Exhibit 23(g)(ii)
SUB-CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of February 2, 1998 among PNC BANK, NATIONAL
ASSOCIATION, a national banking association ("PNC Bank"), WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as custodian ("Custodian"), XXXXXX
SQUARE MANAGEMENT CORPORATION, a Delaware corporation ("RSMC") and THE XXXXXX
SQUARE TAX-EXEMPT FUND, a Massachusetts business 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");
WHEREAS, Custodian serves as custodian for the Fund pursuant to a
custody agreement with the Fund; and
WHEREAS, Custodian, with the consent of the Fund, wishes to retain PNC
Bank to provide sub-custodian services, and PNC Bank wishes to furnish
sub-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, the
Custodian and any
other person duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PNC Bank. An Authorized Person's scope
of authority may be limited by the Fund by setting forth such limitation in the
Authorized Persons Appendix.
(d) "BOOK-ENTRY SYSTEM" means 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 maintained
by an exchange 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
PNC Bank from an Authorized Person or from a person reasonably believed by PNC
Bank to be an Authorized Person.
(g) "PNC BANK" means PNC Bank, National Association or a
subsidiary or affiliate of PNC Bank, National Association.
(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 PNC
Bank or which PNC Bank may from time to
time hold for the Fund;
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(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
PNC Bank from time to time, from or on
behalf of the Fund.
(l) "WRITTEN INSTRUCTIONS" mean written instructions
signed by one Authorized Person and received by PNC Bank. The instructions may
be delivered by hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. APPOINTMENT. Custodian, with the consent of the Fund, hereby
appoints PNC Bank to provide sub-custodian services to the Fund, on behalf of
each of its investment portfolios (each, a "Portfolio"), and PNC Bank accepts
such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where
applicable, will provide PNC Bank with the following:
(a) certified or authenticated copies of the resolutions of
the Fund's Board of Trustees, approving the appointment
of PNC Bank or its affiliates to provide services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution agreement with respect to
each class of Shares;
(e) a copy of each Portfolio's administration agreement if
PNC Bank is not providing the Portfolio with such
services;
(f) copies of any shareholder servicing agreements made in
respect of the Fund
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or a Portfolio; and
(g) certified or authenticated copies of any and all
amendments or supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
PNC Bank undertakes to comply with all applicable
requirements of the Securities Laws and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by PNC Bank hereunder. Except as specifically set forth herein, PNC
Bank assumes no responsibility for such compliance by the Fund or any Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PNC Bank
shall act only upon Oral Instructions and Written Instructions.
(b) PNC Bank shall be entitled to rely upon any Oral
Instructions and Written Instructions it receives from an Authorized Person (or
from a person reasonably believed by PNC Bank to be an Authorized Person)
pursuant to this Agreement. PNC Bank 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 PNC Bank receives Written Instructions to the contrary.
(c) Custodian and the Fund, as applicable, agree to forward
to PNC Bank Written Instructions confirming Oral Instructions (except where such
Oral Instructions are given by PNC Bank or its affiliates) so that PNC Bank
receives the Written Instructions by the close of business
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on the same day that such Oral Instructions are received. The fact that such
confirming Written Instructions are not received by PNC Bank shall in no way
invalidate the transactions or enforceability of the transactions authorized by
the Oral Instructions. Where Oral Instructions or Written Instructions
reasonably appear to have been received from an Authorized Person, PNC Bank
shall incur no liability to the Fund in acting upon such Oral Instructions or
Written Instructions provided that PNC Bank's actions comply with the other
provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PNC Bank is in doubt as to any
action it should or should not take, PNC Bank may request directions or advice,
including Oral Instructions or Written Instructions, from Custodian or the Fund,
as applicable.
(b) ADVICE OF COUNSEL. If PNC Bank shall be in doubt as to
any question of law pertaining to any action it should or should not take, PNC
Bank may request advice at its own cost from such counsel of its own choosing
(who may be counsel for Custodian, the Fund, the Fund's investment adviser or
PNC Bank, at the option of PNC Bank).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral Instructions or Written Instructions PNC Bank
receives and the advice it receives from counsel, PNC Bank shall be entitled to
rely upon and, after notice to Custodian and the Fund, to follow the advice of
counsel. In the event PNC Bank so relies on the advice of counsel, PNC Bank
remains liable for any action or omission on the part of PNC Bank which
constitutes willful misfeasance, bad faith, negligence or reckless disregard by
PNC Bank of any duties, obligations or responsibilities set forth in this
Agreement.
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(d) PROTECTION OF PNC BANK. PNC Bank shall be protected in
any action it takes or does not take in reliance upon Oral Instructions or
Written Instructions it receives from the Fund, or directions or advice from
counsel and which PNC Bank believes, in good faith, to be consistent with those
directions, advice or Oral Instructions or Written Instructions. Nothing in this
section shall be construed so as to impose an obligation upon PNC Bank (i) to
seek such directions, advice or Oral Instructions or Written Instructions, or
(ii) to act in accordance with such directions, advice or Oral Instructions or
Written Instructions unless, under the terms of other provisions of this
Agreement, the same is a condition of PNC Bank's properly taking or not taking
such action. Nothing in this subsection shall excuse PNC Bank when an action or
omission on the part of PNC Bank constitutes willful misfeasance, bad faith,
negligence or reckless disregard by PNC Bank of any duties, obligations or
responsibilities set forth in this Agreement.
7. RECORDS; VISITS. The books and records pertaining to
Custodian, the Fund and any Portfolio, which are in the possession or under the
control of PNC Bank, shall be the property of Custodian and 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. Custodian, the Fund and
Authorized Persons shall have access to such books and records at all times
during PNC Bank's normal business hours. Upon the reasonable request of
Custodian or the Fund, copies of any such books and records shall be provided by
PNC Bank to Custodian, the Fund or to an authorized representative of either, at
the Fund's expense.
8. CONFIDENTIALITY. PNC Bank agrees to keep confidential all
records of Custodian, the Fund and information relating to Custodian, the Fund
and its shareholders, unless the release of such
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records or information is otherwise consented to, in writing, by Custodian or
the Fund, as the case may be. Custodian and the Fund agree that such consent
shall not be unreasonably withheld and may not be withheld where PNC Bank may be
exposed to civil or criminal contempt proceedings or when required to divulge
such information or records to duly constituted authorities, unless PNC Bank is
indemnified by Custodian or the Fund, as the case may be.
9. COOPERATION WITH ACCOUNTANTS. PNC Bank shall cooperate with
Custodian's and the Fund's independent public accountants and shall take all
reasonable action in the performance of its obligations under this Agreement to
ensure that the necessary information is made available to such accountants for
the expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PNC Bank 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, PNC Bank shall, at no additional expense to the Fund, take reasonable
steps to minimize service interruptions. PNC Bank shall have no liability with
respect to the loss of data or service interruptions caused by equipment failure
provided such loss or interruption is not caused by PNC Bank's own willful
misfeasance, bad faith, negligence or reckless disregard of its duties or
obligations under this Agreement.
11. COMPENSATION. As compensation for sub-custody services
rendered by PNC Bank during the term of this Agreement, RSMC, on behalf of the
Fund and each of the Portfolios, will pay to PNC Bank a fee or fees as may be
agreed to in writing from time to time by RSMC, the Fund and PNC Bank.
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12. INDEMNIFICATION. The Fund and Custodian, on behalf of each
Portfolio, agree to indemnify and hold harmless PNC Bank and its affiliates from
all taxes, charges, expenses, assessments, claims and liabilities (including,
without limitation, liabilities arising under the Securities Laws and any state
and foreign securities and blue sky laws, and amendments thereto, and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or omission to act which PNC Bank takes
(i) at the request or on the direction of or in reliance on the advice of the
Fund or Custodian or (ii) upon Oral Instructions or Written Instructions. The
Custodian's indemnification of PNC Bank is subject to the Fund's indemnification
of Custodian. Neither PNC Bank, nor any of its affiliates, shall be indemnified
against any liability (or any expenses incident to such liability) arising out
of PNC Bank's or its affiliates' own willful misfeasance, bad faith, negligence
or reckless disregard of its duties under this Agreement.
13. RESPONSIBILITY OF PNC BANK.
(a) PNC Bank shall be under no duty to take any action on
behalf of Custodian, or the Fund or any Portfolio except as specifically set
forth herein or as may be specifically agreed to by PNC Bank in writing. PNC
Bank shall be obligated to exercise care and diligence in the performance of its
duties hereunder, to act in good faith and to use its best efforts, within
reasonable limits, in performing services provided for under this Agreement. PNC
Bank shall be liable for any damages arising out of PNC Bank's failure to
perform its duties under this Agreement to the extent such damages arise out of
PNC Bank's willful misfeasance, bad faith, negligence or reckless disregard of
its duties under this Agreement.
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(b) Without limiting the generality of the foregoing or of
any other provision of this Agreement, (i) PNC Bank shall not be under any duty
or obligation to inquire into and shall not be liable for (A) the validity or
invalidity or authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which PNC Bank reasonably believes to be
genuine; or (B) subject to section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PNC Bank's control, including acts
of civil or military authority, national emergencies, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
(c) Notwithstanding anything in this Agreement to the
contrary, neither PNC Bank nor its affiliates shall be liable to Custodian, or
the Fund or to any Portfolio for any consequential, special or indirect losses
or damages which Custodian or the Fund may incur or suffer by or as a
consequence of PNC Bank's or its affiliates' performance of the services
provided hereunder, whether or not the likelihood of such losses or damages was
known by PNC Bank or its affiliates.
(d) Notwithstanding anything to the contrary contained
herein, PNC Bank on behalf of itself and any and all of its affiliates or
assignees hereunder, agrees to indemnify and hold harmless Custodian and its
directors, officers and employees from and against any and all damages, losses,
costs, taxes, charges, expenses, assessments, claims and liabilities, including,
without limitation, attorneys' fees and disbursements (collectively, "Losses"),
arising directly from any action or omission to act by PNC Bank or any of its
affiliates or assignees, as applicable, relating to this Agreement, including
Losses arising out of any threatened, pending or completed claim, action, suit
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or proceeding, whether civil, criminal, administrative or investigative, except
to the extent such Losses were caused directly by the willful misfeasance, bad
faith, negligence or reckless disregard by Custodian of its duties under this
Agreement.
14. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. Custodian, for the account of
the Fund, will deliver or arrange for delivery to PNC Bank, all the Property
owned by the Portfolios, including cash received as a result of the distribution
of Shares, during the period that is set forth in this Agreement. PNC Bank will
not be responsible for such property until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PNC Bank, acting upon
Written Instructions, shall open and maintain separate accounts in Custodian's
name for the benefit of the Fund using all cash received from or for the account
of the Fund, subject to the terms of this Agreement. In addition, upon Written
Instructions, PNC Bank shall open separate custodial accounts for each separate
series or Portfolio of the Fund (collectively, the "Accounts") and shall hold in
the Accounts all cash received from or for the Accounts of the Fund specifically
designated to each separate series or Portfolio.
PNC Bank shall make cash payments from or for the Accounts of a
Portfolio only for:
(i) purchases of securities in the name of a
Portfolio or PNC Bank or PNC Bank's nominee
as provided in sub-section (j) and for
which PNC Bank 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 PNC Bank;
(iii) payment of, subject to Written
Instructions, interest, taxes,
administration, accounting, distribution,
advisory, management fees or similar
expenses
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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, 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,
PNC Bank 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, PNC Bank 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 PNC Bank;
(vi) payments of the amounts of dividends
received with respect to securities sold
short;
(vii) payments made to a sub-custodian pursuant
to provisions in sub-section (c) of this
Section; and
(viii) payments, upon Written Instructions, made
for other proper Fund purposes.
PNC Bank 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; SUB-CUSTODIANS.
(i) PNC Bank shall hold all securities received
by it for the Accounts in a separate
account that physically segregates such
securities from those of any other persons,
firms or corporations, except for
securities held in a Book-Entry System. All
such securities shall be held or disposed
of only upon Written Instructions of the
Fund pursuant to the terms of this
Agreement. PNC Bank 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 and upon Written
Instructions, accompanied by a certified
resolution of the Fund's Board of Trustees,
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.
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At PNC Bank's own expense and for its own
convenience, PNC Bank may enter into
sub-custodian agreements with other United
States banks or trust companies to perform
duties described in this sub-section (c).
Such bank or trust company shall have an
aggregate capital, surplus and undivided
profits, according to its last published
report, of at least one million dollars
($1,000,000), if it is a subsidiary or
affiliate of PNC Bank, or at least twenty
million dollars ($20,000,000) if such bank
or trust company is not a subsidiary or
affiliate of PNC Bank. In addition, such
bank or trust company must be qualified to
act as custodian and agree to comply with
the relevant provisions of the 1940 Act and
other applicable rules and regulations. Any
such arrangement will not be entered into
without prior written notice to the Fund.
PNC Bank shall remain responsible for the
performance of all of its duties as
described in this Agreement and shall hold
the Fund and each Portfolio harmless from
its own acts or omissions, under the
standards of care provided for herein, or
the acts and omissions of any sub-custodian
chosen by PNC Bank under the terms of this
sub-section (c).
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of
Oral Instructions or Written Instructions and not otherwise, PNC Bank, directly
or through the use of the Book-Entry System, shall:
(i) deliver any securities held for a Portfolio
against the receipt of payment for the sale
of such securities;
(ii) execute and deliver to such persons as may
be designated in such Oral Instructions or
Written Instructions, proxies, consents,
authorizations, and any other instruments
whereby the authority of a Portfolio as
owner of any securities may be exercised;
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(iii) deliver any securities to the issuer
thereof, or its agent, when such securities
are called, redeemed, retired or otherwise
become payable; provided that, in any such
case, the cash or other consideration is to
be delivered to PNC Bank;
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(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
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 PNC Bank of the monies
borrowed, except that in cases where
additional collateral is required to secure
a borrowing already made subject to proper
prior authorization, further securities may
be released for that purpose; and repay
such loan upon redelivery to it of the
securities pledged or hypothecated therefor
and upon surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities owned by a
Portfolio in connection with any repurchase
agreement entered into on behalf of the
Fund, but only on receipt of payment
therefor; and pay out moneys of the Fund in
connection with such repurchase agreements,
but only upon the delivery of the
securities;
(ix) release and deliver or exchange securities
owned by the Fund in connection with any
conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities owned by the
Fund for the purpose of redeeming in kind
shares of the Fund upon delivery thereof to
PNC Bank; and
(xi) release and deliver or exchange securities
owned by the Fund for other
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corporate purposes.
PNC Bank 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 (xi).
(e) USE OF BOOK-ENTRY SYSTEM. The Fund shall deliver to PNC
Bank certified resolutions of the Fund's Board of Trustees approving,
authorizing and instructing PNC Bank on a continuous basis, to deposit in the
Book-Entry System all securities belonging to the Portfolios eligible for
deposit therein and to utilize the Book-Entry System to the extent possible in
connection with settlements of purchases and sales of securities by the
Portfolios, and deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with borrowings. PNC
Bank shall continue to perform such duties until it receives Written
Instructions or Oral Instructions authorizing contrary actions.
PNC Bank shall administer the Book-Entry System as follows:
(i) With respect to securities of each
Portfolio which are maintained in the
Book-Entry System, the records of PNC Bank
shall identify by Book-Entry or otherwise
those securities belonging to each
Portfolio. PNC Bank shall furnish to the
Fund a detailed statement of the Property
held for each Portfolio under this
Agreement at least monthly and from time to
time and upon written request.
(ii) Securities and any cash of each Portfolio
deposited in the Book-Entry System will at
all times be segregated from any assets and
cash controlled by PNC Bank in other than a
fiduciary or custodian capacity but may be
commingled with other assets held in such
capacities. PNC Bank and its sub-custodian,
if any, will pay out money only upon
receipt of securities and will deliver
securities only upon the receipt of money.
(iii) All books and records maintained by PNC
Bank which relate to the Fund's
participation in the Book-Entry System will
at all times during PNC Bank's regular
business hours be open to the inspection of
Authorized Persons, and
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PNC Bank will furnish to Custodian and the
Fund all information in respect of the
services rendered as it may require.
PNC Bank will also provide Custodian and 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 held in the Book-Entry System, shall be held by PNC Bank in bearer
form; all other securities held for a Portfolio may be registered in the name of
the Fund on behalf of that Portfolio, PNC Bank, the Book-Entry System, a
sub-custodian, or any duly appointed nominees of the Fund, PNC Bank, Book-Entry
System or sub-custodian. The Fund reserves the right to instruct PNC Bank as to
the method of registration and safekeeping of the securities of the Fund. The
Fund agrees to furnish to PNC Bank appropriate instruments to enable PNC Bank to
hold or deliver in proper form for transfer, or to register in the name of its
nominee or in the name of the Book-Entry System, any securities which it may
hold for the Accounts and which may from time to time be registered in the name
of the Fund on behalf of a Portfolio.
(g) VOTING AND OTHER ACTION. Neither PNC Bank 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.
PNC Bank, directly or through the use of the Book-Entry System, shall execute in
blank and promptly deliver all notices, proxies and proxy soliciting materials
to the registered holder of such securities. If the registered holder is not the
Fund on behalf of a Portfolio, then PNC Bank shall deliver such materials timely
to the applicable investment
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adviser for the Portfolio or such other party as may be identified for such
purpose in Written Instructions.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence
of contrary Written Instructions, PNC Bank is authorized to take the following
actions:
(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, as collected, to each
Portfolio's custodian account;
(B) endorse and deposit for collection,
in the name of the Fund, checks,
drafts, or other orders for the
payment of money;
(C) receive and hold for the account of
each Portfolio all securities
received as a distribution on the
Portfolio's securities as a result
of a stock dividend, share split-up
or reorganization, recapitalization,
readjustment or other rearrangement
or distribution of rights or similar
securities issued with respect to
any securities belonging to a
Portfolio and held by PNC Bank
hereunder;
(D) present for payment and collect the
amount payable upon all securities
which may mature or be called,
redeemed, or retired, or otherwise
become payable on the date such
securities become payable; and
(E) take any action which may be
necessary and proper in connection
with the collection and receipt of
such income and other payments and
the endorsement for collection of
checks, drafts, and other negotiable
instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) deliver or cause to be delivered
Property against payment or
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other consideration or written
receipt therefor in the following
cases:
(1) for examination by a broker or
dealer selling for the account
of a Portfolio in accordance
with street delivery custom;
(2) for the exchange of interim
receipts or temporary
securities for definitive
securities; and
(3) for transfer of securities into
the name of the Fund on behalf
of a Portfolio or PNC Bank or
nominee of either, 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 PNC Bank.
(B) Unless and until PNC Bank receives
Oral Instructions or Written
Instructions to the contrary, PNC
Bank 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 PNC Bank;
and
(4) execute as agent on behalf of
the Fund all necessary
ownership certificates required
by the Internal Revenue Code or
the Income Tax Regulations of
the United States Treasury
Department or under the laws of
any state now or hereafter in
effect, inserting the Fund's
name, on behalf of a Portfolio,
on such certificate as the
owner of the securities covered
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thereby, to the extent it may
lawfully do so.
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(i) SEGREGATED ACCOUNTS.
(i) PNC Bank shall upon receipt of Written
Instructions or Oral Instructions establish
and maintain segregated accounts on its
records for and on behalf of each
Portfolio. Such accounts may be used to
transfer cash and securities, including
securities in the Book-Entry System:
(A) for the purposes of compliance by
the Fund with the procedures
required by a securities or option
exchange, providing such procedures
comply with the 1940 Act and any
releases of the SEC relating to the
maintenance of segregated accounts
by registered investment companies;
and
(B) upon receipt of Written
Instructions, for other proper
corporate purposes.
(ii) PNC Bank 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
Custodian, the Fund, PNC Bank and the
Fund's transfer agent.
(j) PURCHASES OF SECURITIES. PNC Bank shall settle purchased
securities upon receipt of Oral Instructions or Written Instructions on behalf
of the Fund or its investment advisers 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;
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(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.
PNC Bank shall upon receipt of securities
purchased by or for a Portfolio pay out of
the moneys held for the account of the
Portfolio the total amount payable to the
person from whom or the broker through whom
the purchase was made, provided that the
same conforms to the total amount payable
as set forth in such Oral Instructions or
Written Instructions.
(k) SALES OF SECURITIES. PNC Bank shall settle sold
securities upon receipt of Oral Instructions or Written Instructions on behalf
of the Fund 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;
and
(viii) the Portfolio involved.
PNC Bank 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.
Subject to the foregoing, PNC Bank may accept payment in such form as shall be
reasonably satisfactory to it, and may deliver securities and arrange for
21
payment in accordance with the customs prevailing among dealers in securities.
(l) REPORTS; PROXY MATERIALS.
(i) PNC Bank shall furnish to Custodian and the
Fund the following reports:
(A) such periodic and special reports as
Custodian and/or the Fund may
reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the
account of each Portfolio, listing
each Portfolio securities belonging
to each Portfolio with the adjusted
average cost of each issue and the
market value at the end of such
month and stating the cash account
of each Portfolio including
disbursements;
(C) the reports required to be furnished
to the Fund pursuant to Rule 17f-4;
and
(D) such other information as may be
agreed upon from time to time
between Custodian and/or the Fund
and PNC Bank.
(ii) PNC Bank shall transmit promptly to the
Fund any proxy statement, proxy material,
notice of a call or conversion or similar
communication received by it as
sub-custodian of the Property and PNC Bank
shall use its best efforts, within
reasonable limits, to transmit promptly to
the Fund any class action notices and
tender or exchange offers. PNC Bank shall
be under no other obligation to inform the
Fund as to such actions or events.
(m) 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 PNC Bank) shall be at the sole risk of the
Fund. If payment is not received by PNC Bank within a reasonable time
22
after proper demands have been made, PNC Bank shall notify the Fund in writing,
including copies of all demand letters, any written responses, memoranda of all
oral responses and shall await instructions from the Fund. PNC Bank shall not be
obliged to take legal action for collection unless and until reasonably
indemnified to its satisfaction. PNC Bank 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.
15. DURATION AND TERMINATION. This Agreement shall be effective
on the date first written above and shall continue for a period of five (5)
years (the "Initial Term"). Upon the expiration of the Initial Term, this
Agreement shall automatically renew for successive terms of one (1) year
("Renewal Terms") each provided that it may be terminated by the Fund, Custodian
or PFPC without penalty during a Renewal Term upon written notice given at least
sixty (60) days prior to termination. During either the Initial Term or the
Renewal Terms, this Agreement may also be terminated on an earlier date by the
Fund, Custodian or PFPC for cause.
With respect to the Fund, cause shall mean PFPC's material breach of
this Agreement causing it to fail to substantially perform its duties under this
Agreement. In order for such material breach to constitute "cause" under this
Paragraph, PFPC must receive written notice from the Fund specifying the
material breach and PFPC shall not have corrected such breach within a 30-day
period. Custodian may terminate this Agreement for cause immediately in the
event of the appointment of a conservator or receiver for PNC Bank or any
assignee or successor hereunder by the applicable regulator or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction. With respect to PFPC, cause includes, but is
23
not limited to, the failure of RSMC, on behalf of the Fund and each of the
Portfolios, to pay the compensation set forth in writing pursuant to Paragraph
11 of this Agreement after it has received written notice from PFPC specifying
the amount due and RSMC shall not have paid that amount within a 30-day period.
A constructive termination of this Agreement will result where a substantial
percentage of the Fund's assets are transferred, merged or are otherwise removed
from the Fund to another fund(s) that is not serviced by PFPC.
Any notice of termination for cause shall be effective sixty (60) days
from the date of any such notice. Upon the termination hereof, RSMC shall pay to
PFPC such compensation as may be due for the period prior to the date of such
termination. Any termination effected shall not affect the rights and
obligations of the parties under Paragraphs 12 and 13 hereof.
In the event this Agreement is terminated (pending appointment of a
successor to PNC Bank or vote of the shareholders of the Fund to dissolve or to
function without a custodian of its cash, securities or other property), PNC
Bank shall not deliver cash, securities or other property of the Portfolios to
the Fund. If a successor to PNC Bank is not appointed by Custodian or the Fund
within such sixty (60) day period, PNC Bank may deliver them to a bank or trust
company of PNC Bank's choice, having an aggregate capital, surplus and undivided
profits, as shown by its last published report, of not less than twenty million
dollars ($20,000,000), as a custodian for the Fund to be held under the terms of
this Agreement. PNC Bank shall not be required to make any such delivery or
payment until full payment shall have been made to PNC Bank of all of its fees,
compensation, costs and expenses. PNC Bank shall have a security interest in and
shall have a right of setoff against the Property as security for the payment of
such fees, compensation, costs and expenses.
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16. NOTICES. All notices and other communications, including
Written Instructions, shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notice shall be addressed (a) if to PNC Bank
at Airport Business Center, International Court 2, 000 Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxx 00000, marked for the attention of the Custodian Services
Department (or its successor) (b) if to Custodian, 0000 Xxxxx Xxxxxx Xx.,
Xxxxxxxxxx, DE., Attn: Corporate Custody (c) if to the Fund, c/o Wilmington
Trust Company, 0000 Xxxxx Xxxxxx Xx., Xxxxxxxxxx, DE., Attn: Asset Management
Department; or (d) if to none of the foregoing, at such other address as shall
have been given by like notice to the sender of any such notice or other
communication by the other party. If notice is sent by confirming telegram,
cable, telex or facsimile sending device, it shall be deemed to have been given
immediately. If notice is sent by first-class mail, it shall be deemed to have
been given five days after it has been mailed. If notice is sent by messenger,
it shall be deemed to have been given on the day it is delivered.
17. AMENDMENTS. This Agreement, or any term hereof, may be
changed or waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
18. DELEGATION; ASSIGNMENT. Subject to the provision of Section
14(c) hereof, PNC Bank may assign its rights and delegate its duties hereunder
to any wholly-owned direct or indirect subsidiary of PNC Bank, National
Association or PNC Bank Corp., provided that (i) PNC Bank gives the Fund thirty
(30) days' prior written notice; (ii) the delegate (or assignee) agrees with PNC
Bank and the Fund to comply with all relevant provisions of the 1940 Act; and
(iii) PNC Bank and such delegate (or assignee) promptly provide such information
as the Fund may request, and respond
25
to such questions as the Fund may ask, relative to the delegation (or
assignment), including (without limitation) the capabilities of the delegate (or
assignee).
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. FURTHER ACTIONS. Each party agrees to perform such further
acts and execute such further documents as are necessary to effectuate the
purposes hereof.
21. 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 and Oral Instructions.
(b) 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.
(c) 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.
(d) 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.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall
26
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any
party to this Agreement shall constitute the valid and binding execution hereof
by such party.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By:_________________________
Title:______________________
WILMINGTON TRUST COMPANY
By:_________________________
Title:______________________
XXXXXX SQUARE MANAGEMENT CORPORATION
By:_________________________
Title:______________________
ACKNOWLEDGED
AND AGREED TO:
THE XXXXXX SQUARE TAX-EXEMPT FUND
By:_____________________
Title:__________________
28
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
_________________ _________________
_________________ _________________
_________________ _________________
_________________ _________________
_________________ _________________
_________________ _________________
29
