Exhibit (j)
FORM OF CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of June 26, 2002 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and DB HEDGE STRATEGIES FUND LLC a Delaware limited liability
company (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as a closed-end, non-diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(c) "1940 Act" means the Investment Company Act of 1940, as
amended.
(c) "Authorized Person" means any officer of the Fund and any
other person authorized by the Fund on an Authorized Persons
List attached hereto to give Oral or Written Instructions on
behalf of the Fund, or any person reasonably believed by PFPC
Trust to be so authorized. An Authorized Person's scope of
authority
may be limited by setting forth such limitation in a written
document signed by both parties hereto.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry
system for United States and federal agency Securities, its
successor or successors, and its nominee or nominees and any
book-entry system maintained by an exchange registered with
the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "Change of Control" means a change in ownership or control
(not including transactions between wholly-owned direct or
indirect subsidiaries of a common parent) of 25% or more of
the beneficial ownership of the shares of common stock or
shares of beneficial interest of an entity or its parent(s).
(g) "Units" mean the beneficial interest of any series or class of
the Fund.
(h) "Oral Instructions" mean oral instructions received by PFPC
Trust from 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.
(i) "PFPC Trust" means PFPC Trust Company or a subsidiary or
affiliate of PFPC Trust Company.
(j) "SEC" means the Securities and Exchange Commission.
(k) "Securities" means Securities (including without limitation
equities, debt obligations, options, and other "securities" as
that term is defined in Section 2(a)(36) of the 0000 Xxx) and
any contracts for forward or future delivery of any security
debt obligation, all manner of derivative instruments and any
contracts
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based on any index or group of Securities or debt obligations,
and any options thereon, as well as investments in registered
investment companies and private investment funds.
(l) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940
Act and the CEA.
(m) "Property" means:
(i) any and all Securities and other investment items
which the Fund may from time to time deposit, or
cause to be deposited, with PFPC Trust or which PFPC
Trust may from time to time hold for the Fund;
(ii) all income in respect of any of such Securities or
other investment items;
(iii) all proceeds of the sale of any of such Securities or
investment items; and
(iv) all proceeds of the sale of Securities issued by the
Fund, which are received by PFPC Trust from time to
time, from or on behalf of the Fund.
(m) "Written Instructions" mean (i) written instructions signed by
two 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 or by
hand, mail or facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund and PFPC Trust accepts such appointment and agrees
to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC Trust with the following:
(a) at PFPC Trust's request, certified or authenticated copies of
the resolutions of the Fund's directors, approving the
appointment of PFPC Trust or its affiliates to provide
services;
(b) a copy of the Fund's most recent effective registration
statement;
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(c) a copy of the Fund's limited liability company operating
agreement;
(d) a copy of the Fund's advisory agreements;
(e) a copy of the distribution/underwriting agreement with respect
to the Fund;
(f) a copy of the Fund's administration agreement and
sub-administration agreement;
(g) copies of any distribution and/or member servicing plans and
agreements made in respect of the Fund; and
(h) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
PFPC Trust undertakes to comply with applicable requirements of the
Securities Laws and of laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be
performed by PFPC Trust hereunder. Except as specifically set forth
herein, PFPC Trust assumes no responsibility for such compliance by the
Fund or any other entity.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall
act only upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instruction
or Written Instruction it receives from an Authorized Person
pursuant to this Agreement. PFPC Trust may assume that any
Oral Instructions or Written Instructions received hereunder
are not in any way inconsistent with the provisions of
organizational documents of the Fund or of any vote,
resolution or proceeding of the Fund's directors or of the
Fund's members, unless and until PFPC Trust receives Written
Instructions to the contrary.
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(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions given on behalf of the Fund
(except where such Oral Instructions are given by PFPC Trust
or its affiliates) and shall endeavor to ensure 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. Where Oral Instructions or Written Instructions
reasonably appear to have been received from an Authorized
Person, PFPC shall incur no liability to the Fund in acting
upon such Oral Instructions or Written Instructions provided
that PFPC's actions comply with the other provisions of this
Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) Advice of the Fund. If PFPC Trust is in doubt as to any action
it should or should not take, PFPC Trust may request
directions or advice, including Oral Instructions or Written
Instructions, from the Fund.
(b) Advice of Counsel. If PFPC Trust shall be in doubt as to any
question of law pertaining to any action it should or should
not take, PFPC Trust may request advice from counsel of its
own choosing (who may be counsel for the Fund, the Fund's
investment adviser or PFPC Trust, at the option of PFPC
Trust); provided, however, that the Fund will be responsible
only for reasonable legal expenses arising out of such advice.
(c) Conflicting Advice. In the event of a conflict between
directions or advice or
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Oral Instructions or Written Instructions PFPC Trust receives
from the Fund, and the advice it receives from counsel, PFPC
Trust shall be entitled to rely upon and follow the advice of
counsel. PFPC Trust shall promptly inform the Fund of such
conflict, and PFPC Trust shall refrain from acting in the
event of a conflict, unless counsel advises PFPC Trust that
failure to take action is likely to result in additional loss,
liability, or expense. In the event PFPC Trust relies on the
advice of counsel, PFPC Trust remains liable for any action or
omission on the part of PFPC Trust that constitutes willful
misfeasance, bad faith, gross negligence. or reckless
disregard by PFPC Trust of any duties, obligations, or
responsibilities set forth in this Agreement.
(d) Protection of PFPC Trust. PFPC Trust shall be indemnified by
the Fund and without liability for any action PFPC Trust takes
or does not take in reliance upon directions or advice or Oral
Instructions or Written Instructions PFPC Trust receives from
or on behalf of the Fund or from counsel and which PFPC Trust
believes, in good faith, to be consistent with those
directions or advice or Oral Instructions or Written
Instructions. Nothing in this section shall be construed so as
to impose an obligation upon PFPC Trust (i) to seek such
directions or advice or Oral Instructions or Written
Instructions, or (ii) to act in accordance with such
directions or advice or Oral Instructions or Written
Instructions unless, under the terms of the other provisions
of this Agreement, the same is a condition of PFPC Trust's
properly taking or not taking such action. Nothing in this
subsection shall excuse PFPC Trust when an action or omission
on the part of PFPC Trust constitutes willful misfeasance, bad
faith, gross negligence, or reckless disregard
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of its duties, obligations, or responsibilities set forth in
this Agreement.
7. RECORDS; VISITS. The books and records pertaining to the Fund, which
are in the possession or under the control of PFPC Trust, shall be the
property of the Fund. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable Securities
Laws, rules and regulations. The Fund and Authorized Persons shall have
access to such books and records at all times during PFPC Trust's
normal business hours. Upon the reasonable request of the Fund, copies
of any such books and records shall be provided by PFPC Trust to the
Fund or to an Authorized Person, at the Fund's expense. To the extent
required by, and in the manner prescribed by and in accordance with,
the 1940 Act, the books and records of PFPC Trust pertaining to its
actions under this Agreement and reports by PFPC Trust or its
independent accountants concerning its accounting system, procedures
for safeguarding Securities, and internal accounting controls will be
open to inspection and audit at reasonable times by officers,
employees, or agents of the Fund or auditors employed by the Fund and
will be preserved by PFPC Trust.
8. CONFIDENTIALITY. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that
is competitively sensitive material, and not generally known to the
public, including, but not limited to, information about product plans,
marketing strategies, finances, operations, customer relationships,
customer profiles, customer lists, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Fund or PFPC Trust, their respective
subsidiaries and affiliated companies and the customers, clients and
suppliers of any of
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them; (b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or PFPC
Trust a competitive advantage over its competitors; (c) all
confidential or proprietary concepts, documentation, reports, data,
specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, and trade secrets, whether or
not patentable or copyrightable; and (d) anything designated as
confidential. Notwithstanding the foregoing, information shall not be
subject to such confidentiality obligations if it: (a) is already known
to the receiving party at the time it is obtained (other than as a
result of disclosure by the other party under similar confidentiality
obligations); (b) is or becomes publicly known or available through no
wrongful act of the receiving party; (c) 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) is released by the protected party
to a third party without restriction; (e) is required to be disclosed
by the receiving party pursuant to a requirement of a court order,
subpoena, governmental or regulatory agency or law (provided the
receiving party will provide the other party written notice of such
requirement, to the extent such notice is permitted); (f) is relevant
to the defense of any claim or cause of action asserted against the
receiving party; or (g) has been or is independently developed or
obtained by the receiving party.
If any party to this Agreement or any of such party's affiliates or
their respective employees, officers, agents, or representatives
(hereinafter, "Qualified Persons") is requested or required (by oral
question, interrogatories, requests for information or documents,
subpoena, civil investigative demand, or similar process) to disclose
any
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Confidential Information, such party, on its own behalf or on behalf of
such party's Qualified Person, will promptly notify such other party of
such request or requirement so that such other party may seek an
appropriate protective order or waive compliance with provisions of
this Agreement. If, in the absence of a protective order or the receipt
of a waiver hereunder, such party or such party's Qualified Person
subject to the disclosure request or requirement is, in the written
opinion of such party's counsel addressed to such other party (the
reasonable costs of which shall be paid by such other party), compelled
to disclose the Confidential Information or else stand liable for
contempt or suffer other censure or significant penalty, such party or
such party's Qualified Person subject to the disclosure request or
requirement may disclose only such of the Confidential Information to
the party compelling disclosure as is required by law. Any party that
discloses Confidential Information pursuant to the foregoing sentence
shall not be liable for the disclosure of such Confidential Information
to the other party unless such disclosure was caused by such party's or
such party's Qualified Person's action or inaction that (i) constitutes
willful misfeasance, bad faith, gross negligence, or reckless disregard
of their duties hereunder subject to the disclosure request or
requirement or (ii) is not otherwise permitted by this Agreement.
9. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the
Fund's independent public accountants and shall take all reasonable
action to make any requested information available to such accountants
as reasonably requested by the Fund.
10. PFPC SYSTEM. PFPC Trust shall retain title to and ownership of any and
all data base technology, computer programs, screen formats, report
formats, interactive design
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techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC Trust in
connection with the services provided by PFPC Trust to the Fund.
11. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in
effect with appropriate parties one or more agreements making
reasonable provisions for emergency use of electronic data processing
equipment, including the maintenance of an offsite disaster recovery
site from which PFPC can meet its obligations hereunder in the event
that its primary facility is unavailable. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall
have no liability with respect to the loss of data or service
interruptions caused by equipment failure provided such loss or
interruption is not caused by PFPC Trust's own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties or
obligations under this Agreement.
12. COMPENSATION. As compensation for custody services rendered by PFPC
Trust during the term of this Agreement, the Fund will pay to PFPC
Trust a fee or fees as may be agreed to in writing from time to time by
the Fund and PFPC Trust. The Fund acknowledges that PFPC Trust may
receive float benefits in connection with maintaining certain accounts
required to provide services under this Agreement.
13. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless PFPC
Trust and its affiliates, including their respective officers,
directors, agents and employees, from all taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
attorneys' fees and disbursements and liabilities arising under the
Securities
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Laws and any state and foreign Securities Laws and blue sky laws)
arising directly or indirectly from any action or omission to act that
PFPC Trust takes in connection with the provision of services to the
Fund; under this Agreement. Neither PFPC Trust nor any of its
affiliates shall be indemnified against any liability (or any expenses
incident to such liability) arising out of or 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.
Notwithstanding anything in this Agreement to the contrary, neither the
Fund nor its affiliates shall be liable for any consequential, special
or indirect losses or damages whether or note likelihood of such
damages or loss was known by the Fund or its affiliates.
The provisions of this Section 13 shall survive termination of this
Agreement.
14. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action hereunder
on behalf of the Fund except as specifically set forth herein
or as may be specifically agreed to by PFPC Trust and the Fund
in a written amendment hereto. PFPC Trust shall be obligated
to exercise care and diligence in the performance of its
duties hereunder and to act in good faith in performing
services provided for under this Agreement. PFPC Trust shall
be liable only for any damages arising out of PFPC Trust's
failure to perform its duties under this Agreement 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
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occurring directly or indirectly by reason of circumstances
beyond its reasonable control, including without limitation
acts of God; action or inaction of civil or military
authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion;
interruption, loss or malfunction of utilities,
transportation, computer or communications capabilities;
insurrection; elements of nature; or non-performance by a
third party; and (ii) PFPC Trust shall not be under any duty
or obligation to inquire into and shall not be liable for the
validity or invalidity, authority or lack thereof, or
truthfulness or accuracy or lack thereof, of any instruction,
direction, notice, instrument or other information that
conforms to the applicable requirements of this Agreement and
that PFPC Trust reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary,
(i) neither PFPC Trust nor its affiliates shall be liable for
any consequential, special or indirect losses or damages,
whether or not the likelihood of such losses or damages was
known by PFPC Trust or its affiliates and (ii) PFPC Trust's
cumulative liability to the Fund for all losses, claims,
suits, controversies, breaches or damages for any cause
whatsoever (including but not limited to those arising out of
or related to this Agreement) and regardless of the form of
action or legal theory shall not exceed the lesser of $200,000
or the fees received by PFPC Trust for services provided
hereunder during the 24 months immediately prior to the date
of such loss or damage.
(d) Any cause of action asserted by the Fund against PFPC Trust or
any of its affiliates must be asserted within the 12 month
period immediately after the Fund
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or its affiliate(s) obtained actual knowledge of such cause of
action.
(e) Each party shall have a duty to mitigate damages for which the
other party may become responsible.
The provisions of this Section 14 shall survive termination of
this Agreement.
15. DESCRIPTION OF SERVICES.
(a) Delivery of the Property. The Fund will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Fund,
including cash received as a result of the distribution of
Units, during the term of this Agreement. PFPC Trust will not
be responsible for such property until actual receipt.
(b) Receipt and Disbursement of Money. PFPC Trust, acting upon
Written Instructions, shall open and maintain separate
accounts in the Fund's name using all cash received from or
for the account of the Fund, subject to the terms of this
Agreement.
PFPC Trust shall make cash payments from or for the Accounts
only for:
(i) purchases of Securities in the name of the Fund, PFPC
Trust, PFPC Trust's nominee or a sub-custodian or
nominee thereof as provided in sub-section (j) and
for which PFPC Trust has received a copy of the
broker's or dealer's confirmation or payee's invoice,
as appropriate;
(ii) purchase or redemption of Units of the Fund delivered
to PFPC Trust;
(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting,
distribution, advisory, management fees or similar
expenses which are to be borne by the Fund;
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent for
the members, of an amount equal to the amount of
dividends and distributions stated in the Written
Instructions to be distributed in cash by the
transfer agent to members, or, in lieu of paying the
Fund's transfer agent, PFPC Trust may arrange for the
direct payment of cash dividends and distributions to
members in accordance with
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procedures mutually agreed upon from time to time by
and among the Fund, PFPC Trust and the Fund's
transfer agent.
(v) payments, upon receipt of Written Instructions, in
connection with the conversion, exchange or surrender
of Securities owned or subscribed to by the Fund and
held by or delivered to PFPC Trust;
(vi) payments of the amounts of dividends received with
respect to Securities sold short;
(vii) payments 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 Accounts.
(c) Receipt of Securities; Subcustodians.
(i) PFPC Trust shall hold all Securities received by it
for the Accounts in a separate account that
physically segregates such Securities from those of
any other persons, firms or corporations, except for
Securities held in a Book-Entry System. All such
Securities shall be held or disposed of only upon
Written Instructions of the Fund pursuant to the
terms of this Agreement. PFPC Trust shall have no
power or authority to assign, hypothecate, pledge or
otherwise dispose of any such Securities or
investment, except upon the express terms of this
Agreement or upon Written Instructions authorizing
the transaction. In no case may any member of the
Fund's directors, or any officer, employee or agent
of the Fund withdraw any Securities.
At PFPC Trust's own expense and for its own
convenience, PFPC Trust may enter into sub-custodian
agreements with other banks or trust companies that
are banks as defined in the 1940 Act to perform
duties described in this sub-section (c) with respect
to domestic assets. Such bank or trust company shall
have an aggregate capital, surplus and undivided
profits, according to its last published report, of
at least one million dollars ($1,000,000), if it is a
subsidiary or affiliate of PFPC Trust, or at least
twenty million dollars ($20,000,000) if such bank or
trust company is not a subsidiary or affiliate of
PFPC Trust. In addition, such bank or trust company
must be qualified to act as custodian and agree to
comply with the relevant provisions of the 1940 Act
and other applicable rules and regulations. Any such
arrangement will not be entered into
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without prior written notice to the Fund (or as
otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements
with sub-custodians with respect to services
regarding foreign assets. Any such arrangement will
be entered into with prior written notice to the Fund
(or as otherwise provided in the 1940 Act).
PFPC Trust shall remain responsible for the
performance of all of its duties as described in this
Agreement and shall hold the Fund harmless from its
own acts or omissions, under the standards of care
provided for herein, or the acts and omissions of any
sub-custodian chosen by PFPC Trust under the terms of
this sub-section (c).
(d) Transactions Requiring Instructions. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC
Trust, directly or through the use of the Book-Entry System,
shall:
(i) deliver any Securities held for the Fund against the
receipt of payment for the sale of such Securities;
(ii) execute and deliver to such persons as may be
designated in such Oral Instructions or Written
Instructions, proxies, consents, authorizations, and
any other instruments whereby the authority of the
Fund as owner of any Securities may be exercised;
(iii) deliver any Securities to the issuer thereof, or its
agent, when such Securities are called, redeemed,
retired or otherwise become payable at the option of
the holder; provided that, in any such case, the cash
or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any Securities held for the Fund against
receipt of other Securities or cash issued or paid in
connection with the liquidation, reorganization,
refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise
of any conversion privilege;
(v) deliver any Securities held for the Fund to any
protective committee, reorganization committee or
other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization
or sale of assets of any corporation, and receive and
hold under the terms of this Agreement such
certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to
evidence such delivery;
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(vi) make such transfer or exchanges of the assets of the
Fund and take such other steps as shall be stated in
said Oral Instructions or Written Instructions to be
for the purpose of effectuating a duly authorized
plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(vii) release Securities belonging to the Fund to any bank
or trust company for the purpose of a pledge or
hypothecation to secure any loan incurred by the
Fund; provided, however, that Securities shall be
released only upon payment to PFPC Trust of the
monies borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made subject to proper prior
authorization, further Securities may be released for
that purpose; and repay such loan upon redelivery to
it of the Securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing
the loan;
(viii) release and deliver Securities owned by the Fund in
connection with any repurchase agreement entered into
on behalf of the Fund, but only on receipt of payment
therefor; and pay out moneys of the Fund in
connection with such repurchase agreements, but only
upon the delivery of the Securities;
(ix) release and deliver or exchange Securities owned by
the Fund in connection with any conversion of such
Securities, pursuant to their terms, into other
Securities;
(x) release and deliver Securities to a broker in
connection with the broker's custody of margin
collateral relating to futures and options
transactions;
(xi) release and deliver Securities owned by the Fund for
the purpose of redeeming in kind shares of the Fund
upon delivery thereof to PFPC Trust; and
(xii) release and deliver or exchange Securities owned by
the Fund for other purposes.
PFPC Trust must also receive a certified resolution
describing the nature of the corporate purpose and
the name and address of the person(s) to whom
delivery shall be made when such action is pursuant
to sub-paragraph d(xii).
(e) Use of Book-Entry System. PFPC Trust is authorized and
instructed, on a continuous basis, to deposit in the
Book-Entry System all Securities belonging to
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the Fund eligible for deposit therein and to utilize the
Book-Entry System to the extent possible in connection with
settlements of purchases and sales of Securities by the Fund,
and deliveries and returns of Securities loaned, subject to
repurchase agreements or used as collateral in connection with
borrowings. PFPC Trust shall continue to perform such duties
until it receives Written Instructions or Oral Instructions
authorizing contrary actions.
PFPC Trust shall administer the Book-Entry System as follows:
(i) With respect to Securities of the Fund which are
maintained in the Book-Entry System, the records of
PFPC Trust shall identify by Book-Entry or otherwise
those Securities belonging to the Fund.
(ii) Assets of the Fund deposited in the Book-Entry System
will at all times be segregated from any assets and
cash controlled by PFPC Trust in other than a
fiduciary or custodian capacity but may be commingled
with other assets held in such capacities.
PFPC Trust will provide the Fund with such reports on its own
system of internal control as the Fund may reasonably request
from time to time.
(f) Registration of Securities. All Securities held for the Fund
which are issued or issuable only in bearer form, except such
Securities held in the Book-Entry System, shall be held by
PFPC Trust in bearer form; all other Securities held for the
Fund may be registered in the name of the Fund, PFPC Trust,
the Book-Entry System, a sub-custodian, or any duly appointed
nominee of the Fund, PFPC Trust, Book-Entry System or
sub-custodian. The Fund reserves the right to instruct PFPC
Trust as to the method of registration and safekeeping of the
Securities of the Fund. The Fund agrees to furnish to PFPC
Trust appropriate instruments to enable PFPC Trust to hold or
deliver in proper form for transfer, or to register in
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the name of its nominee or in the name of the Book-Entry
System or in the name of another appropriate entity, any
Securities which it may hold for the Accounts and which may
from time to time be registered in the name of the Fund.
(g) Voting and Other Action. Neither PFPC Trust nor its nominee
shall vote any of the Securities held pursuant to this
Agreement by or for the account of the Fund, except in
accordance with Written Instructions. PFPC Trust, directly or
through the use of the Book-Entry System, shall execute in
blank and promptly deliver all notices, proxies and proxy
soliciting materials received by PFPC Trust as custodian of
the Property to the registered holder of such Securities. If
the registered holder is not the Fund, then Written
Instructions or Oral Instructions must designate the person
who owns such Securities.
(h) Transactions Not Requiring Instructions. In the absence of
contrary Written Instructions, PFPC Trust is authorized to
take the following actions:
(i) Collection of Income and Other Payments.
(A) collect and receive for the account of the
Fund, all income, dividends, distributions,
coupons, option premiums, other payments and
similar items, included or to be included in
the Property, and, in addition, promptly
advise the Fund of such receipt and credit
such income, as collected, to the Fund's
custodian account;
(B) endorse and deposit for collection, in the
name of the Fund, checks, drafts, or other
orders for the payment of money;
(C) receive and hold for the account of the Fund
all Securities received as a distribution on
the Fund's Securities as a result of a stock
dividend, share split-up or reorganization,
recapitalization, readjustment or other
rearrangement or distribution of rights or
similar Securities issued with respect to
any Securities belonging to the Fund and
held by PFPC Trust hereunder;
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(D) present for payment and collect the amount
payable upon all Securities that may mature
or be, on a mandatory basis, called,
redeemed, or retired, or otherwise become
payable on the date such Securities become
payable; and
(E) take any action which may be necessary and
proper in connection with the collection and
receipt of such income and other payments
and the endorsement for collection of
checks, drafts, and other negotiable
instruments.
(ii) Miscellaneous Transactions.
(A) PFPC Trust is authorized to deliver or cause
to be delivered Property against payment or
other consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or
dealer selling for the account of
the Fund in accordance with street
delivery custom;
(2) for the exchange of interim
receipts or temporary Securities
for definitive Securities; and
(3) for transfer of Securities into the
name of the Fund or PFPC Trust or a
sub-custodian or a nominee of one
of the foregoing, or for exchange
of Securities for a different
number of bonds, certificates, or
other evidence, representing the
same aggregate face amount or
number of units bearing the same
interest rate, maturity date and
call provisions, if any; provided
that, in any such case, the new
Securities are to be delivered to
PFPC Trust.
(B) unless and until PFPC Trust receives Oral
Instructions or Written Instructions to the
contrary, PFPC Trust shall:
(1) pay all income items held by it
which call for payment upon
presentation and hold the cash
received by it upon such payment
for the account of the Fund;
(2) collect interest and cash dividends
received, with notice to the Fund,
to the account of the Fund;
(3) hold for the account of the Fund
all stock dividends, rights and
similar Securities issued with
respect to any Securities held by
PFPC Trust; and
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(4) execute as agent on behalf of the
Fund all necessary ownership
certificates required by the
Internal Revenue Code or the Income
Tax Regulations of the United
States Treasury Department or under
the laws of any state now or
hereafter in effect, inserting the
Fund's name on such certificate as
the owner of the Securities covered
thereby, to the extent it may
lawfully do so.
(i) Segregated Accounts.
(i) PFPC Trust shall upon receipt of Written Instructions
or Oral Instructions establish and maintain
segregated accounts on its records for and on behalf
of the Fund. Such accounts may be used to transfer
cash and Securities, including Securities in the
Book-Entry System:
(A) for the purposes of compliance by the Fund
with the procedures required by a Securities
or option exchange, providing such
procedures comply with the 1940 Act and any
releases of the SEC relating to the
maintenance of segregated accounts by
registered investment companies; and
(B) upon receipt of Written Instructions, for
other purposes.
(ii) PFPC Trust shall arrange for the establishment of XXX
custodian accounts for such members holding Units
through XXX accounts, in accordance with the Fund's
prospectuses, the Internal Revenue Code of 1986, as
amended (including regulations promulgated
thereunder), and with such other procedures as are
mutually agreed upon from time to time by and among
the Fund, PFPC Trust and the Fund's transfer agent.
(j) Purchases of Securities. PFPC Trust shall settle purchased
Securities upon receipt of Oral Instructions or Written
Instructions that specify:
(i) the name of the issuer and the title of the
Securities, including CUSIP number if applicable;
(ii) the number of shares or the principal amount
purchased and accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
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(v) the total amount payable upon such purchase; and
(vi) the name of the person from whom or the broker
through whom the purchase was made. PFPC Trust shall
upon receipt of Securities purchased by or for the
Fund pay out of the moneys held for the account of
the Fund the total amount payable to the person from
whom or the broker through whom the purchase was
made, provided that the same conforms to the total
amount payable as set forth in such Oral Instructions
or Written Instructions.
(k) Sales of Securities. PFPC Trust shall settle sold Securities
upon receipt of Oral Instructions or Written Instructions that
specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and
accrued interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to
whom the sale was made; and
(vii) the location to which the security must be delivered
and delivery deadline, if any.
PFPC Trust shall deliver the Securities upon receipt of the total
amount payable to the Fund upon such sale, provided that the total
amount payable is the same as was set forth in the Oral Instructions
or Written Instructions. Notwithstanding the other provisions
thereof, PFPC Trust may accept payment in such form as is consistent
with industry practice or is satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
(l) Reports; Proxy Materials.
(i) PFPC Trust shall furnish to the Fund the following
reports:
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(A) such periodic and special reports as the
Fund may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the account of
the Fund, listing each portfolio security
belonging to the Fund with the adjusted
average cost of each issue and the market
value at the end of such month and stating
the cash account of the Fund including
disbursements;
(C) the reports required to be furnished to the
Fund pursuant to Rule 17f-4 of the 1940 Act;
and
(D) such other information as may be agreed upon
from time to time between the Fund and PFPC
Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any
proxy statement, proxy material, notice of a call or
conversion or similar communication received by it as
custodian of the Property. PFPC Trust shall be under
no other obligation to inform the Fund as to such
actions or events. For clarification, upon
termination of this Agreement PFPC Trust shall have
no responsibility to transmit such material or to
inform the Fund or any other person of such actions
or events.
(m) Crediting of Accounts. If PFPC Trust in its sole discretion
credits an Account with respect to (a) income, dividends,
distributions, coupons, option premiums, other payments or
similar items on a contractual payment date or otherwise in
advance of PFPC Trust's actual receipt of the amount due, (b)
the proceeds of any sale or other disposition of assets on the
contractual settlement date or otherwise in advance of PFPC
Trust's actual receipt of the amount due or (c) provisional
crediting of any amounts due, and (i) PFPC Trust is
subsequently unable to collect full and final payment for the
amounts so credited within a reasonable time period
- 22 -
using reasonable efforts or (ii) pursuant to standard industry
practice, law or regulation PFPC Trust is required to repay to
a third party such amounts so credited, or if any Property has
been incorrectly credited, PFPC Trust shall have the absolute
right in its sole discretion without demand to reverse any
such credit or payment, to debit or deduct the amount of such
credit or payment from the Account, and to otherwise pursue
recovery of any such amounts so credited from the Fund.
Nothing herein or otherwise shall require PFPC Trust to make
any advances or to credit any amounts until PFPC Trust's
actual receipt thereof. The Fund hereby grants a first
priority contractual possessory security interest in and a
right of setoff against the assets maintained in an Account
hereunder in the amount necessary to secure the return and
payment to PFPC Trust of any advance or credit made by PFPC
Trust (including reasonable charges related thereto) to such
Account.
(n) Collections. All collections of monies or other property in
respect, or which are to become part, of the Property (but not
the safekeeping thereof upon receipt by PFPC Trust) shall be
at the sole risk of the Fund. If payment is not received by
PFPC Trust within a reasonable time after proper demands have
been made, PFPC Trust shall notify the Fund in writing,
including copies of all demand letters, any written responses
and memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to
take legal action for collection unless and until reasonably
indemnified to its satisfaction. PFPC Trust shall also notify
the Fund as soon as reasonably practicable whenever income due
on Securities is not collected in due course and shall provide
the Fund
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with periodic status reports of such income collected after a
reasonable time.
16. DURATION AND TERMINATION. This Agreement shall continue until
terminated by the Fund or PFPC Trust on sixty (60) days' prior written
notice to the other party by certified mail with confirmed receipt. In
the event this Agreement is terminated (pending appointment of a
successor to PFPC Trust or vote of the members of the Fund to dissolve
or to function without a custodian of its cash, Securities or other
property), PFPC Trust shall not deliver cash, Securities or other
property of the Fund to the Fund. It may deliver them to a bank or
trust company of PFPC Trust's choice, having an aggregate capital,
surplus and undivided profits, as shown by its last published report,
of not less than twenty million dollars ($20,000,000), and which meets
the requirements of Rule 17(f)(1) under the 1940 Act as a custodian for
the Fund to be held under terms similar to those of this Agreement.
PFPC Trust shall not be required to make any delivery or payment of
assets upon termination until full payment shall have been made to PFPC
Trust of all of its fees, compensation, costs and expenses (such
expenses include, without limitation, expenses associated with movement
(or duplication) of records and materials and conversion thereof to a
successor service provider, or to a bank or trust company pending
appointment of such successor, and all trailing expenses incurred by
PFPC Trust). PFPC Trust shall have a security interest in and shall
have a right of setoff against the Property as security for the payment
of such fees, compensation, costs and expenses.
17. NOTICES. Subject to Section 16, Notices shall be addressed (a) if to
PFPC Trust at 0000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, Attention: Xxx Xxxxxxxx; (b) if to the Fund, at
c/o DB Absolute Return Strategies, 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx XX
00000, Attention: Xxxx Xxxxxxxx; or (c) if to neither of the
foregoing, at such other address as shall have been given by like
notice to the
- 24 -
sender of any such notice or other communication by the other party. If
notice is sent by confirming electronic, hand or facsimile sending
device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given five
days after it has been mailed. If notice is sent by messenger, it shall
be deemed to have been given on the day it is delivered.
18. AMENDMENTS. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
19. DELEGATION; ASSIGNMENT. PFPC Trust may assign its rights and delegate
its duties hereunder at no additional cost to any affiliate of PFPC
Trust or of The PNC Financial Services Group, Inc., provided that (i)
PFPC Trust gives the Fund sixty (60) days' prior written notice of such
assignment or delegation; (ii) the assignee or delegate agrees to
comply with the relevant provisions of the Securities Laws; and (iii)
PFPC Trust and such assignee or delegate promptly provide such
information as the Fund may request, and respond to such questions as
the Fund may ask, relative to the assignment or delegation, (including,
without limitation) or the capabilities of the assignee or delegate.
Except as stated above, this Agreement may not be assigned or delegated
by either party without the written consent of the other party.
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. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
- 25 -
22. MISCELLANEOUS.
(a) Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to
delegated duties.
(b) No Changes that Materially Affect Obligations. Notwithstanding
anything in this Agreement to the contrary, the Fund agrees to
provide PFPC Trust with prior notice sufficient for PFPC Trust
to evaluate the impact of any modifications to its
registration statement or the adoption of any policies that
would affect materially the obligations or responsibilities of
PFPC Trust hereunder.
(c) 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.
(d) Governing Law. This Agreement shall be deemed to be a contract
made in Delaware and governed by Delaware law, without regard
to principles of conflicts of law.
(e) 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.
(f) 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.
- 26 -
(g) Facsimile Signatures. The facsimile signature of any party to
this Agreement shall constitute the valid and binding
execution hereof by such party.
- 27 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
PFPC TRUST COMPANY
By:
-----------------------
Xxxxxx X. Xxxxx
Title: Vice President
DB HEDGE STRATEGIES FUND LLC
By:
-----------------------
Xxxxxxx Xxxxxxxxx
Vice President
- 28 -
