf
of that Portfolio, but only on receipt of payment therefor; and
pay out monies of the Fund in connection with such repurchase
agreements, but only upon the delivery of the securities;
(ix) release and deliver or exchange securities owned by the Fund in
connection with any conversion of such securities, pursuant to
their terms, into other securities;
88
(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 OR OTHER DEPOSITORY. PFPC Trust will deposit
in Book-Entry Systems and other depositories all securities belonging
to the Portfolios eligible for deposit therein and will utilize
Book-Entry Systems and other depositories to the extent possible in
connection with settlements of purchases and sales of securities by
the Portfolios, and deliveries and returns of securities loaned,
subject to repurchase agreements or used as collateral in connection
with borrowings. PFPC Trust shall continue to perform such duties
until it receives Written Instructions or Oral Instructions
authorizing contrary actions. Notwithstanding anything in this
Agreement to the contrary, PFPC Trust's use of a Book-Entry System
shall comply with the requirements of Rule 17f-4 under the 1940 Act.
PFPC Trust shall administer a Book-Entry System or other depository as
follows:
(i) With respect to securities of each Portfolio which are maintained
in a Book-Entry System or another depository, the records of PFPC
Trust shall identify by book-entry or otherwise those securities
as belonging to each Portfolio.
(ii) Assets of each Portfolio deposited in a Book-Entry System or
another depository will (to the extent consistent with applicable
law and standard practice) at all times be segregated from any
assets and cash controlled by PFPC Trust in other than a
fiduciary or custodian capacity but may be commingled with other
assets held in such capacities.
PFPC Trust will provide the Fund with such reports on its own system
of internal control as the Fund may reasonably request from time
to time.
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(f) REGISTRATION OF SECURITIES. All securities held for a Portfolio which
are issued or issuable only in bearer form, except such securities
maintained in the Book-Entry System or in another depository, shall be
held by PFPC Trust in bearer form; all other securities maintained for
a Portfolio may be registered in the name of the Fund on behalf of
that Portfolio, PFPC Trust, a Book-Entry System, another depository, a
sub-custodian, or any duly appointed nominee of the Fund, PFPC Trust,
Book-Entry System, depository or sub-custodian. The Fund reserves the
right to instruct PFPC Trust as to the method of registration and
safekeeping of the securities of the Fund. The Fund agrees to furnish
to PFPC Trust appropriate instruments to enable PFPC Trust to maintain
or deliver in proper form for transfer, or to register in the name of
its nominee or in the name of the Book-Entry System or in the name of
another appropriate entity, any securities which it may maintain for
the Accounts. With respect to uncertificated securities which are
registered in the name of the Fund or a Portfolio (or a nominee
thereof), PFPC Trust will reflect such securities on its records based
upon the holdings information provided to it by the issuer of such
securities, but notwithstanding anything in this Agreement to the
contrary PFPC Trust shall not be obligated to safekeep such securities
or to perform other duties with respect to such securities other than
to make payment for the purchase of such securities upon receipt of
Oral or Written Instructions, accept in sale proceeds received by PFPC
Trust upon the sale of such securities of which PFPC Trust is informed
pursuant to Oral or Written Instructions, and accept in other
distributions received by PFPC Trust with respect to such securities
or reflect on its records any reinvested distributions with respect to
such securities of which it is informed by the issuer of the
securities.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall vote
any of the securities held pursuant to this Agreement by or for the
account of a Portfolio, except in accordance with Written
Instructions. PFPC Trust, directly or through the use of another
entity, shall execute in blank and promptly deliver all notices,
proxies and proxy soliciting materials received by PFPC Trust as
90
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. Notwithstanding anything in
this Agreement requiring instructions in order to take a particular
action, in the absence of a contrary Written Instruction, PFPC Trust
is authorized to take the following actions without the need for
instructions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of each Portfolio, all
income, dividends, distributions, coupons, option premiums,
other payments and similar items, included or to be included
in the Property, and, in addition, promptly advise each
Portfolio of such receipt and credit such income to each
Portfolio's custodian account;
(B) endorse and deposit for collection, in the name of the Fund,
checks, drafts, or other orders for the payment of money;
(C) receive and hold for the account of each Portfolio all
securities received as a distribution on the Portfolio's
securities as a result of a stock dividend, share split-up
or reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar
securities issued with respect to any securities belonging
to a Portfolio and held by PFPC Trust hereunder;
(D) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed, retired
or otherwise become payable (on a mandatory basis) on the
date such securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such income
and other payments and the endorsement for collection of
checks, drafts, and other negotiable instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause to be delivered
Property against payment or other consideration or written
receipt therefor in the following cases:
(1) for examination by a broker or dealer selling for the
account of a Portfolio in accordance with street
delivery custom;
(2) for the exchange of interim receipts or temporary
securities for definitive securities; and
91
(3) for transfer of securities into the name of the Fund on
behalf of a Portfolio or PFPC Trust or a sub-custodian
or a nominee of one of the foregoing, or for exchange
of securities for a different number of bonds,
certificates, or other evidence, representing the same
aggregate face amount or number of units bearing the
same interest rate, maturity date and call provisions,
if any; provided that, in any such case, the new
securities are to be delivered to PFPC Trust.
(B) PFPC Trust shall:
(1) pay all income items held by it which call for payment
upon presentation and hold the cash received by it upon
such payment for the account of each Portfolio;
(2) collect interest and cash dividends received, with
notice to the Fund, to the account of each Portfolio;
(3) hold for the account of each Portfolio all stock
dividends, rights and similar securities issued with
respect to any securities held by PFPC Trust; and
(4) subject to receipt of such documentation and
information as PFPC Trust may request, execute as agent
on behalf of the Fund all necessary ownership
certificates required by a national governmental taxing
authority or under the laws of any U.S. state now or
hereafter in effect, inserting the Fund's name, on
behalf of a Portfolio, on such certificate as the owner
of the securities covered thereby, to the extent it may
lawfully do so.
(iii) OTHER MATTERS.
(A) subject to receipt of such documentation and information as
PFPC Trust may request, PFPC Trust will, in such
jurisdictions as PFPC Trust may agree from time to time,
seek to reclaim or obtain a reduction with respect to any
withholdings or other taxes relating to assets maintained
hereunder (provided that PFPC Trust will not be liable for
failure to obtain any particular relief in a particular
jurisdiction); and
(B) PFPC Trust is authorized to deduct or withhold any sum in
respect of tax which PFPC Trust considers is required to be
deducted or withheld "at source" by any relevant law or
practice.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or Oral
Instructions establish and maintain segregated accounts on its
records for and on behalf of each Portfolio. Such accounts may
be used to transfer cash and securities, including securities
in a Book-Entry System or other depository:
(A) for the purposes of compliance by the Fund with the
procedures required by a
92
securities or option exchange, providing such procedures
comply with the 1940 Act and any releases of the SEC
relating to the maintenance of segregated accounts by
registered investment companies; and
(B) upon receipt of Written Instructions, for other
purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX custodian
accounts for such shareholders holding Shares through XXX
accounts, in accordance with the Fund's prospectuses, the
Internal Revenue Code of 1986, as amended (including regulations
promulgated thereunder), and with such other procedures as are
mutually agreed upon from time to time by and among the Fund,
PFPC Trust and the Fund's transfer agent.
(j) PURCHASES OF SECURITIES. PFPC Trust shall settle purchased securities
upon receipt of Oral Instructions or Written Instructions that
specify:
(i) the name of the issuer and the title of the securities,
including CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through whom the
purchase was made. PFPC Trust shall upon receipt of securities
purchased by or for a Portfolio (or otherwise in accordance with
standard market practice) pay out of the monies held for the
account of the Portfolio the total amount payable to the person
from whom or the broker through whom the purchase was made,
provided that the same conforms to the total amount payable as
set forth in such Oral Instructions or Written Instructions.
(k) SALES OF SECURITIES. PFPC Trust shall settle sold securities upon
receipt of Oral
Instructions or Written Instructions that specify:
(i) the name of the issuer and the title of the security, including
CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
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(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 anything to
the contrary in this Agreement, PFPC Trust may accept payment in
such form as is consistent with standard industry practice and
may deliver assets and arrange for payment in accordance with
standard market practice.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the Fund the following reports:
(A) such periodic and special reports as the Fund may reasonably
request;
(B) a monthly statement summarizing all transactions and entries
for the account of each Portfolio, listing each portfolio
security belonging to each Portfolio (with the corresponding
security identification number) held at the end of such
month and stating the cash balance of each Portfolio at the
end of such month.
(C) the reports required to be furnished to the Fund pursuant to
Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time to
time between the Fund and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any proxy
statement, proxy material, notice of 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 person of such actions or events.
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(m) CREDITING OF ACCOUNTS. PFPC Trust may in its sole discretion credit an
Account with respect to income, dividends, distributions, coupons,
option premiums, other payments or similar items prior to PFPC Trust's
actual receipt thereof, and in addition PFPC Trust may in its sole
discretion credit or debit the assets in an Account on a contractual
settlement date with respect to any sale, exchange or purchase
applicable to the Account; provided that nothing herein or otherwise
shall require PFPC Trust to make any advances or to credit any amounts
until PFPC Trust's actual receipt thereof. If PFPC Trust credits an
Account with respect to (a) income, dividends, distributions, coupons,
option premiums, other payments or similar items on a contractual
payment date or otherwise in advance of PFPC Trust's actual receipt of
the amount due, (b) the proceeds of any sale or other disposition of
assets on the contractual settlement date or otherwise in advance of
PFPC Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is subsequently
unable to collect full and final payment for the amounts so credited
within a reasonable time period using reasonable efforts or (ii)
pursuant to standard industry practice, law or regulation PFPC Trust
is required to repay to a third party such amounts so credited, or if
any Property has been incorrectly credited, PFPC Trust shall have the
absolute right in its sole discretion without demand to reverse any
such credit or payment, to debit or deduct the amount of such credit
or payment from the Account, and to otherwise pursue recovery of any
such amounts so credited from the Fund. The Fund hereby grants to PFPC
Trust and to each sub-custodian utilized by PFPC Trust in connection
with providing services to the Fund a first priority contractual
possessory security interest in and a right of setoff against the
assets maintained in an Account hereunder in the amount necessary to
secure the return and payment to PFPC Trust and to each such
sub-custodian of any advance or credit made by PFPC Trust and/or by
such sub-custodian (including charges related thereto) to such
Account. Notwithstanding anything in this Agreement to the contrary,
PFPC Trust shall be entitled to assign any rights it has under this
sub-section (m) to any sub-custodian utilized by PFPC Trust in
connection with providing services to the Fund which sub-custodian
makes any credits or advances with respect to the Fund.
(n) COLLECTIONS. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PFPC Trust) shall be at the sole risk of the
Fund. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Fund in writing, including copies of all demand letters, any written
responses and memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to take
legal action for collection unless and until reasonably indemnified to
its satisfaction. PFPC Trust shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Fund with periodic
status reports of such income collected after a reasonable time.
(o) EXCESS CASH SWEEP. PFPC Trust will, consistent with applicable law,
sweep any net excess cash balances daily into an investment vehicle or
other instrument designated in writing by the Fund, so long
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as the investment vehicle or instrument is acceptable to PFPC Trust,
subject to a fee, paid to PFPC Trust for such service, to be agreed
between the parties. Such investment vehicle or instrument may be
offered by an affiliate of PFPC Trust or by a PFPC Trust client and
PFPC Trust may receive compensation therefrom.
(p) FOREIGN EXCHANGE. PFPC Trust and/or sub-custodians may enter into or
arrange foreign exchange transactions (at such rates as they may
consider appropriate) in order to facilitate transactions under this
Agreement, and such entities and/or their affiliates may receive
compensation in connection with such foreign exchange transactions.
PFPC Trust will not have responsibility for an entity (including a
sub-custodian) which the Fund instructs it to use in connection with a
foreign exchange transaction.
15. DURATION AND TERMINATION.
(a) This Agreement shall be effective on the date first written above and
shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to Section 15(c) or 15(d) of this
Agreement. After the Initial Term, this Agreement shall automatically
be renewed for successive terms of three (3) years ("Renewal Terms")
each, unless notice is provided pursuant to Section 15(b) of this
Agreement or unless earlier terminated pursuant to Section 15(c) or
15(d) of this Agreement.
(b) Either party may terminate this Agreement at the end of the Initial
Term or at the end of any subsequent Renewal Term upon not than less
than ninety (90) days or more than one hundred-eighty (180) days prior
written notice to the other party.
(c) If a party hereto is guilty of a material failure to perform its
duties and obligations under this Agreement or under any other
custodian services agreement between PFPC Trust and a registered
investment company for which Sit Investment Associates, Inc. (or a
successor thereto) serves as the investment adviser which other
agreement provides for the same or substantially similar services as
this Agreement (a "Defaulting Party"), which material failure results
in a material loss to the other party (i.e., either PFPC Trust on one
hand, or the Fund or such other registered investment company on the
other hand), such 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
96
after such written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written notice of
such termination to the Defaulting Party. In all cases, termination by
the Non-Defaulting Party shall not constitute a waiver by the
Non-Defaulting Party of any other rights it might have under this
Agreement or otherwise against the Defaulting Party.
(d) Notwithstanding anything contained in the foregoing provisions of this
Section 15 to the contrary, the Fund may terminate this Agreement for
any reason, or no reason, upon ninety (90) days written notice to PFPC
Trust.
(e) In the event of any termination of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term (including
termination pursuant to Section 15(d) of this Agreement prior to the
expiration of the then current Initial Term or Renewal Term but not
including termination pursuant to Section 15(c) of this Agreement),
the Fund shall immediately pay to PFPC Trust the amount of $1,000.
(f) 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, having aggregate
capital, surplus and undivided profits, as shown by its last published
report, of not less than twenty million dollars ($20,000,000), as a
custodian for the Fund to be held under terms similar to those of this
Agreement. PFPC Trust shall not be required to make any delivery or
payment of assets upon termination until full payment shall have been
made to PFPC Trust of all of its fees, compensation, costs, expenses
and other amounts owing to it under Section 15 of this Agreement
(including without limitation fees and expenses associated with
deconversion or conversion to another service provider and other
trailing expenses incurred by PFPC Trust). PFPC Trust shall have a
first priority contractual possessory security interest in and shall
have a right of setoff against the Property as
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security for the payment of such fees, compensation, costs, expenses
and other amounts owing to it under Section 15 of this Agreement.
16. NOTICES. Notices shall be addressed (a) if to PFPC Trust at 0000 Xxxxxxx
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxx
Xxxxxxxx; (b) if to the Fund, at 3300 IDS Center, 00 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: President; or (c) if to
neither of the foregoing, at such other address as shall have been given by
like notice to the sender of any such notice or other communication by the
other party. If notice is sent by confirming electronic delivery, hand or
facsimile sending device, it shall be deemed to have been given
immediately. If notice is sent by first-class mail, it shall be deemed to
have been given five days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day it is
delivered.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. ASSIGNMENT. PFPC Trust may assign this Agreement to any affiliate of PFPC
Trust or of The PNC Financial Services Group, Inc., provided that PFPC
Trust gives the Fund 30 days' prior written notice of such assignment.
19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
20. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties.
(b) NO REPRESENTATIONS OR WARRANTIES. Except as expressly provided in this
Agreement, PFPC Trust hereby disclaims all representations and
warranties, express or implied, made to the Fund or any
98
other person, including, without limitation, any warranties regarding
quality, suitability, merchantability, fitness for a particular
purpose or otherwise (irrespective of any course of dealing, custom or
usage of trade), of any services or any goods provided incidental to
services provided under this Agreement. PFPC Trust disclaims any
warranty of title or non-infringement except as otherwise set forth in
this Agreement.
(c) NO CHANGES THAT MATERIALLY AFFECT OBLIGATIONS. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees not to
make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of PFPC Trust hereunder without the prior written
approval of PFPC Trust, which approval shall not be unreasonably
withheld or delayed.
(d) CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(e) INFORMATION. The Fund will provide such information and documentation
as PFPC Trust may reasonably request in connection with services
provided by PFPC Trust to the Fund.
(f) GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(g) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(i) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(j) CUSTOMER IDENTIFICATION PROGRAM NOTICE. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify,
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and record certain information that identifies each person who
initially opens an account with that financial institution on or after
October 1, 2003. Consistent with this requirement, PFPC Trust may
request (or may have already requested) the Fund's name, address and
taxpayer identification number or other government-issued
identification number, and, if such party is a natural person, that
party's date of birth. PFPC Trust may also ask (and may have already
asked) for additional identifying information, and PFPC Trust may take
steps (and may have already taken steps) to verify the authenticity
and accuracy of these data elements.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx, XX
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Title: Vice President
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SIT MUTUAL FUNDS TRUST
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Title: Vice President
-------------------------------------
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