CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of April 23, 2007, by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and EXCELSIOR DIRECTIONAL HEDGE FUND OF FUNDS (TE), LLC, a
Delaware limited liability company (the "Company").
W I T N E S S E T H:
WHEREAS, the Company wishes to retain PFPC Trust to provide custodian
services to the Company 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) "AUTHORIZED PERSON" means any officer of the Company and any other
person authorized by the Company's Board of Managers to give Oral or
Written Instructions on behalf of the Company. An Authorized
Person's scope of authority may be limited by setting forth such
limitation in a written document signed by both parties hereto.
(b) "BOARD OF MANAGERS" shall have the same meaning as set forth in the
Company's limited liability company agreement, as may be amended
from time to time ("Limited Liability Company Agreement").
(c) "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 registered with the SEC under the Securities
Exchange Act of 1934.
(d) "MEMBERS" shall have the same meaning as set forth in the Limited
Liability Company Agreement.
(e) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC Trust
from an Authorized Person or from a person reasonably believed by
PFPC Trust to be an Authorized Person. PFPC Trust may, in its sole
discretion in each separate instance, consider and rely upon
instructions it receives from an Authorized Person via electronic
mail as Oral Instructions.
(f) "PFPC TRUST" means PFPC Trust Company or a subsidiary or affiliate
of PFPC Trust Company.
(g) "INTERESTS" mean the shares of beneficial interest of any series or
class of the Company.
(h) "PROPERTY" means:
(i) any and all securities and other investment items which the
Company 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 Company;
(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 Company,
which are received by PFPC Trust from time to time, from or on
behalf of the Company.
(i) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by two
Authorized Persons (or persons reasonably believed by PFPC Trust to
be Authorized Persons) and received by PFPC Trust or (ii) trade
instructions transmitted by means of an electronic transaction
reporting system which requires the use of a password or other
authorized identifier in order to gain access. The instructions may
be delivered electronically (with respect to sub-item (ii) above) or
by hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. APPOINTMENT. The Company hereby appoints PFPC Trust to provide custodian
services to the Company as set forth herein and PFPC Trust accepts such
appointment and agrees to furnish such services.
3. COMPLIANCE WITH LAWS. PFPC Trust undertakes to comply with material
applicable requirements of the material laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to
be performed by PFPC Trust. Except as specifically set forth herein, PFPC
Trust assumes no responsibility for such compliance by the Company or any
other entity.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act
only upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives pursuant to this Agreement. PFPC
Trust may assume that any Oral Instructions or Written Instructions
received hereunder are not in any way inconsistent with the
provisions of organizational documents of the Company or of any
vote, resolution or proceeding of the Company's Board of Managers or
of the Company's Members, unless and until PFPC Trust receives
Written Instructions to the contrary.
2
(c) The Company 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.
5. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE COMPANY. 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 Company.
(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 Company, the Company'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 Company, and the advice it receives from counsel,
PFPC Trust shall be entitled to rely upon and follow the advice of
counsel.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be indemnified by the
Company and without liability for any action PFPC Trust takes or
does not take in reliance upon directions or advice or Oral
Instructions or Written Instructions PFPC Trust receives from or on
behalf of the Company 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.
6. RECORDS; VISITS. The books and records pertaining to the Company, which
are in the possession or under the control of PFPC Trust, shall be the
property of the Company. Such books and records shall be prepared and
maintained as required by the applicable securities laws, rules and
regulations. The Company and Authorized Persons shall have access to such
books and records at all times during PFPC Trust's normal business hours.
Upon the reasonable request of the Company, copies of any such books and
records shall be provided by PFPC Trust to the Company or to an authorized
representative of the Company, at the Company's expense.
3
7. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the public,
including, but not limited to, information about product plans, marketing
strategies, finances, operations, customer relationships, customer
profiles, customer lists, sales estimates, business plans, and internal
performance results relating to the past, present or future business
activities of the Company or PFPC Trust, their respective subsidiaries and
affiliated companies; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable
and secret in the sense that its confidentiality affords the Company or
PFPC Trust a competitive advantage over its competitors; (c) all
confidential or proprietary concepts, documentation, reports, data,
specifications, computer software, source code, object code, flow charts,
databases, inventions, know-how, and trade secrets, whether or not
patentable or copyrightable; and (d) anything designated as confidential.
Notwithstanding the foregoing, information shall not be Confidential
Information and shall not be subject to such confidentiality obligations
if: (a) it is already known to the receiving party at the time it is
obtained; (b) it is or becomes publicly known or available through no
wrongful act of the receiving party; (c) it is rightfully received from a
third party who, to the best of the receiving party's knowledge, is not
under a duty of confidentiality; (d) it is released by the protected party
to a third party without restriction; (e) it is requested or required to
be disclosed by the receiving party pursuant to a court order, subpoena,
governmental or regulatory agency request or law (provided the receiving
party will provide the other party written notice of the same, to the
extent such notice is permitted); (f) release of such information by PFPC
Trust is necessary or desirable in connection with the provision of
services under this Agreement; (g) it is Company information provided by
PFPC Trust in connection with an independent third party compliance or
other review; (h) it is relevant to the defense of any claim or cause of
action asserted against the receiving party; or (i) it has been or is
independently developed or obtained by the receiving party. The provisions
of this Section 7 shall survive termination of this Agreement for a period
of three (3) years after such termination. PFPC Trust will not gather,
store, or use any Customer Information (as defined below), and will not
disclose, distribute, sell, share, rent or otherwise transfer any Customer
Information to any third party, except (i) as provided in this Agreement;
(ii) as PFPC Trust may be directed in advance in writing by the Company or
as required in connection with the provision of services under this
Agreement; or (iii) as permitted or required by applicable law. PFPC Trust
represents, covenants, and warrants that PFPC Trust will use Customer
Information only in compliance with: (a) this Agreement; (b) any Company
privacy policies provided to PFPC Trust and accepted by PFPC Trust; and
(c) all applicable laws, policies and regulations (including but not
limited to applicable laws, policies and regulations related to spamming,
privacy, and consumer protection). As soon as PFPC Trust no longer needs
to retain such Customer Information in order to perform its duties under
this Agreement, PFPC Trust will upon request and at the Company's expense,
promptly return or (if so instructed by the Company in writing) destroy
all originals and copies of such Customer Information, except to the
extent PFPC Trust is prohibited by law from doing so. "Customer
Information" means all disclosed "non-public personal information" (as
such
4
term is defined by ▇▇▇▇▇▇▇▇▇▇ ▇-▇, ▇▇ ▇▇▇ Part 248.11), however collected,
including without limitation, through "cookies", Web bugs or
non-electronic means, pertaining to or identifiable to a "customer", as
such term is defined by ▇▇▇▇▇▇▇▇▇▇ ▇-▇, ▇▇ ▇▇▇ Part 248.11.
8. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the
Company's independent public accountants and shall take all reasonable
action to make any requested information available to such accountants as
reasonably requested by the Company.
9. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and all
data bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable
or copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC Trust in
connection with the services provided by PFPC Trust to the Company.
10. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Company, take
reasonable steps to minimize service interruptions.
11. COMPENSATION.
(a) As compensation for custody services rendered by PFPC Trust during
the term of this Agreement, the Company will pay to PFPC Trust a fee
or fees as may be agreed to in writing from time to time by the
Company and PFPC Trust. The Company acknowledges that PFPC Trust may
receive float benefits in connection with maintaining certain
accounts required to provide services under this Agreement.
(b) The undersigned hereby represents and warrants to PFPC Trust that
the terms of this Agreement, (ii) the fees and expenses associated
with this Agreement, and (iii) any benefits accruing to PFPC Trust
or to the adviser or sponsor to the Company in connection with this
Agreement, including but not limited to any fee waivers, conversion
cost reimbursements, up front payments, signing payments or periodic
payments made or to be made by PFPC Trust to such adviser or sponsor
or any affiliate of the Company relating to this Agreement have been
fully disclosed to the Board of Managers and that, if required by
applicable law, such Board of Managers has approved or will approve
the terms of this Agreement, any such fees and expenses, and any
such benefits.
12. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless PFPC Trust and its
affiliates from all taxes, charges, expenses, assessments, claims
and liabilities (including, without limitation, attorneys' fees and
disbursements and liabilities arising under
5
any laws, rules and regulations) (Collectively, "Losses"), arising
directly or indirectly from any action or omission to act which PFPC
Trust takes in connection with the provision of services to the
Company. Neither PFPC Trust, nor any of its affiliates, shall be
indemnified against any liability (or any expenses incident to such
liability) caused by PFPC Trust's or its affiliates' own willful
misfeasance, bad faith, gross negligence or reckless disregard in
the performance of PFPC Trust's activities under this Agreement.
(b) PFPC Trust will indemnify and hold harmless the Company from all
Losses incurred by the Company to the extent (and only to the
extent) that such Losses arise out of PFPC Trust's (i) uncured
material breach of its duties and obligations under this Agreement;
(ii) willful misfeasance; (iii) bad faith; or (iv) gross negligence.
(c) The provisions of this Section 12 shall survive termination of this
Agreement.
13. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder on
behalf of the Company except as specifically set forth herein or as
may be specifically agreed to by PFPC Trust and the Company in a
written amendment hereto. PFPC Trust shall be obligated to exercise
care and diligence in the performance of its duties hereunder and to
act in good faith in performing services provided for under this
Agreement. PFPC Trust shall be liable only for any damages arising
out of PFPC Trust's failure to perform its duties under this
Agreement and only to the extent such damages arise out of PFPC
Trust's willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
Trust shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion; interruption,
loss or malfunction of utilities, transportation or communications
capabilities; insurrection; elements of nature; or non-performance
by a third party; and (ii) PFPC Trust shall not be under any duty or
obligation to inquire into and shall not be liable for the validity
or invalidity, authority or lack thereof, or truthfulness or
accuracy or lack thereof, of any instruction, direction, notice,
instrument or other information which PFPC Trust reasonably believes
to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC Trust nor its affiliates shall be liable for any consequential,
special or indirect losses or damages whether or not the likelihood
of such losses or damages was known by PFPC Trust or its affiliates.
6
(d) Notwithstanding anything in this Agreement to the contrary, the
Company and its affiliates shall not be liable for any
consequential, special or indirect losses or damages whether or not
the likelihood of such losses or damages was known by the Company or
its affiliates.
(e) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(f) Notwithstanding anything in this Agreement to the contrary (other
than as specifically provided in Section 14(h)(ii)(B)(4) and Section
14(h)(iii)(A) of this Agreement), the Company shall be responsible
for all filings, tax returns and reports on any transactions
undertaken pursuant to this Agreement, or in respect of the Property
or any collections undertaken pursuant to this Agreement, which may
be requested by any relevant authority. In addition, the Company
shall be responsible for the payment of all taxes and similar items
(including without limitation penalties and interest related
thereto).
(g) The provisions of this Section 13 shall survive termination of this
Agreement.
(h) Notwithstanding anything in this Agreement to the contrary, PFPC
Trust shall have no liability either for any error or omission of
any of its predecessors as servicer on behalf of the Company or for
any failure to discover any such error or omission, unless such
predecessor is an affiliate of PFPC Trust or The PNC Financial
Services Group, Inc.
14. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Company will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Company,
including cash received as a result of the purchase of Interests,
during the period that is set forth in this Agreement. PFPC Trust
will not be responsible for any assets until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust, acting upon Written
Instructions, shall open and maintain an account for the Company
(the "Account") and shall maintain in the Account all cash and other
assets received from or for the account of the Company specifically
designated to such Account.
PFPC Trust shall make cash payments from or for the Account only
for:
(i) purchases of securities in the name of the Company, PFPC Trust
or PFPC Trust's nominee or a sub-custodian or nominee thereof
as provided in sub-section (j) and for which PFPC Trust has
received a copy of (A) the subscription document, or (B) the
broker's or dealer's confirmation, or (C) payee's invoice, as
appropriate;
(ii) the repurchase of Interests of the Company;
7
(iii) payment of, subject to Written Instructions, interest, taxes,
(provided that tax which PFPC Trust considers is required to
be deducted or withheld "at source" will be governed by
Section 14(h)(iii)(B) of this Agreement), administration,
accounting, distribution, advisory, management fees or similar
expenses which are to be borne by the Company;
(iv) payment to, subject to receipt of Written Instructions, the
Company's administrator, as agent for the Members, of an
amount equal to the amount of any distributions stated in the
Written Instructions to be distributed in cash by the
administrator to Members, or, in lieu of paying the Company's
administrator, PFPC Trust may arrange for the direct payment
of cash dividends and distributions to Members in accordance
with procedures mutually agreed upon from time to time by and
among the Company, PFPC Trust and the Company's administrator;
(v) payments, upon receipt of Written Instructions signed by one
Authorized Person, in connection with the conversion, exchange
or surrender of securities owned or subscribed to by the
Company and held pursuant to this Agreement or delivered to
PFPC Trust;
(vi) payments of, subject to receipt of Written Instructions signed
by one Authorized Person, 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) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the
Account.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PFPC Trust shall hold all securities received by it for the
Account in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry
System or through a sub-custodian or depository. All such
securities shall be held or disposed of only upon Written
Instructions or otherwise pursuant to the terms of this
Agreement. PFPC Trust shall have no power or authority to
assign, hypothecate, pledge or otherwise dispose of any such
securities or investment, except upon the express terms of
this Agreement or upon Written Instructions authorizing the
transaction. In no case may any member of the Company's Board
of Managers, or any officer, employee or agent of the Company
withdraw any securities.
8
At PFPC Trust's own expense and for its own convenience, PFPC
Trust may enter into sub-custodian agreements with other
United States banks or trust companies to perform duties
described in this sub-section (c) with respect to domestic
assets. Such bank or trust company shall have aggregate
capital, surplus and undivided profits, according to its last
published report, of at least one million dollars
($1,000,000), if it is a subsidiary or affiliate of PFPC
Trust, or at least twenty million dollars ($20,000,000) if
such bank or trust company is not a subsidiary or affiliate of
PFPC Trust. Any such arrangement will not be entered into
without prior written notice to the Company.
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign
assets. Any such arrangement will be entered into with prior
written notice to the Company.
Sub-custodians utilized by PFPC Trust may be subsidiaries or
affiliates of PFPC Trust, and such entities will be compensated for
their services at such rates as are agreed between the entity and
PFPC Trust. PFPC Trust shall remain responsible for the acts and
omissions of any sub-custodian chosen by PFPC Trust under the terms
of this sub-section (c) to the same extent that PFPC Trust is
responsible for its own acts and omissions under this Agreement.
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC Trust,
shall:
(i) deliver any securities held for the Company against the
receipt of payment for the sale of such securities or
otherwise in accordance with standard market practice;
(ii) execute and deliver to such persons as may be designated in
such Oral Instructions or Written Instructions, proxies,
consents, authorizations, and any other instruments received
by PFPC Trust as custodian whereby the authority of the
Company as owner of any securities may be exercised;
(iii) deliver any securities to the issuer thereof, or its agent,
when such securities are called, redeemed, retired or
otherwise become payable at the option of the holder; provided
that, in any such case, the cash or other consideration is to
be delivered to PFPC Trust;
(iv) deliver any securities held for the Company 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;
9
(v) deliver any securities held for the Company to any protective
committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery;
(vi) make such transfer or exchanges of the assets of the Company
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 Company;
(vii) release securities belonging to the Company to any bank or
trust company for the purpose of a pledge or hypothecation to
secure any loan incurred by the Company; provided, however,
that securities shall be released only upon payment to PFPC
Trust of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing
already made subject to proper prior authorization, further
securities may be released for that purpose; and repay such
loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities owned by the Company in
connection with any repurchase agreement entered into by the
Company, but only on receipt of payment therefor; and pay out
monies of the Company in connection with such repurchase
agreements, but only upon the delivery of the securities;
(ix) release and deliver or exchange securities owned by the
Company in connection with any conversion of such securities,
pursuant to their terms, into other securities;
(x) release and deliver securities to a broker in connection with
the broker's custody of margin collateral relating to futures
and options transactions;
(xi) release and deliver securities owned by the Company for the
purpose of redeeming in kind Interests of the Company upon
delivery thereof to PFPC Trust; and
(xii) release and deliver or exchange securities owned by the
Company for other purposes.
(e) USE OF BOOK-ENTRY SYSTEM OR OTHER DEPOSITORY. PFPC Trust will
deposit in Book-Entry Systems and other depositories all securities
belonging to the Company eligible for deposit therein and will
utilize Book-Entry Systems and
10
other depositories to the extent possible in connection with
settlements of purchases and sales of securities by the Company, and
deliveries and returns of securities loaned, subject to repurchase
agreements or used as collateral in connection with borrowings. PFPC
Trust shall continue to perform such duties until it receives
Written Instructions or Oral Instructions authorizing contrary
actions.
PFPC Trust shall administer the Book-Entry System or other depository as
follows:
(i) With respect to securities of the Company which are maintained
in the Book-Entry System or another depository, the records of
PFPC Trust shall identify by book-entry or otherwise those
securities as belonging to the Company.
(ii) Assets of the Company deposited in a Book-Entry System or
another depository will (to the extent consistent with
applicable law and standard practice) at all times be
segregated from any assets and cash controlled by PFPC Trust
in other than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities.
PFPC Trust will provide the Company with such reports on its own
system of internal control as the Company may reasonably request
from time to time.
(f) REGISTRATION OF SECURITIES. All securities held for the Company
which are issued or issuable only in bearer form, except such
securities maintained in the Book-Entry System or in another
depository, shall be held by PFPC Trust in bearer form; all other
securities maintained for the Company may be registered in the name
of the Company, PFPC Trust, a Book-Entry System, another depository,
a sub-custodian, or any duly appointed nominees of the Company, PFPC
Trust, Book-Entry System, depository or sub-custodian. The Company
reserves the right to instruct PFPC Trust as to the method of
registration and safekeeping of the securities of the Company. The
Company agrees to furnish to PFPC Trust appropriate instruments to
enable PFPC Trust to maintain or deliver in proper form for
transfer, or to register in the name of its nominee or in the name
of the Book-Entry System or in the name of another appropriate
entity, any securities which it may maintain for the Account. With
respect to uncertificated securities which are registered in the
name of the Company (or a nominee thereof), PFPC Trust will reflect
such securities on its records based upon the holdings information
provided to it by the issuer of such securities, but notwithstanding
anything in this Agreement to the contrary PFPC Trust shall not be
obligated to safekeep such securities or to perform other duties
with respect to such securities other than to make payment for the
purchase of such securities upon receipt of Oral or Written
Instructions, accept in sale proceeds received by PFPC Trust upon
the sale of such securities of which PFPC Trust is informed pursuant
to Oral or Written Instructions, and accept in other distributions
received by PFPC Trust with respect to such securities or reflect on
its records any reinvested distributions
11
with respect to such securities of which it is informed by the
issuer of the securities.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall
vote any of the securities held pursuant to this Agreement by or for
the account of the Company, except in accordance with Written
Instructions. PFPC Trust, directly or through the use of another
entity, shall execute in blank and promptly deliver all notices,
proxies and proxy soliciting materials received by PFPC Trust as
custodian to the registered holder of such securities. If the
registered holder is not the Company, then Written Instructions or
Oral Instructions must designate the person who owns such
securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. Notwithstanding anything in
this Agreement requiring instructions in order to take a particular
action, in the absence of a contrary Written Instruction, PFPC Trust
is authorized to take the following actions without the need for
instructions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of the Company, all
income, dividends, distributions, coupons, option
premiums, other payments and similar items, included or
to be included in the Property, and, in addition,
promptly advise the Company of such receipt and credit
such income to the Company's custodian account;
(B) endorse and deposit for collection, in the name of the
Company, checks, drafts, or other orders for the payment
of money;
(C) receive and hold for the account of the Company all
securities received as a distribution on the Company's
securities as a result of a stock dividend, share
split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of
rights or similar securities issued with respect to any
securities belonging to the Company and held by PFPC
Trust hereunder;
(D) present for payment and collect the amount payable upon
all securities which may mature or be called, redeemed,
or retired, or otherwise become payable (on a mandatory
basis) on the date such securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such
income and other payments and the endorsement for
collection of checks, drafts, and other negotiable
instruments.
12
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause to be
delivered Property against payment or other
consideration or written receipt therefor in the
following cases:
(1) for examination by a broker or dealer selling for
the account of the Company 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
Company on behalf of the Company or PFPC Trust or
a sub-custodian or a nominee of one of the
foregoing, or for exchange of securities for a
different number of bonds, certificates, or other
evidence, representing the same aggregate face
amount or number of units bearing the same
interest rate, maturity date and call provisions,
if any; provided that, in any such case, the new
securities are to be delivered to PFPC Trust.
(B) PFPC Trust shall:
(1) pay all income items held by it which call for
payment upon presentation and hold the cash
received by it upon such payment for the account
of the Company;
(2) collect interest and cash dividends received, with
notice to the Company, for the account of the
Company;
(3) hold for the account of the Company all stock
dividends, rights and similar securities issued
with respect to any securities held by PFPC Trust;
and
(4) subject to receipt of such documentation and
information as PFPC Trust may request, execute as
agent on behalf of the Company all necessary
ownership certificates required by a national
governmental taxing authority or under the laws of
any U.S. state now or hereafter in effect,
inserting the Company's name on such certificate
as the owner of the securities covered thereby, to
the extent it may lawfully do so.
13
(iii) OTHER MATTERS.
(A) subject to receipt of such documentation and information
as PFPC Trust may request, PFPC Trust will, in such
jurisdictions as PFPC Trust may agree from time to time,
seek to reclaim or obtain a reduction with respect to
any withholdings or other taxes relating to assets
maintained hereunder (provided that PFPC Trust will not
be liable for failure to obtain any particular relief in
a particular jurisdiction); and
(B) PFPC Trust is authorized to deduct or withhold any sum
in respect of tax which PFPC Trust considers is required
to be deducted or withheld "at source" by any relevant
law or practice.
(i) SEGREGATED ACCOUNTS.
PFPC Trust shall upon receipt of Written Instructions or Oral
Instructions establish and maintain segregated accounts on its
records for and on behalf of the Company. Such accounts may be
used to transfer cash and securities, including securities in
a Book-Entry System or other depository:
(A) for the purposes of compliance by the Company with the
procedures required by a securities, futures or option
exchange; and
(B) upon receipt of Written Instructions, for other
purposes.
(j) PURCHASES OF SECURITIES. PFPC Trust shall settle purchased
securities upon receipt of Oral Instructions or Written Instructions
that specify:
(i) the name of the issuer and the title of the securities,
including CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase; and
(vi) the name of the person from whom or the broker through whom
the purchase was made. PFPC Trust shall upon receipt of
securities purchased by or for the Company (or otherwise in
accordance with standard market practice) pay out of the
monies held for the account of the Company the total amount
payable to the person from whom or the broker through
14
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 Company upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made; and
(vii) the location to which the security must be delivered and
delivery deadline, if any.
PFPC Trust shall deliver the securities upon receipt of the total amount
payable to the Company upon such sale, provided that the total amount
payable is the same as was set forth in the Oral Instructions or Written
Instructions. Notwithstanding anything to the contrary in this Agreement,
PFPC Trust may accept payment in such form which is consistent with
standard industry practice and may deliver assets and arrange for payment
in accordance with standard market practice.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the Company the following reports:
(A) such periodic and special reports as the Company may
reasonably request;
(B) a monthly statement summarizing all transactions and
entries for the account of the Company, listing each
portfolio security belonging to the Company (with the
corresponding security identification number) held at
the end of such month and stating the cash balance of
the Company at the end of such month;
(C) the reports required to be furnished to the Company
pursuant to Rule 17f-4 of the Investment Company Act of
1940, as amended; and
15
(D) such other information as may be agreed upon from time
to time between the Company and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Company any proxy
statement, proxy material, notice of a call or conversion,
other corporate action or similar communication received by it
as custodian of the Property. PFPC Trust shall be under no
other obligation to inform the Company as to such actions or
events.
(m) CREDITING OF ACCOUNT. PFPC Trust may in its sole discretion credit
the Account with respect to income, dividends, distributions,
coupons, option premiums, other payments or similar items prior to
PFPC Trust's actual receipt thereof, and in addition PFPC Trust may
in its sole discretion credit or debit the assets in the Account on
a contractual settlement date with respect to any sale, exchange or
purchase applicable to the Account; provided that nothing herein or
otherwise shall require PFPC Trust to make any advances or to credit
any amounts until PFPC Trust's actual receipt thereof. If PFPC Trust
credits the Account with respect to (a) income, dividends,
distributions, coupons, option premiums, other payments or similar
items on a contractual payment date or otherwise in advance of PFPC
Trust's actual receipt of the amount due, (b) the proceeds of any
sale or other disposition of assets on the contractual settlement
date or otherwise in advance of PFPC Trust's actual receipt of the
amount due or (c) provisional crediting of any amounts due, and (i)
PFPC Trust is subsequently unable to collect full and final payment
for the amounts so credited within a reasonable time period using
reasonable efforts or (ii) pursuant to standard industry practice,
law or regulation PFPC Trust is required to repay to a third party
such amounts so credited, or if any Property has been incorrectly
credited, PFPC Trust shall have the absolute right in its sole
discretion without demand to reverse any such credit or payment, to
debit or deduct the amount of such credit or payment from the
Account, and to otherwise pursue recovery of any such amounts so
credited from the Company. The Company hereby grants to PFPC Trust
and to each sub-custodian utilized by PFPC Trust in connection with
providing services to the Company a first priority contractual
possessory security interest in and a right of setoff against the
assets maintained hereunder in the amount necessary to secure the
return and payment to PFPC Trust and to each such sub-custodian of
any advance or credit made by PFPC Trust and/or by such
sub-custodian (including reasonable charges related thereto).
Notwithstanding anything in this Agreement to the contrary, PFPC
Trust shall be entitled to assign any rights it has under this
sub-section (m) to any sub-custodian utilized by PFPC Trust in
connection with providing services to the Company which
sub-custodian makes any credits or advances with respect to the
Company.
(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 Company. If payment is not received by PFPC Trust within
a reasonable time after proper demands have been made,
16
PFPC Trust shall notify the Company in writing, including copies of
all demand letters, any written responses and memoranda of all oral
responses and shall await instructions from the Company. 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 Company as soon as reasonably practicable whenever
income due on securities is not collected in due course and shall
provide the Company with periodic status reports of such income
collected after a reasonable time.
(o) EXCESS CASH SWEEP. PFPC Trust will, consistent with applicable law,
sweep any net excess cash balances daily into an investment vehicle
or other instrument designated in Written Instructions, so long as
the investment vehicle or instrument is acceptable to PFPC Trust,
subject to a fee, paid to PFPC Trust for such service, to be agreed
between the parties. Such investment vehicle or instrument may be
offered by an affiliate of PFPC Trust or by a PFPC Trust client and
PFPC Trust may receive compensation therefrom.
(p) FOREIGN EXCHANGE. PFPC Trust and/or sub-custodians may enter into or
arrange foreign exchange transactions (at such rates as they may
consider appropriate) in order to facilitate transactions under this
Agreement, and such entities and/or their affiliates may receive
compensation in connection with such foreign exchange transactions.
15. DURATION AND TERMINATION.
(a) The term of this Agreement is for an initial term beginning from the
date of this Agreement and continuing through the close of business
two (2) years thereafter (the "Initial Term"). Upon the expiration
of the Initial Term, this Agreement will automatically renew for
successive terms of one (1) year ("Renewal Terms"). Either Party may
terminate this Agreement effective at the end of the Initial Term or
any Renewal Term by providing written notice to the other party of
its intent not to renew. Notice of termination must be received not
less than ninety (90) days prior to the expiration of the Initial
Term or the then current Renewal Term. In the event the Company
gives notice of termination, all expenses associated with movement
(or duplication) of records and materials and conversion thereof to
a successor service provider (or each successor service provider, if
there are more than one), and all trailing expenses incurred by
PFPC, will be borne by the Company.
(b) If a party hereto fails in any material respect to perform its
duties and obligations hereunder (a "Defaulting Party"), or if a
representation and warranty of a party hereof becomes untrue or
inaccurate in any material respect, 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 sixty (60) days after such written notice is given,
then the Non-Defaulting Party may terminate this Agreement by giving
sixty (60) days' written notice of such termination to the
17
Defaulting Party. Termination of this Agreement by the
Non-Defaulting Party shall not constitute a waiver of any other
rights or remedies with respect to obligations of the parties prior
to such termination or rights of PFPC to be reimbursed for all of
its out-of-pocket expenses and its normal monthly fees or other
obligations due it. 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.
(c) Upon occurrence of any of the following events, the party not
subject to such event shall have the right to immediately terminate
this Agreement upon written notice to the other party: (i) either
party ceases doing (or gives notice of ceasing to do) business and
its business is not continued by another corporation or entity who
has agreed to assume its obligations, (ii) either party becomes
insolvent or files for or becomes a party to any involuntary
bankruptcy, receivership or similar proceeding, and such involuntary
proceeding is not dismissed within forty-five (45) calendar days
after filing, or (iii) either party makes an assignment for the
benefit of creditors.
(d) In the event this Agreement is terminated (pending appointment of a
successor to PFPC Trust or vote of the Members of the Company 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 Company, except for the books and records of
the Company, to the Company. It may deliver them to a bank or trust
company of PFPC Trust's choice, having aggregate capital, surplus
and undivided profits, as shown by its last published report, of not
less than twenty million dollars ($20,000,000), as a custodian for
the Company to be held under terms similar to those of this
Agreement. PFPC Trust shall not be required to make any delivery or
payment of assets upon termination until full payment shall have
been made to PFPC Trust of all of its fees, compensation, costs and
expenses (including without limitation fees and expenses associated
with deconversion or conversion to another service provider and
other trailing expenses incurred by PFPC Trust). PFPC Trust shall
have a first priority contractual possessory security interest in
and shall have a right of setoff against the Property as security
for the payment of such fees, compensation, costs and expenses.
16. [RESERVED].
17. NOTICES. Notices shall be addressed (a) if to PFPC Trust at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇
▇▇▇▇▇▇▇▇ (or such other address as PFPC Trust may inform the Company in
writing); (b) if to the Company, at Excelsior Directional Hedge Fund of
Funds (TE), LLC, c/o U.S. Trust Hedge Fund Management, Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (or such
other address as the Company may inform PFPC Trust in writing) or (c) if
to neither of the foregoing, at such other address as shall have been
given by like notice to the sender of any such notice or other
communication by the other party. If notice is sent by confirming
electronic delivery, hand or facsimile sending device, it shall
18
be deemed to have been given immediately. If notice is sent by first-class
mail, it shall be deemed to have been given five days after it has been
mailed. If notice is sent by messenger, it shall be deemed to have been
given on the day it is delivered.
18. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
19. DELEGATION; ASSIGNMENT. PFPC Trust may assign its rights and delegate its
duties hereunder to any affiliate of PFPC Trust or of The PNC Financial
Services Group, Inc., provided that PFPC Trust gives the Company thirty
(30) days' prior written notice of such assignment or delegation.
20. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
21. 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) NO REPRESENTATIONS OR WARRANTIES. Except as expressly provided in
this Agreement, PFPC Trust hereby disclaims all representations and
warranties, express or implied, made to the Company or any other
person, including, without limitation, any warranties regarding
quality, suitability, merchantability, fitness for a particular
purpose or otherwise (irrespective of any course of dealing, custom
or usage of trade), of any services or any goods provided incidental
to services provided under this Agreement. PFPC Trust disclaims any
warranty of title or non-infringement except as otherwise set forth
in this Agreement.
(c) NO CHANGES THAT MATERIALLY AFFECT OBLIGATIONS. Notwithstanding
anything in this Agreement to the contrary, the Company agrees not
to make any modifications to its registration statement or adopt any
policies which would affect materially the obligations or
responsibilities of PFPC Trust hereunder without the prior written
approval of PFPC Trust, which approval shall not be unreasonably
withheld or delayed.
(d) CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or
effect.
19
(e) INFORMATION. The Company will provide such information and
documentation as PFPC Trust may reasonably request in connection
with services provided by PFPC Trust to the Company.
(f) GOVERNING LAW. This Agreement shall be deemed to be a contract made
in Delaware in the United States and governed by Delaware law,
without regard to principles of conflicts of law.
(g) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(h) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
(i) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(j) CUSTOMER IDENTIFICATION PROGRAM NOTICE. To help the U.S. government
fight the funding of terrorism and money laundering activities, U.S.
Federal law requires each financial institution to obtain, verify,
and record certain information that identifies each person who
initially opens an account with that financial institution on or
after October 1, 2003. Consistent with this requirement, PFPC Trust
may request (or may have already requested) the Company's name,
address and taxpayer identification number or other
government-issued identification number, and, if such party is a
natural person, that party's date of birth. PFPC Trust may also ask
(and may have already asked) for additional identifying information,
and PFPC Trust may take steps (and may have already taken steps) to
verify the authenticity and accuracy of these data elements.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By:
---------------------------
Title:
-------------------------
EXCELSIOR DIRECTIONAL HEDGE FUND OF FUNDS
(TE), LLC
By:
---------------------------
Title:
-------------------------
