Exhibit (g)(13)
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of November 1, 2002 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and THE GALAXY 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");
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" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or
not such person is an officer or employee of the Fund, duly
authorized to give Oral Instructions or Written Instructions
on behalf of the Fund as indicated in writing to PFPC Trust
from time to time.
(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 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 instructions, other than Written
Instructions, actually received by PFPC Trust from an
Authorized Person or from a person reasonably believed by PFPC
Trust to be an Authorized Person.
(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
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delivered electronically or by hand, mail or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund, on behalf of each of its investment portfolios
(each, a "Portfolio") identified in the attached Exhibit 1, and PFPC
Trust accepts such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC Trust with the following:
(a) at PFPC Trust's request, certified or authenticated copies of
the resolutions of the Fund's Board of Trustees approving the
appointment of PFPC Trust or its affiliates to provide
services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of each Portfolio's advisory agreement;
(d) a copy of the distribution agreement with respect to each
class of Shares;
(e) a copy of each Portfolio's administration agreement;
(f) copies of any distribution and/or shareholder servicing plans
and related agreements made in respect of the Fund or a
Portfolio; and
(g) certified or authenticated copies of any and all addenda,
amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS.
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.
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5. 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
Instructions or Written Instructions it receives from an
Authorized Person (or from a person reasonably believed by
PFPC Trust to be an Authorized Person) pursuant to this
Agreement. PFPC Trust may assume that any Oral Instructions or
Written Instructions received hereunder are not in any way
inconsistent with the provisions of organizational documents
of the Fund or of any vote, resolution or proceeding of the
Fund's Board of Trustees or of the Fund's shareholders, unless
and until PFPC Trust receives Written Instructions to the
contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions (except where such Oral
Instructions are given by PFPC Trust or its affiliates) so
that PFPC Trust receives the Written Instructions by the close
of business on the same day that such Oral Instructions are
received. The fact that such confirming Written Instructions
are not received by PFPC Trust or differ from the Oral
Instructions shall in no way invalidate the transactions or
enforceability of the transactions authorized by the Oral
Instructions or PFPC Trust's ability to rely upon such Oral
Instructions.
6. 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.
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(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any
question of law pertaining to any action it should or should
not take, PFPC Trust may request advice from counsel of its
own choosing (who may be counsel for the Fund, the Fund's
investment adviser or PFPC Trust, at the option of PFPC
Trust).
(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 protected in any
action PFPC Trust takes or does not take in reliance upon
directions or advice or Oral Instructions or Written
Instructions PFPC Trust receives from or on behalf of the Fund
or from counsel and which PFPC Trust believes, in good faith,
to be consistent with those directions or advice or Oral
Instructions or Written Instructions. Nothing in this section
shall be construed so as to impose an obligation upon PFPC
Trust (i) to seek such directions or advice or Oral
Instructions or Written Instructions, or (ii) to act in
accordance with such directions or advice or Oral Instructions
or Written Instructions unless, pursuant to other provisions
of this Agreement, the same is a condition of PFPC Trust's
properly taking or not taking such action. Nothing in this
subsection shall excuse PFPC Trust, when an action or omission
on the part of PFPC Trust which is taken in reliance upon
directions or advice or Oral Instructions or Written
Instructions constitutes willful misfeasance, bad faith,
negligence or reckless disregard by PFPC Trust of any duties,
obligations or responsibilities set forth in this Agreement.
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7. 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, Authorized
Persons and the Fund's authorized representatives 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 to an
Authorized Person or to an authorized representative of the Fund, at
the Fund's expense.
8. CONFIDENTIALITY. (a) The parties agree that the Proprietary Information
(defined below) and the contents of this Agreement (collectively
"Confidential Information") are confidential information of the parties
and their respective licensors. The Fund and PFPC Trust shall exercise
at least the same degree of care, but not less than reasonable care, to
safeguard the confidentiality of the Confidential Information of the
other as it would exercise to protect its own Confidential Information.
The Fund and PFPC Trust may use the Confidential Information only to
exercise their respective rights or perform their respective duties
under this Agreement. Except as required by law and except as disclosed
in the Fund's registration statement or filed as an exhibit thereto,
the Fund and PFPC Trust shall not duplicate, sell or disclose to others
the Confidential Information of the other, in whole or in part, without
the prior written permission of the other party. The Fund and PFPC
Trust may, however, disclose Confidential
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Information to their respective employees who have a need to know the
Confidential Information to perform work for the other, provided that
the Fund and PFPC Trust shall use reasonable efforts to ensure that the
Confidential Information is not duplicated or disclosed by their
respective employees in breach of this Agreement. The Fund and PFPC
Trust may also disclose the Confidential Information to independent
contractors, auditors, and professional advisors, provided they first
agree in writing to be bound by confidentiality obligations
substantially similar to this Section 8(a). Notwithstanding the
previous sentence, in no event shall either the Fund or PFPC Trust
disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
(b) Proprietary Information means:
(i) 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, finance, operations, customer
relationships, customer profiles, 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
and the customers, clients and suppliers of any of them;
(ii) 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; and
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(iii) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer
software, source code, object code, flow charts, databases,
inventions, know-how, show-how and trade secrets, whether or
not patentable or copyrightable.
(c) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory
notebooks, drawings, diagrams, specifications, bills of
material, equipment, prototypes and models, and any other
tangible manifestation of the foregoing of either party which
now exist or come into the control or possession of the other.
9. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with 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. 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.
11. 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
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to the Fund, take reasonable steps to minimize service interruptions.
PFPC Trust shall have no liability with respect to the loss of data or
service interruptions caused by equipment failure provided such loss or
interruption is not caused by PFPC Trust's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties or obligations
under this Agreement.
12. COMPENSATION. PFPC Trust and the Fund agree that the Fund shall be
responsible for the payment of all fees and out-of-pocket or incidental
expenses charged by PFPC Trust for its services under this Agreement as
agreed to in writing by PFPC Trust and the Fund.
13. INDEMNIFICATION.
(a) The Fund, on behalf of each Portfolio, agrees to indemnify,
defend and hold harmless PFPC Trust from all taxes, charges,
expenses, assessments, claims and liabilities (including,
without limitation, attorneys' fees and disbursements and
liabilities arising under the Securities Laws and any state
and foreign securities and blue sky laws) arising directly or
indirectly from any action or omission to act which PFPC Trust
takes in connection with the provision of services to the
Fund, including, without limitation, any action or omission to
act which PFPC Trust takes in reliance upon directions or
advice or Oral Instructions or Written Instructions from or on
behalf of the Fund or from counsel. PFPC Trust shall not be
indemnified against any liability (or any expenses incident to
such liability) caused by PFPC Trust's own willful
misfeasance, bad faith, negligence or reckless disregard in
the performance of PFPC Trust's duties or responsibilities
specifically described in this Agreement. Subject to
subsection (b) below, the provisions of this Section 13 shall
survive termination of this Agreement.
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(b) A claim by PFPC Trust for indemnification under this Agreement
must be made prior to the earlier of (i) one year after PFPC
Trust becomes aware of the event for which indemnification is
claimed; or (ii) one year after the earlier of termination of
this Agreement or the expiration of the term of this
Agreement.
(c) Except for remedies that cannot be waived as a matter of law
(and injunctive or provisional relief), the provisions of this
Section 13 shall be PFPC Trust's sole and exclusive remedy for
claims or other actions or proceedings to which the Fund's
indemnification obligations pursuant to this Section 13 may
apply.
14. RESPONSIBILITY OF PFPC TRUST.
(a) In the performance of its duties hereunder, PFPC Trust shall
be obligated to exercise care and diligence, to act in good
faith and to use its best efforts within commercially
reasonable limits to ensure the accuracy and completeness of
all services performed under this Agreement, but assumes no
responsibility for loss or damage to the Fund unless said loss
or damages are caused by PFPC Trust's own negligence, bad
faith or willful misconduct or that of its employees, agents
or representatives.
(b) Notwithstanding anything in this Agreement to the contrary and
provided that PFPC Trust has acted in accordance with the
standard of care set forth above, (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
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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 Oral Instructions, Written Instructions, direction,
notice, instrument or other information which PFPC Trust
reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, in
no event shall either party, its affiliates or any of its or
their directors, trustees, officers, employees, agents or
subcontractors be liable to the other party for consequential
damages.
(d) No party may assert a cause of action against PFPC
Trust or any of its affiliates that allegedly occurred more
than 12 months immediately prior to the filing of the suit
(or, if applicable, commencement of arbitration proceedings)
alleging such cause of action.
(e) Each party shall have a duty to mitigate damages for which the
other party may become responsible.
(f) The provisions of this Section 14 shall survive termination of
this Agreement.
15. 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 such property until
actual receipt.
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(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust, acting upon
Written Instructions, shall open and maintain separate
accounts in the Fund's name using all cash received from or
for the account of the Fund, subject to the terms of this
Agreement. In addition, upon Written Instructions, PFPC Trust
shall open separate custodial accounts for each separate
Portfolio of the Fund (collectively, the "Accounts") and shall
hold in the Accounts all cash received from or for the
Accounts of the Fund specifically designated to each separate
Portfolio. PFPC Trust shall make cash payments from or for the
Accounts of a Portfolio only for:
(i) purchases of securities in the name of a Portfolio,
PFPC Trust, PFPC Trust's nominee or a sub-custodian
or nominee thereof as provided in subsection (j) and
for which PFPC Trust has received a copy of the
broker's or dealer's confirmation or payee's invoice,
as appropriate;
(ii) purchase or redemption of Shares of the Fund
delivered to PFPC Trust;
(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting, transfer
agency, distribution, advisory, management and
support services fees or similar expenses which are
to be borne by a Portfolio;
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent for
the shareholders, of an amount equal to the amount of
dividends and distributions stated in the Written
Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying
the Fund's transfer agent, PFPC Trust may arrange for
the direct payment of cash dividends and
distributions to shareholders in accordance with
procedures mutually agreed upon from time to time by
and among the Fund, PFPC Trust and the Fund's
transfer agent;
(v) payments, upon receipt of Written Instructions, in
connection with the conversion, exchange or surrender
of securities owned or subscribed to by the Fund and
held by or delivered to PFPC Trust;
(vi) payments of the amounts of dividends received with
respect to securities sold short;
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(vii) payments to PFPC Trust for its services hereunder;
(viii) payments to a sub-custodian pursuant to subsection
(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. All such
securities shall be held or disposed of only upon
Written Instructions of the Fund pursuant to the
terms of this Agreement. PFPC Trust shall have no
power or authority to assign, hypothecate, pledge or
otherwise dispose of any such securities or
investments, except upon the express terms of this
Agreement or upon Written Instructions authorizing
the transaction. In no case may any member of the
Fund's Board of Trustees, or any officer, employee or
agent of the Fund, withdraw any securities.
At PFPC Trust's own expense and for its own
convenience, PFPC Trust may enter into sub-custodian
agreements with other banks or trust companies to
perform duties described in this sub-section (c) with
respect to domestic assets. Such bank or trust
company shall have an aggregate capital, surplus and
undivided profits, according to its last published
report, of at least one million dollars ($1,000,000),
if it is a subsidiary or affiliate of PFPC Trust, or
at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or
affiliate of PFPC Trust. In addition, such bank or
trust company must be qualified to act as custodian
and agree to comply with the relevant provisions of
the 1940 Act and other 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 in accordance with the
requirements of the 1940 Act. Any such arrangement
will be entered into with prior written notice to the
Fund (or as otherwise provided in the 1940 Act).
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PFPC Trust shall remain responsible for the
performance of all of its duties as described in this
Agreement and shall hold the Fund and each Portfolio
harmless from its own acts or omissions, under the
standards of care provided for herein, or the acts
and omissions of any sub-custodian chosen by PFPC
Trust under the terms of this sub-section (c).
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC
Trust, directly or through the use of the Book-Entry System,
shall:
(i) deliver any securities held for a Portfolio against
the receipt of payment for the sale of such
securities;
(ii) execute in blank and deliver to such persons as may
be designated in such Oral Instructions or Written
Instructions, proxies, consents, authorizations, and
any other instruments received by PFPC Trust as
custodian of the Property 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 transfers or exchanges of the assets of the
Portfolios and take such other steps as shall be
stated in said Oral Instructions or Written
Instructions to be for the purpose of effectuating a
duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the
Fund;
(vii) release securities belonging to a Portfolio to any
bank or trust company for
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the purpose of a pledge or hypothecation to secure
any loan incurred by the Fund on behalf of that
Portfolio; provided, however, that securities
shall be released only upon payment to PFPC
Trust of the monies borrowed, except that in
cases where additional collateral is required to
secure a borrowing already made subject to proper
prior authorization, further securities may be
released for that purpose; and repay such loan upon
redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note
or notes evidencing the loan;
(viii) release and deliver securities owned by a
Portfolio in connection with any repurchase agreement
(or reverse repurchase agreement) entered into by the
Fund on behalf of the Portfolio, but only on receipt
of payment therefor; and pay out moneys of the
Portfolio in connection with such repurchase
agreements (or reverse repurchase agreements), but
only upon the delivery of the securities;
(ix) release and deliver or exchange securities owned by a
Portfolio 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 a Portfolio
for the purpose of redeeming in kind shares of the
Portfolio upon delivery thereof to PFPC Trust; and
(xii) release and deliver or exchange securities owned by a
Portfolio 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 subsection(d)(xii).
(e) USE OF BOOK-ENTRY SYSTEM. PFPC Trust is authorized and
instructed, on a continuous basis, to deposit in the
Book-Entry System all securities belonging to the Portfolios
eligible for deposit therein and to utilize the Book-Entry
System to the extent possible in connection with settlements
of purchases and sales of securities by the Portfolios, and
deliveries and returns of securities loaned, subject
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to repurchase agreements (or reverse repurchase agreements) or
used as collateral in connection with borrowings. PFPC Trust
shall continue to perform such duties until it receives
Written Instructions or Oral Instructions authorizing contrary
actions.
PFPC Trust shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio
which are maintained in the Book-Entry System, the
records of PFPC Trust shall identify by Book-Entry or
otherwise those securities belonging to each
Portfolio.
(ii) Assets of each Portfolio deposited in the Book-Entry
System will at all times be segregated from any
assets and cash controlled by PFPC Trust in other
than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities.
(iii) PFPC Trust and its sub-custodian, if any, will settle
transactions as provided in subsections (j) and (k)
below.
(iv) PFPC Trust will provide the Fund with copies of any
reports obtained by PFPC Trust on the system of
internal accounting control of the Book-Entry System
promptly after receipt of such a report by PFPC
Trust.
PFPC Trust will also 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 held in the Book-Entry System, shall be
held by PFPC Trust in bearer form; all other securities held
for a Portfolio may be registered in the name of the Fund on
behalf of that Portfolio, PFPC Trust, the Book-Entry System, a
sub-custodian, or any duly appointed nominee of the Fund, PFPC
Trust, the Book-Entry System or the 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
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Trust appropriate instruments to enable PFPC Trust to hold or
deliver in proper form for transfer, or to register in the
name of its nominee or in the name of the Book-Entry System or
in the name of another appropriate entity, any securities
which it may hold 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 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 the Book-Entry System, shall execute in
blank and promptly deliver all notices, proxies and proxy
soliciting materials received by PFPC Trust as custodian of
the Property to the registered holder of such securities. If
the registered holder is not the Fund on behalf of a
Portfolio, then Written Instructions or Oral Instructions must
designate the person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of
contrary Written Instructions, PFPC Trust 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 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,
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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, on a mandatory basis, called,
redeemed, or retired, or otherwise become
payable on the date such securities
become payable; and
(E) take any action which may be
necessary and proper in connection with the
collection and receipt of such income and
other payments and the endorsement for
collection of checks, drafts, and other
negotiable instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause
to be delivered Property against payment or
other consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or
dealer selling for the account of a
Portfolio in accordance with street
delivery custom;
(2) for the exchange of interim
receipts or temporary securities
for definitive securities; and
(3) for transfer of securities
into the name of the Fund on behalf
of a Portfolio or PFPC Trust or a
sub-custodian or a nominee of one of
the foregoing, or for exchange of
securities for a different number of
bonds, certificates, or other
evidence, representing the same
aggregate face amount or number of
units bearing the same interest
rate, maturity date and call
provisions, if any; provided that,
in any such case, the new securities
are to be delivered to PFPC Trust.
(B) Unless and until PFPC Trust receives
Oral Instructions or Written Instructions to
the contrary, PFPC Trust shall:
(1) pay all income items held by it
which call for payment upon
presentation and hold the cash
received by it upon such payment
for the account of each Portfolio;
(2) collect interest and cash dividends
received, with notice to
18
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) execute as agent on behalf of the
Fund all necessary ownership
certificates required by the
Internal Revenue Code or the Income
Tax Regulations of the United
States Treasury Department or under
the laws of any state now or
hereafter in effect, inserting the
Fund's name, on behalf of a
Portfolio, on such certificate as
the owner of the securities covered
thereby, to the extent it may
lawfully do so.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions
or Oral Instructions establish and maintain
segregated accounts on its records for and on behalf
of each Portfolio. Such accounts may be used to
transfer cash and securities, including securities in
the Book-Entry System:
(A) for the purposes of compliance by the
Fund with the procedures required by a
securities or option exchange, providing
such procedures comply with the 1940 Act and
any releases of the SEC relating to the
maintenance of segregated accounts by
registered investment companies; and
(B) upon receipt of Written Instructions, for
other purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX
custodian accounts for such shareholders holding
Shares through XXX accounts, in accordance with the
Fund's prospectuses, the Internal Revenue Code of
1986, as amended (including regulations promulgated
thereunder), and with such other procedures as are
mutually agreed upon from time to time by 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;
19
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker
through whom the purchase was made.
PFPC Trust shall upon receipt of securities purchased by or
for a Portfolio pay out of the moneys held for the account of
the Portfolio the total amount payable to the person from whom
or the broker through whom the purchase was made, provided
that the same conforms to the total amount payable as set
forth in such Oral Instructions or Written Instructions.
(k) SALES OF SECURITIES. PFPC Trust shall settle sold securities
upon receipt of Oral Instructions or Written Instructions that
specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and
accrued interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to
whom the sale was made;
(vii) the location to which the security must be delivered
and delivery deadline, if any; and
(viii) the Portfolio involved.
PFPC Trust shall deliver the securities upon receipt of the total
amount payable to the Portfolio upon such sale, provided that the total
amount payable is the same as was set forth in the Oral Instructions or
Written Instructions. Notwithstanding the other
20
provisions thereof, to the extent required with respect to any
particular type of security, PFPC Trust may accept payment in such form
as shall be satisfactory to it and in conformance with prevailing
market practice, and may deliver securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the Fund the following
reports:
(A) such periodic and special reports as the
Fund may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the account of
each Portfolio, listing each portfolio
security belonging to each Portfolio with
the adjusted average cost of each issue and
the market value at the end of such month
and stating the cash account of each
Portfolio including disbursements;
(C) the reports required to be furnished to the
Fund pursuant to Rule 17f-4 of the 1940 Act;
and
(D) such other information as may be mutually
agreed upon from time to time by 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. 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. If PFPC Trust in its sole discretion
credits an Account with respect to (a) income, dividends,
distributions, coupons, option premiums, other
21
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. Nothing herein or otherwise shall require PFPC Trust
to make any advances or to credit any amounts until PFPC
Trust's actual receipt thereof. The Fund hereby grants a first
priority contractual possessory security interest in and a
right of setoff against the assets maintained in an Account
hereunder in the amount necessary to secure the return and
payment to PFPC Trust of any advance or credit made by PFPC
Trust (including charges related thereto) to such Account.
(n) COLLECTIONS. All collections of monies or other property in
respect, or which are to become part, of the Property (but not
the safekeeping thereof upon receipt by PFPC Trust) shall be
at the sole risk of the Fund. If payment is not received by
PFPC Trust within a reasonable time after proper demands have
been made, PFPC Trust shall notify the Fund in writing,
including copies of all demand letters, any
22
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) JOINT ACCOUNTS.
(i) In addition to the accounts which PFPC Trust has
agreed to establish and maintain pursuant to this
Agreement, PFPC Trust also agrees to establish and
maintain one or more joint accounts (the "Joint
Accounts"). The Joint Accounts are intended to be
used to hold (A) uninvested cash balances that remain
at the end of a trading day as may be received from
accounts ("Deposit Accounts") of the Fund's
Portfolios, and (B) any short-term liquid assets
("Short-Term Investments") that may be purchased with
the daily cash balances in the Joint Accounts. Each
Joint Account so established shall be titled "Fleet
Joint Trading Account" with an appropriate number
designation.
(ii) (A) PFPC Trust will transfer cash from the
Deposit Account of a Portfolio of the Fund
to one or more Joint Accounts upon receipt
of Written Instructions from the Fund or its
designee, which Written Instructions shall
include all information required by PFPC
Trust.
(B) PFPC Trust will make payments from a Joint
Account which holds any cash balances of a
Portfolio of the Fund upon receipt of
Written Instructions from the Fund or its
designee, which Written Instructions shall
include all information required by PFPC
Trust for the allocation of any Short-Term
Investments purchased with such cash
balances among the participating Portfolios
of the Fund.
(C) In the event that any payment to be made
under sub-paragraph (B) of this paragraph
(ii) exceeds the funds available in the
Joint Account, PFPC Trust, in its
discretion, may advance the participating
Portfolios of the Fund such excess amount
which shall be deemed a loan payable on
demand, bearing interest at the rate
customarily charged by PFPC Trust on similar
loans.
23
(D) Short-Term Investments in a Joint Account
will be transferred, exchanged or delivered
by PFPC Trust upon receipt by PFPC Trust of
Written Instructions, which Written
Instructions shall include all information
required by PFPC Trust. Settlement and
payment for Short-Term Investments received
for, and delivery of Short-Term Investments
out of, a Joint Account may be made in
accordance with the customary or established
securities trading or securities processing
practices and procedures in the jurisdiction
or market in which the transaction occurs,
including, without limitation, delivery of
Short-Term Investments to a purchaser,
dealer or their agents against a receipt
with the expectation of receiving later
payment and free delivery. Delivery of
Short-Term Investments out of a Joint
Account may also be made in any manner
specifically required by Instructions
acceptable to PFPC Trust.
(E) PFPC Trust, in its discretion, may credit or
debit a Joint Account on a contractual
settlement date with cash or Short-Term
Investments with respect to any sale,
exchange or purchase of Short-Term
Investments. Otherwise, such transactions
will be credited or debited to the Joint
Account on the date cash or Short-Term
Investments are actually received by PFPC
Trust and reconciled to the Joint Account.
(1) PFPC Trust may reverse credits or
debits made to a Joint Account in
its discretion if the related
transaction fails to settle within
a reasonable period, determined by
PFPC Trust in its discretion, after
the contractual settlement date for
the related transaction.
(2) If any Short-Term Investments
delivered pursuant to this
paragraph (ii) are returned by the
recipient thereof, PFPC Trust may
reverse the credits and debits of
the particular transaction at
anytime.
(F) If PFPC Trust credits a Joint Account on a
payable date, or at any time prior to the
actual collection and reconciliation to the
Joint Account, with interest, dividends,
redemptions or any other amount due, the
participating Portfolios of the Fund will
promptly return their share of any such
amount upon oral or written notification:
(i) that such amount has not been received
in the ordinary course of business or (ii)
that such amount was incorrectly credited.
If the participating Portfolios of the Fund
do not promptly return their share of any
amount upon such notification, PFPC Trust
shall be entitled, upon oral or written
notification to the Fund, to reverse such
credit by debiting the Joint Account for the
amount previously
24
credited. PFPC Trust shall have no duty or
obligation to institute legal proceedings,
file a claim or a proof of claim in any
insolvency proceeding or take any other
action with respect to the collection of
such amount, but may act for the Fund upon
Written Instructions after consultation with
the Fund.
(ii) PFPC Trust shall maintain records, based upon
the Written Instructions it receives from the Fund,
documenting for any given day the aggregate
investment in a Joint Account by each of the Fund's
participating Portfolios and each participating
Portfolio's pro rata share of each Short-Term
Investment made through such Joint Agreement. PFPC
Trust shall maintain such records for at least (6)
years.
(iii) PFPC Trust shall have no obligation or duty to
monitor or determine whether a Joint Account is being
operated in compliance with the exemptive order
received by the Fund and its affiliates pursuant to
which the Fund may participate in the Joint Accounts.
16. DURATION AND TERMINATION.
(a) The term of this Agreement commences on the date first written above
and shall continue until December 31, 2007 (the "Initial Term").
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) years ("Renewal
Terms") each, unless the Fund or PFPC Trust provides written notice to
the other of its intent not to renew. Such notice must be received not
less than sixty (60) days prior to the expiration of the Initial Term
or the then current Renewal Term.
(c) 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. If, after the effective date of
the termination of this Agreement, the Fund has not appointed a
25
successor custodian, PFPC Trust may deliver the Fund's cash, securities
and other property to a bank or trust company of PFPC Trust's choice,
having an aggregate capital, surplus and undivided profits, as shown by
its last published report, of not less than twenty million dollars
($20,000,000), as a custodian for the Fund to be held under terms
similar to those of this Agreement.
(d) If a party hereto is guilty of a material failure to perform its duties
and obligations hereunder (a "Defaulting Party"), the other party (the
"Non-Defaulting Party") may give written notice thereof to the
Defaulting Party, and if such material breach shall not have been
remedied within thirty (30) days after such written notice is given,
then the Non-Defaulting Party may terminate this Agreement by giving
thirty (30) days written notice of such termination to the Defaulting
Party. If PFPC is the Non-Defaulting Party, its termination of this
Agreement shall not constitute a waiver of any other rights or remedies
of PFPC with respect to services performed prior to such termination or
rights of PFPC to be reimbursed for out-of-pocket expenses. In all
cases, termination by the Non-Defaulting Party shall not constitute a
waiver by the Non-Defaulting Party of any other rights it might have
under this Agreement or otherwise against the Defaulting Party.
(e) The Fund may terminate this Agreement in the event that the negligent
action or negligent omission to act on the part of PFPC Trust causes
damages to the Fund or its shareholders in excess of two hundred fifty
thousand dollars ($250,000). "Damages to the Fund" are defined as
damages caused by a single event, or cumulative series of events
related to the same matter, which generates a monetary loss. The Fund's
right to terminate under this Section 16(e) shall
26
remain effective in the event PFPC Trust has made the Fund
whole with respect to the damages caused. Unless the Fund
provides PFPC Trust with written notice of the Fund's intent
to exercise its option under this Section 16(e) within 30 days
after the Fund becomes aware of the occurrence, the Fund shall
have waived its option to terminate under this provision.
(f) The Fund shall have the right to terminate this Agreement at
any time with respect to the Fund or a particular Portfolio if
the Fund or the Portfolio, as the case may be, reorganizes
into another entity, liquidates or otherwise ceases to exist.
In the event the Fund terminates the Agreement pursuant to
this paragraph (f), the Fund shall reimburse PFPC Trust for
all reasonable costs associated with such termination.
(g) In the event this Agreement is terminated by the Fund pursuant
to subsections (d) or (e) above, all reasonable expenses
associated with movement of cash, securities, records and
other property to a successor custodian will be borne by PFPC
Trust and the Fund shall not be responsible for PFPC Trust's
costs associated with such termination. In the event of
termination of this Agreement pursuant to any other
subsections of this Agreement, all reasonable expenses
associated with termination will be borne by the Fund.
17. 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, c/o Columbia Management
Group, Inc., 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxx, with a copy to W. Xxxxx XxXxxxxx, III, Drinker
Xxxxxx & Xxxxx LLP, One Xxxxx Square, 00xx & Xxxxxx Xxxxxxx,
Xxxxxxxxxxxx,
00
Xxxxxxxxxxxx 00000; 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, 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.
18. AMENDMENTS. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
19. ASSIGNMENT. This Agreement, its benefits and obligations shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may not be
assigned or otherwise transferred by either party hereto, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided, however, that PFPC Trust may, in its
sole discretion, assign all its right, title and interest in this
Agreement to an affiliate, parent or subsidiary, provided that, in the
reasonable judgment of the Board of Trustees of the Fund acting in its
sole discretion: (i) the financial capacity of such assignee is not
materially less than that of PFPC Trust; (ii) the nature and quality of
the services to be provided hereunder are not materially adversely
affected by such assignment; and (iii) the quality and capability of
the personnel and facilities of the assignee are not materially less
than those of PFPC Trust. PFPC Trust may, in its sole discretion,
engage subcontractors to perform any non-material or non-substantive
obligations contained in this Agreement that it is otherwise required
to perform hereunder, provided that PFPC Trust shall be responsible for
all
28
compensation payable to such subcontractors and shall remain
responsible for the acts and omissions of such subcontractors to the
same extent that it is hereunder.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. MISCELLANEOUS.
(a) 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.
(b) 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) 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. The
29
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. Notwithstanding any provision hereof, the services of
PFPC Trust are not, nor shall they be, construed as
constituting legal advice or the provision of legal services
for or on behalf of the Fund or any other person.
(d) The laws of the Commonwealth of Massachusetts,
excluding the laws on conflicts of laws, shall govern the
interpretation, validity, and enforcement of this Agreement.
All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of
Boston, and PFPC Trust and the Fund hereby submit themselves
to the exclusive jurisdiction of those courts.
(e) 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.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors
and permitted assigns.
(h) The facsimile signature of any party to this Agreement
shall constitute the valid and binding execution hereof by
such party.
(i) The names "The Galaxy Fund" and "Trustees of The Galaxy Fund"
refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time
to time under a Declaration of Trust dated March 31, 1986
which is hereby referred to and a copy of which is on file at
the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of the Fund. The
obligations of "The Galaxy Fund" entered into in the
30
name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees,
Shareholders, or representatives of the Fund personally, but
bind only the Trust Property, and all persons dealing with any
class of Shares of the Fund must look solely to the Trust
Property belonging to such class for the enforcement of any
claims against the Fund.
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/ Xxx Xxxxxxxx XX
-----------------------------------------
Title: Vice President
--------------------------------------
THE GALAXY FUND
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Title: Vice President
--------------------------------------
Business Approval By: /s/ Xx Xxxxx
-----------------------
Date: November 12, 2002
---------------------------------------
Legal Approval By: /s/ Xxxxxxxxx X. Xxxxx
--------------------------
Date: November 7, 2002
--------------------------------------
31
EXHIBIT 1
PORTFOLIO EFFECTIVE DATE OF APPOINTMENT
Florida Municipal Money Market Fund November 1, 2002
New Jersey Municipal Money Market Fund November 1, 2002
New York Municipal Money Market Fund November 1, 2002
Institutional Prime Money Market Fund November 1, 2002
Money Market Fund January 1, 2003
Government Money Market Fund January 1, 2003
Tax-Exempt Money Market Fund January 1, 2003
U.S. Treasury Money Market Fund January 1, 2003
Institutional Government Money Market Fund January 1, 2003
Connecticut Municipal Money Market Fund January 1, 2003
Massachusetts Municipal Money Market Fund January 1, 2003
Institutional Money Market Fund January 1, 2003
Institutional Treasury Money Market Fund January 1, 2003
Prime Reserves January 1, 2003
Government Reserves January 1, 2003
Tax-Exempt Reserves January 1, 2003
