CUSTODIAN AGREEMENT
THIS AGREEMENT is made as of July 12, 1991, by and between DFA
U.S. LARGE CAP PORTFOLIO INC., a Maryland Corporation (the "Fund") and
PROVIDENT NATIONAL BANK, a national banking association ("Provident").
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940, as amended ("xxx
0000 Xxx"); and
WHEREAS, the Fund desires to retain Provident to serve as the Fund's
custodian and Provident is willing to serve as the Fund's custodian;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints Provident to act as
custodian of the portfolio securities, cash and other property belonging to
the Fund for the period and on the terms set forth in this Agreement.
Provident accepts such appointment and agrees to furnish the services herein
set forth in return for the compensation as provided in Paragraph 21 of this
Agreement.
2. DELIVERY OF DOCUMENTS. The Fund has furnished Provident with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing the
appointment of Provident as custodian of the portfolio securities, cash and
other property belonging to the Fund as provided herein and approving this
Agreement;
(b) Appendix A identifying and containing the signatures of the
Fund's officers authorized to issue Oral Instructions and to sign Written
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Articles of Incorporation filed with the Department of
Assessments and Taxation of the State of Maryland on March 19, 1990 and all
amendments thereto (such Articles of Incorporation, as presently in effect and
as they shall from time to time be amended, are herein called the "Charter");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(e) The current Facility Agreement between Dimensional Fund Advisers
Inc. ("DFA") and the Fund (the "Facility Agreement");
(f) The Agreement between the Fund and DFA Securities Inc.;
(g) The Transfer Agency Agreement between Provident Financial
Processing Corporation (the "Transfer Agent") and the Fund dated as of July 12,
1991 (the "Transfer Agency Agreement");
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(h) The Administration and Accounting Services Agreement between
Provident Financial Processing Corporation and the Fund dated as of July 12,
1991 (the "Accounting Services Agreement");
(i) The Fund's most recent Registration Statement on Form N-1A under
the Securities Act of 1933, as amended ("xxx 0000 Xxx") (File No. 33- )
and under the 1940 Act as filed with the SEC on May 14, 1991 relating to shares
of the Fund's Common Stock, $.0l par value ("Shares"), and all amendments
thereto; and
(j) The Fund's most recent prospectus and Statement of Additional
Information relating to Shares (such prospectus and Statement of Additional
Information, as presently in effect and all amendments and supplements thereto
are herein called the "Prospectus").
The Fund will furnish Provident from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. DEFINITIONS.
(a) "AUTHORIZED PERSON". As used in this Agreement, the term
"Authorized Person" means any of the officers of the Fund and any other person,
whether or not any such person is an officer or employee of the Fund, duly
authorized by the Board of Directors of the Fund to give Oral and Written
Instructions on behalf of the Fund and listed on the Certificate annexed hereto
as Appendix A or any amendment thereto as may be received by Provident from time
to time.
(b) "BOOK-ENTRY SYSTEM". As used in this Agreement, the
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term "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 a
clearing agency registered with the SEC under Section 17A of the Securities
Exchange Act of 1934 (the "1934 Act").
(c) "ORAL INSTRUCTIONS". As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by Provident from an
Authorized Person or from a person reasonably believed by Provident to be an
Authorized Person. The Fund agrees to deliver to Provident, at the time and in
the manner specified in Paragraph 8(b) of this Agreement, Written Instructions
confirming Oral Instructions.
(d) "PROPERTY". The term "Property", as used in this Agreement,
means:
(i) any and all securities, forward currency contracts,
exchange listed financial futures contracts and other property which the Fund
may from time to time deposit, or cause to be deposited, with Provident or which
Provident may from time to time hold for the Fund;
(ii) all income in respect of any of such securities, forward
currency contracts, exchange listed financial futures contracts or other
property;
(iii) all proceeds of the sale of any of such securities, forward
currency contracts, exchange listed financial futures contracts or other
property; and
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(iv) all proceeds of the sale of securities issued by the Fund,
which are received by Provident from time to time from or on behalf of the Fund.
(e) PFPC. As used in this Agreement, "PFPC" means Provident
Financial Processing Corporation.
(f) "WRITTEN INSTRUCTIONS". As used in this Agreement, the term
"Written Instructions" means written instructions delivered by hand, mail,
tested telegram, cable, telex or facsimile sending device, and received by
Provident and signed by an Authorized Person. Written Instructions include
electronic transmissions properly originated and confirmed by the Fund.
(g) "AFFILIATE". As used herein, "Affiliate" means any company that
controls, is controlled by or is under common control with Provident.
4. DELIVERY AND REGISTRATION OF THE PROPERTY. The Fund will deliver
or cause to be delivered to Provident all securities and all moneys owned by
the Fund, including cash or securities received for the issuance of its
Shares, at any time during the period of this Agreement. Provident will not
be responsible for such securities and such moneys until actually received by
it. All securities delivered to Provident (other than in bearer form) shall
be registered in the name of the Fund or in the name of a nominee of the Fund
or in the name of any nominee of Provident (with or without indication of
fiduciary status), or in the name of any subcustodian or any nominee of any
such sub-custodian appointed pursuant to Paragraph 6 hereof or shall be
properly endorsed and in
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form for transfer satisfactory to Provident.
5. RECEIPT AND DISBURSEMENT OF MONEY.
(a) Provident shall open and maintain a separate custodial account or
accounts in the name of the Fund, subject only to draft or order by Provident
acting pursuant to the terms of this Agreement, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it from or
for the account of the Fund. Provident shall make payments of cash to, or for
the account of, the Fund from such cash only (i) for the purchase of securities
as provided in Paragraph 13 hereof; (ii) upon receipt of Written Instructions,
for the payment of interest, dividends, distributions, taxes, administration,
accounting, advisory or management fees or expenses which are to be borne by the
Fund under the terms of this Agreement, the Advisory Agreements, the
Administration and Accounting Services Agreement and the Transfer Agency
Agreement; (iii) upon receipt of Written Instructions, for payments in
connection with the conversion, exchange or surrender of securities owned or
subscribed to by the Fund and held by or to be delivered to Provident; (iv) to a
sub-custodian pursuant to Paragraph 6 hereof; (v) for the redemption of the
Fund's Shares pursuant to the procedures set forth in the Fund's prospectus
dated May 14, 1991 or Written Instructions amending such procedures; (vi) for
payment of the amount of dividends received in respect of securities sold short;
or (vii) upon receipt of Written Instructions, for other Fund purposes. No
payment pursuant to (i) above shall be made unless Provident has
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received a copy of the broker's or dealer's confirmation or the payee's invoice,
as appropriate, and as provided in Paragraph 13 hereof.
(b) Provident is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian for the
account of the Fund.
6. RECEIPT OF SECURITIES. (a) Except as provided by Paragraph 7 hereof,
Provident shall hold and physically segregate in a separate account,
identifiable at all times from those of any other persons, firms, or
corporations, all securities and other property received by it for the account
of the Fund. All such securities and other property shall be held or disposed
of by Provident for the Fund pursuant to the terms of this Agreement. In the
absence of Written Instructions accompanied by a certified resolution of the
Fund's Board of Directors authorizing the transaction, Provident shall have no
power or authority to withdraw, deliver, assign, hypothecate, pledge or
otherwise dispose of any such securities and investments except in accordance
with the express terms provided for in this Agreement. In no case may any
Director, officer, employee or agent of the Fund withdraw any securities upon
their mere receipt. In connection with its customary and normal duties under
this Paragraph 6, Provident may, at its own expense, enter into sub-custodian
agreements with other banks or trust companies for the receipt of certain
securities and cash to be held by Provident for the account of the Fund pursuant
to this Agreement; provided that each such bank or trust company
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has an aggregate capital, surplus and undivided profits, as shown by its last
published report, of not less than one million dollars ($1,000,000) for a
Provident subsidiary or affiliate, or of not less than twenty million dollars
($20,000,000) if such bank or trust company is not a Provident subsidiary or
affiliate and that in either case such bank or trust company agrees with
Provident to comply with all relevant provisions of the 1940 Act and applicable
rules and regulations thereunder. Provident shall remain responsible for the
performance of all of its duties under this Agreement and shall hold the Fund
harmless from the acts and omissions of any bank or trust company that it might
choose pursuant to this Paragraph 6. Provident shall notify the Fund in any
event that it appoints a sub-custodian hereunder and shall provide the Fund with
such information in respect thereof as the Fund may reasonable request.
(b) Where securities are transferred to an account of the Fund
established pursuant to Paragraph 7 hereof, Provident shall also by book
entry or otherwise identify as belonging to the Fund the quantity of
securities in a fungible bulk of securities registered in the name of
Provident (or its nominee) or shown in Provident's account on the books of
the Book-Entry System. On the following business day, Provident shall
furnish PFPC with confirmations and a summary of all transfers to or from the
account of the Fund. At least monthly and from time to time, Provident shall
furnish the Fund and PFPC with a detailed statement of the Property held for
the Fund under this Agreement.
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7. USE OF BOOK-ENTRY SYSTEM AND DEPOSITORY. The Fund shall deliver to
Provident certified resolutions of the Board of Directors of the Fund approving,
authorizing and instructing Provident on a continuous and on-going basis until
instructed to the contrary by Oral or Written Instructions actually received by
Provident (a) to deposit in the Book-Entry System all securities belonging to
the Fund eligible for deposit therein and (b) to utilize the Book-Entry System
to the extent possible in connection with settlements of purchases and sales of
securities by the Fund, and deliveries and returns of securities loaned, subject
to repurchase agreements or used as collateral in connection with borrowing.
Without limiting the generality of such use, it is agreed that the following
provisions shall apply thereto:
(a) Securities and any cash of the Fund deposited in the Book-Entry
System will at all times be segregated from any assets and cash controlled by
Provident in other than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities. Provident and its
sub-custodian, if any, will pay out money only upon receipt of securities and
will deliver securities only upon the receipt of money.
(b) All books and records maintained by Provident which relate to the
Fund's participation in the Book-Entry System will at all times during
Provident's regular business hours be open to the, inspection of the Fund's duly
authorized employees, designees and agents, and the Fund will be furnished with
all information respect of the services rendered to it as it may require.
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(c) Provident will provide the Fund with copies of any report
obtained by Provident on the system of internal accounting control of the
Book-Entry System promptly after receipt of such a report by Provident.
Provident 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.
(d) In the event that any securities transaction for the Fund fails
to settle in accordance with Instructions received by Provident. Provident
shall promptly so notify PFPC and Provident shall use its best efforts to settle
or cause to be settled such transactions in accordance with such Instructions.
8. INSTRUCTIONS CONSISTENT WITH, ETC.
(a) Unless otherwise provided in this Agreement, Provident shall act
only upon oral and Written Instructions. Although Provident may know of the
provisions of such Charter or By-Laws or any vote, resolution or proceeding of
the Shareholders, or of the Board of Directors, or of any committee thereof.
(b) Provident shall be entitled to rely upon any Oral Instructions
and any Written Instructions actually received by Provident pursuant to this
Agreement. The Fund agrees to forward or request PFPC to forward to Provident
Written Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by Provident by the close of business of the
same day that such Oral Instructions are given to Provident. The Fund agrees
that the fact that such confirming Written Instructions are not received by
Provident shall in no way affect
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the validity of the transactions or enforceability of the transactions
authorized by the Fund by giving oral Instructions. The Fund agrees that
Provident shall incur no liability to the Fund in acting in good faith upon Oral
Instructions given to Provident hereunder concerning such transactions provided
such instructions reasonably appear to have been received from an Authorized
Person, provided however, Provident shall not be so protected if such oral or
Written Instructions were received from an Affiliate who has acted negligently,
unless such an Affiliate has received and transmitted erroneous instructions
received from an Authorized Person who is not an Affiliate.
9. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, Provident is authorized to, and shall take, as necessary,
the following actions:
(a) COLLECTION OF INCOME AND OTHER PAYMENTS. Provident shall:
(i) collect and receive for the account of the Fund, all income
and other payments and distributions, including (without limitation) stock
dividends, rights, bond coupons, option premiums and similar items, included or
to be included in the Property, and promptly advise the Fund of such receipt and
shall credit such income, as collected, to the Fund's custodian account;
(ii) endorse and deposit for collection, in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same day as
received;
(iii) receive and hold for the account of the Fund
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all securities received as a distribution on the Fund's securities as a result
of a stock dividend, share split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of rights or similar
securities issued with respect to any portfolio securities belonging to the Fund
held by Provident hereunder;
(iv) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed, or retired, or otherwise
become payable on the date such securities become payable; and
(v) 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 as described in Paragraph 24 of this Agreement.
(b) MISCELLANEOUS TRANSACTIONS. Provident is authorized to deliver
or cause to be delivered Property against payment or other consideration or
written receipt therefor in the following cases:
(i) for examination by a broker selling for the account of the
Fund in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary securities
for definitive securities; and
(iii) for transfer of securities into the name of the Fund or
Provident or nominee of either, or for exchange of securities for a different
number of bonds, certificates, or other
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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 Provident.
10. TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral or Written
Instructions are not otherwise, Provident, directly or through the use of the
Book-Entry System, shall:
(a) execute and deliver to such persons as may be designated in such
Oral or Written Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;
(b) deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
(c) deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) make such transfers or exchanges of the assets of the Fund and
take such other steps as shall be stated in said Oral or Written Instructions to
be for the purpose of effectuating any
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duly authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund;
(e) release securities belonging to the Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Fund; provided, however, that securities shall be released only upon
payment to Provident 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; and
(f) release and deliver securities owned by the Fund in connection
with any repurchase agreement entered into on behalf of the Fund, but only on
receipt of payment therefor; and pay out moneys of the Fund in connection with
such repurchase agreements, but only upon the delivery of the securities; and
(g) otherwise receive, transfer, exchange (including exchanges of
Shares of the Fund for securities and redemption of Shares of the Fund in
securities owned by the Fund), lend or deliver securities in accordance with
Oral or Written Instructions.
11. SEGREGATED ACCOUNTS.
(a) In the event that the Fund engages in transactions involving
forward currency contracts, exchange listed financial futures contracts or
options thereon, or buys, sells, or writes option on securities, Provident shall
upon receipt of Written or
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Oral Instructions establish and maintain a segregated account or accounts on its
records for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities in the Book-Entry
System or with a Depository (i) for the purposes of compliance by the Fund with
the procedures required a securities or options exchange or futures commissions
merchant; and (ii) shall establish other segregated accounts for other proper
purposes hereunder in accordance with Written or Oral Instructions.
(b)(i) Promptly after each loan of securities specifically allocated
to the Fund held by Provident hereunder, the Fund shall deliver or cause to be
delivered to Provident Written Instructions specifying with respect to each such
loan: (a) the name of the issuer and the title of the securities, (b) the number
of shares or the principal amount loaned, (c) the date of the loan and delivery,
(d) the total amount to be delivered to Provident against the loan of the
securities, including the amount of cash collateral and the premium, if any,
separately identified, and (e) the name of the broker, dealer, or financial
institution to which the loan was made. Provident shall deliver the securities
thus designated to the broker, dealer or financial institution to which the loan
was made upon receipt of the total amount designated as to be delivered against
the loan of securities. Provident may accept payment in connection with a
delivery otherwise than through the Book-Entry System only in the form of a
certified or bank cashier's check payable to the order of the Fund or Provident
drawn on New
15
York Clearing House funds and may deliver securities in accordance with the
customs prevailing among dealers in securities.
(ii) Promptly after each termination of the loan of securities by
the Fund, the Fund shall deliver or cause to be delivered to Provident Written
Instructions specifying with respect to each such loan termination and return of
securities: (a) the name of the issuer and the title of the securities to be
returned, (b) the number of shares or the principal amount to be returned, (c)
the date of termination, (d) the total amount to be delivered by Provident
(including the cash collateral for such securities minus any offsetting credits
as described in said Written Instructions) , and (e) the name of the broker,
dealer, or financial institution from which the securities will be returned.
Provident shall receive all securities returned from the broker, dealer, or
financial institution to which such securities were loaned and upon receipt
thereof shall pay, out of the moneys held for the account of the Fund, the total
amount payable upon such return of securities as set forth in the Written
Instructions.
12. DIVIDENDS AND DISTRIBUTIONS. The Fund itself or through PFPC shall
furnish Provident with appropriate evidence of action by the Fund's Board of
Directors declaring and authorizing the payment of any dividends and
distributions in respect of the Fund. Upon receipt by Provident of Written
Instructions with respect to dividends and distributions declared by the Fund's
Board of Directors and payable to Shareholders who have elected in the proper
manner to receive their distributions or dividends in cash,
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and in conformance with procedures mutually agreed upon by Provident, the Fund,
and PFPC, Provident shall pay to PFPC, an amount equal to the amount indicated
in said Written Instructions as payable by the Fund to such Shareholders for
distribution in cash by PFPC to such Shareholders. In lieu of remitting to PFPC
cash dividends and distributions, Provident may arrange for the direct payment
of cash dividends and distributions to Shareholders by Provident in accordance
with such procedures and controls as are mutually agreed upon from time to time
by and among the Fund, Provident and PFPC.
In accordance with the Prospectus, the Internal Revenue Code and
regulations promulgated thereunder, and with such procedures and controls as are
mutually agreed upon from time to time by and among the Fund, Provident and
PFPC, Provident shall arrange for the establishment of XXX custodian accounts
for such Shareholders holding Shares through XXX accounts.
13. PURCHASES OF SECURITIES. Promptly after each purchase of securities
by the Advisor for the Fund, the Fund, through PFPC, shall deliver to Provident
Oral or Written Instructions specifying with respect to each such purchase: (a)
the name of the issuer and the title of the securities including CUSIP number,
if applicable, (b) the number of shares or the principal amount purchased and
accrued interest, if any, (c) the date of purchase and settlement, (d) the
purchase price per unit, (e) the total amount payable upon such purchase and (f)
the name of the person from whom or the broker through whom the purchase was
made. Provident shall pay out
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of the monies held for the account of the Fund the total amount payable to the
person from whom or the broker through whom the purchase was made, provided that
the same conforms to the total amount payable as set forth in such Oral or
Written Instructions. In the event that such a transaction fails to settle in
accordance with such Oral or Written Instructions, Provident shall promptly so
notify the Fund and PFPC and shall use its best efforts to settle or cause to be
settled such transactions in accordance with such Instructions.
14. SALES OF SECURITIES. Promptly after each sale of securities by the
Fund or exercise of an option written by the Fund, the Fund, through PFPC, shall
deliver to Provident Oral Instructions, specifying with respect to each such
sale: (a) the name of the issuer and the title of the security including CUSIP
number, if applicable, (b) the number of shares or principal amount sold, and
accrued interest, if any, (c) the date of sale, (d) the sale price per unit, (e)
the total amount payable to the Fund upon such sale, (f) the name of the
broker through whom or the person to whom the sale was made, and (g) the
location to which the security must be delivered. Provident shall deliver the
securities upon such sale, provided that the same conforms to the total
amount payable as set forth in such Oral Instructions. Subject to the
foregoing, Provident may accept payment in such form as shall be satisfactory to
it, and may deliver securities and arrange for payment in accordance with the
customs prevailing among dealers in securities. If any such transaction fails
to settle in accordance
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with such Instructions, Provident shall promptly notify the Fund and shall use
its best efforts to settle or cause to be settled such transaction in accordance
with such instructions.
15. RECORDS. Provident shall prepare and maintain written records of all
cash and property and income and disbursements of the Fund. The books and
records pertaining to the Fund which are in the possession of Provident 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 laws and regulations
and shall be returned to the Fund or its designee upon request. The Fund and
the Fund's authorized representatives and designees, shall have access to such
books and records at all times during Provident's normal business hours. Upon
the request of the Fund, copies of any such books and records shall be provided
by Provident to the Fund or the Fund's authorized representative or designee at
the Fund's expense.
16. REPORTS AND OTHER INFORMATION.
(a) Provident shall furnish the Fund the following reports:
(1) such periodic and special reports as the Fund may
reasonably request;
(2) a monthly statement summarizing all transactions and
entries for the account of the Fund, listing the portfolio securities
belonging to the Fund with the average cost of each issue at the end
of such month, and stating the cash account of the Fund including
disbursements;
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(3) the reports to be furnished to the Fund pursuant to Rule
17f-4; and
(4) such other information as may be agreed upon from time
to time between the Fund and Provident.
(b) Provident shall transmit promptly to the Fund any proxy
statement, proxy materials, notice of a call, tender offer or conversion,
redemption, reorganization and similar communications received by it as
custodian of the Property.
(c) In addition to its obligations under paragraph 16 (b) herein,
Provident shall use its best efforts to communicate to the Fund such material
information concerning the securities held by the Fund as shall come into
Provident's possession via electronic services or issuer notification, but
Provident shall have no obligation to monitor any publication, newspapers or
similar periodicals for such information and shall not be liable to the Fund in
respect of the activity covered by this Paragraph 16(c).
17. COOPERATION WITH ACCOUNTANTS. Provident shall cooperate with Fund's
independent public accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to assure that the necessary
information is made available to such accountants for the expression of their
opinion, as such may be required from time to time by the Fund.
18. CONFIDENTIALITY. Provident agrees on behalf of itself and its
employees to treat confidentially all records and other information relative to
the Fund and its prior, present, or potential Shareholders, except, after prior
notification to and
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approval in writing by the Fund, which approval may not be withheld where
Provident reasonably believes that it may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Fund.
19. RIGHT TO RECEIVE ADVICE. Provident shall be protected in any action
or inaction which it takes in reliance on advice of Provident's counsel.
Provident shall notify the Fund of the receipt of such advice within a
reasonable time.
20. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. Provident agrees
to perform its duties hereunder in accordance with applicable law; however;
Provident assumes no responsibility for ensuring that the Fund complies with the
requirements of the 1933 Act, the 1940 Act, the CEA, and any laws, rules and
regulations of governmental authorities having jurisdiction.
21. COMPENSATION. As compensation for the services rendered by Provident
during the term of this Agreement, the Fund will pay to Provident the fees set
forth in the Fee Schedule annexed hereto as Schedule A and incorporated herein.
22. INDEMNIFICATION. (a) The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless Provident and its nominees from all taxes, charges,
expenses (except expenses that are inherent to its duties hereunder) ,
assessments, claims and liabilities (including, without limitation, liabilities
arising under the 1933 Act, the 1934 Act, the 1940 Act, the CEA, and any state
and foreign securities and blue sky laws, all as or may be
21
amended from time to time) including (without limitation) reasonable attorneys'
fees and disbursements, arising directly or indirectly (a) solely from the fact
that securities included in the Property are registered in the name of any such
nominee or (b) from any action or thing which Provident takes or does or omits
to take or do (i) at the request or on the direction of or in reliance on the
advice of the Fund or the Fund's counsel on behalf of the Fund or (ii) upon Oral
or Written Instructions, provided that Oral or Written Instructions were not
received from an Affiliate who has acted negligently (unless such Affiliate has
received and transmitted erroneous instructions received from an Authorized
Person that is not an Affiliate) and provided further neither Provident nor any
of its nominees shall be indemnified against any liability (or any expenses
incident to such liability) arising out of Provident's or such nominee's own
misfeasance, bad faith, negligence or disregard of its duties or
responsibilities described in this Agreement. In the event of any advance of
cash for any purpose made by Provident pursuant to Oral or Written Instructions
of the Fund, or in the event that Provident or its nominee shall incur or be
assessed any taxes, charges, expenses,, assessments, claims or liabilities
described in the previous sentence of this Paragraph 22(a), except such as may
arise from its or its nominee I s own negligent action, negligent failure to
act, disregard of its duties hereunder or misconduct, any Property at any time
held for the account of the Fund shall be security therefor.
(b) Provident shall not pay or settle any claim, demand,
22
expense or liability in respect of which Provident is entitled to be indemnified
pursuant to paragraph (a) above (an "Indemnifiable Claim") without the express
written consent of the Fund. Provident shall notify the Fund promptly of
receipt of notification of an Indemnifiable Claim. Unless the Fund notifies
Provident within 30 days of receipt of Written Notice of such Indemnifiable
Claim that the Fund does not intend to defend such Indemnifiable Claim, the Fund
shall defend Provident from such Indemnifiable Claim. The Fund shall have the
right to defend any Indemnifiable Claim at its own expense, such defense to be
conducted by counsel selected by the Fund. Further, Provident may join the Fund
in such defense at Provident's own expense, but to the extent that it shall so
desire the Fund shall direct such defense. If the Fund shall fail or refuse to
defend, pay or settle an Indemnifiable Claim, Provident, at the Fund's expense
consistent with limitations concerning attorney's fees expressed in Paragraph
22(a) hereof, may provide its own defense.
23. RESPONSIBILITY OF PROVIDENT. Provident hereby represents that it is
experienced in the provision of the services covered by this Agreement. In the
performance of its duties hereunder, Provident shall be obligated to exercise
due care and diligence and to act in good faith and in a timely manner to assure
the accuracy and completeness of all services performed under this Agreement.
Provident shall be under no duty to take any action on behalf of the Fund except
as specifically set forth herein or as may be specifically agreed to by
Provident in writing. Provident shall be
23
responsible for its own negligent failure to perform its duties under this
Agreement. In assessing negligence for purposes of this Agreement, the parties
agree that the standard of care applied to Provident's conduct shall be the care
that would be exercised by a similarly situated service provider, supplying
substantially the same services under substantially similar circumstances.
Notwithstanding the foregoing, Provident shall not be responsible for losses
beyond its control, provided that Provident has acted in accordance with the
provisions of this Agreement and the standard of care set forth above; and
provided further that Provident shall only be responsible for that portion of
losses or damages suffered by the Fund attributable to the negligence of
Provident. Losses shall be beyond Provident's control if they result from or
occur because of delays or errors or loss of data provided by a person other
than Provident or its Affiliates, or acts of civil or military authority,
national emergencies, labor difficulties (other than those of Provident or its
Affiliates), fire, failure of equipment caused by failures external to the
premises of Provident or its Affiliates, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply external to the premises of Provident or its Affiliates.
Without limiting the generality of the foregoing or of any other provision
of this Agreement, Provident in connection with its duties under this Agreement
shall not be under any duty or obligation to inquire into and shall not be
liable for or in
24
respect of the validity or invalidity or authority or lack thereof of any Oral
or Written Instruction received from the Fund, or an Affiliate, provided such
Affiliate has not acted negligently (unless such Affiliate has received and
transmitted erroneous instructions received from an Authorized Person that is
not an Affiliate), notice or other instrument which conforms to the applicable
requirements of this Agreement, and which Provident reasonably believes to be
genuine.
Provident shall have no liability to the Fund for any losses or damages the
nature of which is or was remote, unforeseen, unforeseeable or beyond the scope
of reasonable anticipation at the time this Agreement was executed.
24. 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 Provident) shall be at the sole risk of the Fund. In any case
in which Provident does not receive any payment due the Fund within a reasonable
time after Provident has made proper demands for the same, it shall so notify
the Fund in writing, including copies of all demand letters, any written
responses thereto, and memoranda of all oral responses thereto and to telephonic
demands, and await instructions from the Fund. Provident shall not be obliged
to take legal action for collection unless and until reasonably indemnified to
its satisfaction. Provident shall also notify the Fund as soon as reasonably
practicable whenever income due on securities is not collected in due course.
25
25. DURATION AND TERMINATION. This Agreement shall continue in effect for
a period of one year from the date that the Fund begins to invest in stocks that
comprise the Standard & Poor's 500 Composite Stock Price Index (the "investment
date") . This Agreement may be terminated by either party on or after the first
anniversary of the investment date upon not less than 180 days prior written
notice to the other party. The foregoing provisions notwithstanding, either
party may terminate this Agreement in the event of a material breach of the
terms hereof after written notice to the other party of such breach and a
reasonable time for cure of such breach, unless such breach is not curable and,
in such circumstances, this Agreement shall terminate, at the option of the
injured party, three months after the date such notice is given. Upon any
termination of this Agreement Provident shall deliver cash, securities, Property
and the records maintained hereunder for the Fund to a successor custodian
designated by the Fund, and if no such successor is designated, Provident may
deliver such cash, securities, Property and records to a bank or trust company
of its own selection, 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, provided, however, that Provident shall not be
required to make any such delivery or payment until full payment shall have been
made or provided for by the Fund of all liabilities constituting a charge on or
against the property of the Fund then held by Provident or on
26
or against Provident and until full payment shall have been made to Provident of
all of its fees, compensation, costs and expenses as provided herein.
26. NOTICES. All notices and other communications, including Written
Instructions (collectively referred to as "Notice" or "Notices" in this
paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex, or facsimile sending device. Notices shall be addressed (a) if to
Provident at Provident's address, Airport Business Center, 000 Xxxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxxxx 00000, marked for the attention of the Custodian Services
Department (or its successor); (b) if to the Fund, at the address of the Fund;
or (c) if to neither of the foregoing, at such other address as shall have been
notified to the sender of any such Notice or other communication. All postage,
cable, telegram, telex and facsimile sending device charges arising from the
sending of a Notice hereunder shall be paid by the sender.
27. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
28. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
29. DELEGATION. On thirty (30) days prior written notice to the Fund,
Provident may assign its rights and delegate its duties hereunder to any
wholly-owned direct or indirect subsidiary of Provident or PNC Financial Corp,
provided that (i) the delegate
27
agrees with Provident to comply with all relevant provisions of the 1940 Act and
this Agreement; and (ii) Provident and such delegate shall promptly provide such
information as the Fund may request, and respond to such questions as the Fund
may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate. In the event of such delegation, Provident shall
remain liable under this Agreement.
30. 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.
31. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided that the
parties hereto may embody in one or more separate documents their agreement, if
any, with respect to delegated and/or Oral Instructions. The captions in this
Agreement are included for convenience of reference only and in no way defined
or delimit any of the provisions hereof or otherwise affect their construction
or effect. This Agreement shall be deemed to be a contract made in Pennsylvania
and governed by Pennsylvania law. If any provision of this Agreement shall be
held or made invalid by a court decision, statue, rule or
28
otherwise, the remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding and shall inure to the benefit of the parties hereto
and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
DFA U.S. LARGE CAP PORTFOLIO INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
PROVIDENT NATIONAL BANK
By: /s/ Xxxxxx Xxxxxxxx
----------------------------------
29
APPENDIX A
(To identify and furnish signatures of "Authorized Persons" as referred to in
the Custody Agreement and the Transfer Agency Agreement of the Fund.)
30
SCHEDULE A
The Fund will pay Provident National Bank ("Provident") for its services
under this Custodian Agreement and Provident Financial Processing Corporation
("PFPC") for its services under both a Transfer Agency Agreement with the Fund,
dated July 12, 1991, and under an Administration and Accounting Services
Agreement with the Fund, dated July 12, 1991, an aggregate monthly fee of 1/12
of .0175% of the Fund's average daily gross assets, exclusive of out-of-pocket
expenses; PROVIDED, HOWEVER, that the Fund will pay Provident and PFPC a minimum
aggregate annual fee of $70,000. PFPC will receive payment of the aggregate
monthly fee. There will be no transaction-based custody fee.
Fees will begin to accrue on the date that the Fund begins to invest in
stocks that comprise the Standard & Poor's 500 Composite Stock Price Index (the
"investment date") and the twelve month period for calculating the minimum
annual fee shall begin on the investment date.
The following out-of-pocket expenses shall be billed by Provident on a
monthly basis, in arrears, to the extent incurred, commencing on the effective
date of the Custodian Agreement;
(i) Federal Express charges;
(ii) Postage;
(iii) Record storage;
(iv) Dividend/Interest claim fees charged to Provident; and
(v) Payments to depositories (i.e., $.50 to DTC per DTC transaction).
The following out-of-pocket expenses shall be billed by PFPC on a monthly
basis, in arrears, to the extent incurred, commencing on the effective date of
the Transfer Agency and the Administration and Accounting Services Agreements;
(i) Pricing services
- domestic and international prices
- support terminals
- pink sheets;
(ii) Federal Express charges;
(iii) Postage; and
(iv) Record storage.
31
