EXHIBIT 99.g
FORM OF
CUSTODY AGREEMENT
This AGREEMENT is effective as of January 21, 2003, and is between
XX XXXXXX XXXXX BANK (the "Bank") and X.X. XXXXXX XXXXXXX SERIES TRUST (the
"Customer").
1. CUSTOMER ACCOUNTS.
Bank, acting as "Securities Intermediary" (as defined in Section 15(g)
hereof) shall establish and maintain the following accounts ("Accounts"):
(a) a Custody Account (as defined in Section 15(b) hereof) in the
name of Customer for Financial Assets, which shall, except as modified by
Section 15(d) hereof, mean stocks, shares, bonds, debentures, notes, mortgages
or other obligations for the payment of money, bullion, coin and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same or evidencing or representing any
other rights or interests therein and other similar property whether
certificated or uncertificated as may be received by Bank or its Subcustodian
(as defined in Section 3 hereof) for the account of Customer, including as an
"Entitlement Holder" as defined in Section 15(c) hereof); and
(b) an account in the name of Customer ("Deposit Account") for any
and all cash in any currency received by Bank or its Subcustodian for the
account of Customer, which cash shall not be subject to withdrawal by draft or
check.
Customer warrants its authority to: 1) deposit the cash and Financial
Assets (collectively "Assets") received in the Accounts and 2) give Instructions
(as defined in Section 11 hereof) concerning the Accounts. Bank may deliver
Financial Assets of the same class in place of those deposited in the Custody
Account.
Upon written agreement between Bank and Customer, additional Accounts
may be established and separately accounted for as additional Accounts
hereunder.
2. MAINTENANCE OF FINANCIAL ASSETS AND CASH AT BANK AND SUBCUSTODIAN
LOCATIONS.
Unless Instructions specifically require another location acceptable to
Bank:
(a) Financial Assets shall be held in the country or other
jurisdiction in which the principal trading market for such Financial Assets is
located, where such Financial Assets are to be presented for payment or where
such Financial Assets are acquired; and
(b) Cash shall be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and Bank can comply with such
Instructions, Bank is authorized to maintain cash balances on deposit for
Customer with itself or one of its "Affiliates" at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as Customer may direct, if acceptable to Bank. For purposes
hereof, the term "Affiliate" shall mean an entity controlling, controlled by, or
under common control with, Bank.
If Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by Bank and Customer.
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
Bank may act hereunder through the subcustodians listed in Schedule A
hereof with which Bank has entered into subcustodial agreements
("Subcustodians"). At the request of Customer, Bank may, but need not, add to
Schedule A an Eligible Foreign Custodian where Bank has not acted as Foreign
Custody Manager with respect to the selection thereof. Bank shall notify
Customer in the event that it elects to add any such entity. Customer authorizes
Bank to hold Assets in the Accounts in accounts which Bank has established with
one or more of its branches or Subcustodians. Bank and Subcustodians are
authorized to hold any of the Financial Assets in their account with any
securities depository in which they participate.
Bank reserves the right to add new, replace or remove Subcustodians.
Customer shall be given reasonable notice by Bank of any amendment to Schedule
A, but in no case will such amendment be effective prior to Customer's actual
receipt of such notice. Upon request by Customer, Bank shall identify the name,
address and principal place of business of any Subcustodian of Customer's Assets
and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
"The term Subcustodian as used herein shall mean the following:
(a) a 'U.S. Bank,' which shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7);
(b) an 'Eligible Foreign Custodian,' which shall mean (i) a banking
institution or trust company, incorporated or organized under the laws
of a country other than the United States, that is regulated as such by
that country's government or an agency thereof, (ii) a majority-owned
direct or indirect subsidiary of a U.S. bank or bank holding company
which subsidiary is incorporated or organized under the laws of a
country other than the United States; and (iii) any other entity (other
than an Eligible Securities Depository) that shall have been so
qualified by exemptive order, rule or other appropriate action of the
SEC.
For purposes of clarity, it is agreed that as used in Section 12(a)(i),
the term Subcustodian shall not include any Eligible Foreign Custodian as to
which Bank has not acted as Foreign Custody Manager or any Eligible Securities
Depository.
4. USE OF SUBCUSTODIAN.
(a) Bank shall identify the Assets on its books as belonging to
Customer.
(b) A Subcustodian shall hold such Assets together with assets
belonging to other customers of Bank in accounts identified on such
Subcustodian's books as custody accounts for the exclusive benefit of customers
of Bank.
(c) Any Financial Assets in the Accounts held by a Subcustodian
shall be subject only to the instructions of Bank or its agent. Any Financial
Assets held in a securities depository for the account of a Subcustodian shall
be subject only to the instructions of such Subcustodian.
2
(d) Any agreement Bank enters into with a Subcustodian for holding
Bank's customers' assets shall provide (i) for indemnification or insurance
arrangements (or any combination) that will adequately protect the Customer
against the risk of loss of Assets held in accordance with the Agreement; (ii)
that such assets shall not be subject to any right, charge, security interest,
lien or claim of any kind in favor of such Subcustodian or its creditors except
a claim of payment for their safe custody or administration or, in the case of
cash deposits, except for liens or rights in favor of creditors of the
Subcustodian arising under bankruptcy, insolvency or similar laws; (iii) that
the beneficial ownership of such assets shall be freely transferable without the
payment of money or value other than for safe custody or administration; (iv)
that adequate records will be maintained identifying such Assets as belonging to
the Customer or as being held by Bank for the benefit of its customers; (v) that
the Customer's independent public accountants will be given access to those
records or confirmation of the contents of those records; and (vi) that the
Customer will receive periodic reports with respect to the safekeeping of
Customer's Assets, including notification of any transfer to or from Customer's
account or a third party account containing assets held for the benefit of the
Customer. Where Securities are deposited by a Subcustodian with a securities
depository, Bank shall cause the Subcustodian to identify on its books as
belonging to Bank, as agent, the Securities shown on the Subcustodian's account
on the books of such securities depository. The foregoing shall not apply to the
extent of any special agreement or arrangement made by Customer with any
particular Subcustodian.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) Bank or its Subcustodians shall make payments from the Deposit
Account upon receipt of Instructions which include all information required by
Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, Bank, in its discretion, may
advance Customer such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by Bank on similar
loans.
(c) If Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, Customer shall
promptly return any such amount upon oral or written notification: (i) that such
amount has not been received in the ordinary course of business or (ii) that
such amount was incorrectly credited. If Customer does not promptly return any
amount upon such notification, Bank shall be entitled, upon oral or written
notification to Customer, to reverse such credit by debiting the Deposit Account
for the amount previously credited. Bank or its Subcustodian shall have no duty
or obligation to institute legal proceedings, file a claim or a proof of claim
in any insolvency proceeding or take any other action with respect to the
collection of such amount, but may act for Customer upon Instructions after
consultation with Customer.
6. CUSTODY ACCOUNT TRANSACTIONS; ACCOUNTING SERVICES.
(a) Financial Assets shall be transferred, exchanged or delivered by
Bank or its Subcustodian upon receipt by Bank of Instructions which include all
information required by Bank. Settlement and payment for Financial Assets
received for, and delivery of Financial Assets out of, the Custody Account may
be made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Financial Assets to a purchaser, dealer or their agents against a receipt with
the expectation of receiving later payment and free delivery. Delivery of
Financial Assets out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to Bank.
3
(b) In accordance with applicable law, Bank will effect book entries
on a "contractual settlement date accounting" basis as described below with
respect to the settlement of trades in those markets where Bank generally offers
contractual settlement date accounting and will notify Customer of those markets
from time to time. Otherwise, such transactions shall be credited or debited to
the Accounts on the date cash or Financial Assets are actually received by Bank
and reconciled to the Account.
(i) On the settlement date for a sale, Bank will credit the
Deposit Account with the proceeds of the sale and
transfer the relevant Financial Assets to an account at
Bank pending settlement of the trade where not already
delivered.
(ii) On the settlement date for the purchase (or earlier, if
market practice requires delivery of the purchase price
before the settlement date), Bank will debit the Deposit
Account for the settlement amount and credit a separate
account at Bank. Bank then will post the Custody Account
as awaiting receipt of the expected Financial Assets.
Customer will not be entitled to the Financial Assets
that are awaiting receipt until Bank or a Subcustodian
actually receives them.
(iii) Bank reserves the right to restrict in good faith the
availability of contractual settlement date accounting
for credit or operational reasons.
(iv) Bank may (in its absolute discretion) upon oral or
written notification to Customer reverse any debit or
credit made pursuant to this Section 6 prior to a
transaction's actual settlement, and Customer will be
responsible for any costs or liabilities resulting from
such reversal. Customer acknowledges that the procedures
described in this sub-section are of an administrative
nature, and Bank does not undertake to make loans and/or
Financial Assets available to Customer, other than as
provided for in Section 5 or otherwise in this
Agreement.
(c) Bank shall perform fund accounting services as specified on
attached Schedule D.
7. ACTIONS OF BANK.
Bank shall follow Instructions received regarding Assets held in the
Accounts. However, until it receives Instructions to the contrary, Bank shall:
(a) Present for payment any Financial Assets which are called,
redeemed or retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation, to the extent that Bank or
Subcustodian is aware of such opportunities. Bank is deemed to be aware for
purposes of this Agreement upon publication of notice of such opportunities in a
publication identified on Exhibit 1, as such Exhibit may be amended from time to
time by mutual agreement.
(b) Execute in the name of Customer such ownership and other
certificates as may be required to obtain payments in respect of Financial
Assets.
(c) Exchange interim receipts or temporary Financial Assets for
definitive Financial Assets.
(d) Appoint brokers and agents for any transaction involving the
Financial Assets, including, without limitation, Affiliates of Bank or any
Subcustodian.
4
(e) Advise Customer and its investment adviser daily of the amount
of any funds advanced to Customer by Bank under Section 5(b) hereof
("overdrafts") and the circumstances giving rise to each such overdraft.
(f) Issue statements to Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
Bank shall send Customer an advice or notification of any transfers of
Assets to or from the Accounts. Such statements, advices or notifications shall
indicate the identity of the entity having custody of the Assets. Unless
Customer sends Bank a written exception or objection to any Bank statement
within sixty (60) days of receipt, Customer shall be deemed to have approved
such statement. In such event, or where Customer has otherwise approved any such
statement, Bank shall, to the extent permitted by law, be released, relieved and
discharged with respect to all matters set forth in such statement or reasonably
implied therefrom as though it had been settled by the decree of a court of
competent jurisdiction in an action where Customer and all persons having or
claiming an interest in Customer or Customer's Accounts were parties.
All collections of funds or other property paid or distributed in
respect of Financial Assets in the Custody Account shall be made at the risk of
Customer. Bank shall have no liability for any loss occasioned by delay in the
actual receipt of notice by Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Financial Assets in the Custody
Account in respect of which Bank has agreed to take any action hereunder.
8. CORPORATE ACTIONS; PROXIES; TAX RECLAIMS.
(a) CORPORATE ACTIONS. Whenever Bank receives information concerning
the Financial Assets which requires discretionary action by the beneficial owner
of the Financial Assets (other than a proxy), such as subscription rights, bonus
issues, stock repurchase plans and rights offerings, or legal notices or other
material intended to be transmitted to securities holders ("Corporate Actions"),
Bank shall give Customer notice of such Corporate Actions to the extent that
Bank's central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, Bank shall endeavor to obtain
Instructions from Customer or its Authorized Person (as defined in Section 10
hereof), but if Instructions are not received in time for Bank to take timely
action, or actual notice of such Corporate Action was received too late to seek
Instructions, Bank is authorized to sell such rights entitlement or fractional
interest and to credit the Deposit Account with the proceeds or take any other
action it deems, in good faith, to be appropriate in which case it shall be held
harmless for any such action.
(b) PROXY VOTING. Bank shall provide proxy voting services for
securities held outside the United States, if elected by Customer, in accordance
with the terms of the proxy voting services rider hereto. Proxy voting services
may be provided by Bank or, in whole or in part, by one or more third parties
appointed by Bank (which may be Affiliates of Bank). The Bank shall, with
respect to domestic securities held hereunder, cause to be promptly executed by
the registered holder of such securities, if the securities are registered
otherwise than in the name of Customer or one of its series, or a nominee of
such, all proxies it receives, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to the Customer such
proxies, all proxy soliciting materials and all notices relating to such
securities as it has received.
(c) TAX RECLAIMS.
5
(i) Subject to the provisions hereof, Bank shall apply for a
reduction of withholding tax and any refund of any tax paid or tax
credits which apply in each applicable market in respect of income
payments on Financial Assets for Customer's benefit which Bank believes
may be available to Customer.
(ii) The provision of tax reclaim services by Bank is
conditional upon Bank's receiving from Customer or, to the extent the
Financial Assets are beneficially owned by others, from each beneficial
owner, (A) a declaration of the beneficial owner's identity and place of
residence and (B) certain other documentation (pro forma copies of which
are available from Bank). Customer acknowledges that, if Bank does not
receive such declarations, documentation and information, Bank shall be
unable to provide tax reclaim services.
(iii) Bank shall not be liable to Customer or any third party
for any taxes, fines or penalties payable by Bank or Customer, and shall
be indemnified accordingly, whether these result from the inaccurate
completion of documents by Customer or any third party, or as a result
of the provision to Bank or any third party of inaccurate or misleading
information or the withholding of material information by Customer or
any other third party, or as a result of any delay of any revenue
authority or any other matter beyond Bank's control.
(iv) Bank shall perform tax reclaim services only with
respect to taxation levied by the revenue authorities of the countries
notified to Customer from time to time and Bank may, by notification in
writing, at Bank's absolute discretion, supplement or amend the markets
in which tax reclaim services are offered. Other than as expressly
provided in this sub-clause, Bank shall have no responsibility with
regard to Customer's tax position or status in any jurisdiction.
(v) Customer confirms that Bank is authorized to disclose
any information requested by any revenue authority or any governmental
body in relation to Customer or the securities and/or cash held for
Customer.
(vi) Tax reclaim services may be provided by Bank or, in
whole or in part, by one or more third parties appointed by Bank (which
may be Bank's affiliates); provided that Bank shall be liable for the
performance of any such third party to the same extent as Bank would
have been if Bank had performed such services.
(d) TAX OBLIGATIONS.
(i) Customer confirms that Bank is authorized to deduct from
any cash received or credited to the Deposit Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Custody Account.
(ii) Customer shall provide to Bank such documentation and
information as Bank may require in connection with taxation, and
warrants that, when given, this information shall be true and correct in
every respect, not misleading in any way, and contain all material
information. Customer undertakes to notify Bank immediately if any such
information requires updating or amendment.
(iii) Customer shall be responsible for the payment of all
taxes relating to the Financial Assets in the Custody Account, and
Customer agrees to pay, indemnify and hold Bank harmless from and
against any and all liabilities, penalties, interest or additions to tax
with respect to or resulting from any delay in, or failure by, Bank (1)
to pay, withhold or report any U.S. federal, state or local taxes or
foreign taxes imposed on, or (2) to report interest, dividend or other
6
income paid or credited to the Deposit Account, whether such failure or
delay by Bank to pay, withhold or report tax or income is the result of
(x) Customer's failure to comply with the terms of this paragraph, or
(y) Bank's own acts or omissions; provided however, Customer shall not
be liable to Bank for any penalty or additions to tax due as a result of
Bank's failure to pay, withhold or report tax or to report interest,
dividend or other income paid or credited to the Deposit Account solely
as a result of Bank's negligent acts or omissions.
9. NOMINEES.
Financial Assets which are ordinarily held in registered form may be
registered in a nominee name of Bank, Subcustodian or securities depository, as
the case may be. Bank may without notice to Customer cause any such Financial
Assets to cease to be registered in the name of any such nominee and to be
registered in the name of Customer. In the event that any Financial Assets
registered in a nominee name are called for partial redemption by the issuer,
Bank may allot the called portion to the respective beneficial holders of such
class of security in any manner Bank deems to be fair and equitable. Customer
shall hold Bank, Subcustodians, and their respective nominees harmless from any
liability arising directly or indirectly from their status as a mere record
holder of Financial Assets in the Custody Account.
10. AUTHORIZED PERSONS.
As used herein, the term "Authorized Person" means employees or agents
including investment managers as have been designated by written notice from
Customer or its designated agent to act on behalf of Customer hereunder. Such
persons shall continue to be Authorized Persons until such time as Bank receives
Instructions from Customer or its designated agent that any such employee or
agent is no longer an Authorized Person.
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by Bank, via telephone, telex, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system
acceptable to Bank which Bank believes in good faith to have been given by
Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which Bank may specify. Unless
otherwise expressly provided, all Instructions shall continue in full force and
effect until canceled or superseded. The term "Instructions" includes, without
limitation, instructions to sell, assign, transfer, deliver, purchase or receive
for the Custody Account, any and all stocks, bonds and other Financial Assets or
to transfer funds in the Deposit Account.
Any Instructions delivered to Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but Customer shall hold Bank
harmless for the failure of an Authorized Person to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or Bank's failure to produce such confirmation at any
subsequent time. Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which Bank shall make available
to Customer or its Authorized Persons.
12. STANDARD OF CARE; LIABILITIES.
(a) Bank shall be responsible for the performance of only such
duties as are set forth herein or expressly contained in Instructions which are
consistent with the provisions hereof as follows:
7
(i) Bank shall exercise reasonable care and diligence in
carrying out all its duties and obligations under this Agreement, and
shall be liable to Customer for any and all claims, liabilities, losses,
damages, fines, penalties and expenses, including out-of-pocket and
incidental expenses and reasonable attorneys' fees suffered or incurred
by Customer resulting from failure of Bank to exercise such reasonable
care and diligence. Bank shall only be liable to Customer for any loss
which shall occur as the result of the failure of a Subcustodian to
exercise reasonable care with respect to the safekeeping of such Assets
where such loss results directly from the failure by the Subcustodian to
use reasonable care in the provision of custodial services by it in
accordance with the standards prevailing in its local market or from the
willful default of such Subcustodian in the provision of custodial
services by it. In the event of any loss to Customer which is
compensable hereunder (i.e. a loss arising by reason of the failure of
Bank or its Subcustodian to use reasonable care), Bank shall be liable
to Customer only to the extent of Customer's direct damages, to be
determined based on the market value of the property which is the
subject of the loss at the date of discovery of such loss and without
reference to any special conditions or circumstances. Bank shall have no
liability whatsoever for any consequential, special, indirect or
speculative loss or damages (including, but not limited to, lost
profits) suffered by Customer in connection with the transactions and
services contemplated hereby and the relationship established hereby
even if Bank has been advised as to the possibility of the same and
regardless of the form of the action.
(ii) Bank shall not be responsible for the insolvency of any
Subcustodian which is not a branch or Affiliate of Bank. Bank shall not
be responsible for any act, omission, default or the solvency of any
broker or agent which it or a Subcustodian appoints unless such
appointment was made negligently or in bad faith.
(iii) (A) Customer shall indemnify and hold Bank and its
directors, officers, agents and employees (collectively the
"Indemnitees") harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties, and expenses, including
out-of-pocket and incidental expenses and legal fees ("Losses") that may
be imposed on, incurred by, or asserted against, the Indemnitees or any
of them for following any instructions or other directions upon which
Bank is authorized to rely pursuant to the terms of this Agreement. (B)
In addition to and not in limitation of the preceding subparagraph,
Customer shall also indemnify and hold the Indemnitees and each of them
harmless from and against any and all Losses that may be imposed on,
incurred by, or asserted against, the Indemnitees or any of them in
connection with or arising out of Bank's performance under this
Agreement, provided the Indemnitees have acted with reasonable care and
diligence and have not engaged in willful misconduct. (C) In performing
its obligations hereunder, Bank may rely on the genuineness of any
document which it believes in good faith to have been validly executed.
Customer shall have no liability whatsoever for any consequential,
special, indirect or speculative loss or damages (including, but not
limited to, lost profits) suffered by Bank in connection with the
transactions and services contemplated hereby and the relationship
established hereby even if Customer has been advised as to the
possibility of the same and regardless of the form of action.
(iv) Customer shall pay for and hold Bank harmless from any
liability or loss resulting from the imposition or assessment of any
taxes or other governmental charges, and any related expenses, with
respect to income from or Assets in the Accounts.
(v) Bank shall be entitled to rely, and may act, upon the
advice of counsel reasonably acceptable to the Customer on all matters
and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
8
(vi) Bank need not maintain any insurance for the benefit of
Customer.
(vii) Without limiting the foregoing, Bank shall not be liable
for any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from malfunction, interruption of or error
in the transmission of information caused by any machines or system or
interruption of communication facilities, abnormal operating conditions,
nationalization, expropriation or other governmental actions; regulation
of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the
orderly execution of securities transactions or affect the value of
Assets.
(viii) Neither party shall be liable to the other for any loss
due to forces beyond their control including, but not limited to strikes
or work stoppages, acts of war (whether declared or undeclared) or
terrorism, insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to
Customer or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Financial Assets;
(iii) advise Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other than
as provided in Section 5(c) hereof;
(iv) evaluate or report to Customer or an Authorized Person
regarding the financial condition of any broker, agent or other party to
which Financial Assets are delivered or payments are made pursuant
hereto; and
(v) review or reconcile trade confirmations received from
brokers. Customer or its Authorized Persons issuing Instructions shall
bear any responsibility to review such confirmations against
Instructions issued to and statements issued by Bank.
(c) Customer authorizes Bank to act hereunder notwithstanding that
Bank or any of its divisions or Affiliates may have a material interest in a
transaction, or circumstances are such that Bank may have a potential conflict
of duty or interest including the fact that Bank or any of its Affiliates may
provide brokerage services to other customers, act as financial advisor to the
issuer of Financial Assets, act as a lender to the issuer of Financial Assets,
act in the same transaction as agent for more than one customer, have a material
interest in the issue of Financial Assets, or earn profits from any of the
activities listed herein.
13. FEES AND EXPENSES.
Customer shall pay Bank for its services hereunder the fees set forth in
Schedule B hereto or such other amounts as may be agreed upon in writing,
together with Bank's reasonable out-of-pocket or incidental expenses, including,
but not limited to, legal fees. Bank shall have a lien on and is authorized to
charge any Accounts of Customer for any amount owing to Bank under any provision
hereof.
9
14. MISCELLANEOUS.
(a) Certification of Residency, etc. Customer certifies that it is a
resident of the United States and shall notify Bank of any changes in residency.
Bank may rely upon this certification or the certification of such other facts
as may be required to administer Bank's obligations hereunder. Customer shall
indemnify Bank against all losses, liability, claims or demands arising directly
or indirectly from any such certifications.
(b) Access to Records. Bank shall allow Customer's independent
public accountant reasonable access to the records of Bank relating to Financial
Assets as is required in connection with their examination of books and records
pertaining to Customer's affairs. Subject to restrictions under applicable law,
Bank shall also obtain an undertaking to permit Customer's independent public
accountants reasonable access to the records of any Subcustodian which has
physical possession of any Financial Assets as may be required in connection
with the examination of Customer's books and records.
(c) Governing Law; Successors and Assigns; Immunity; Captions. THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN NEW YORK and shall not be assignable by
either party, but shall bind the successors in interest of Customer and Bank. To
the extent that in any jurisdiction Customer may now or hereafter be entitled to
claim, for itself or its assets, immunity from suit, execution, attachment
(before or after judgment) or other legal process, Customer irrevocably shall
not claim, and it hereby waives, such immunity. The captions given to the
sections and subsections of this Agreement are for convenience of reference only
and are not to be used to interpret this Agreement.
(d) Entire Agreement; Applicable Riders. Customer represents that
the Assets deposited in the Accounts are (Check one):
/X/ Investment Company assets subject to certain U.S. Securities and
Exchange Commission rules and regulations;
/ / Other (specify)
This Agreement consists exclusively of this document together with
Schedules A, B, C and D, Appendices 1-A and 1-B and the following
Rider(s) [Check applicable rider(s)]:
/X/ INVESTMENT COMPANY
/X/ PROXY VOTING
/X/ SPECIAL TERMS AND CONDITIONS
There are no other provisions hereof and this Agreement supersedes any
other agreements, whether written or oral, between the parties. Any amendment
hereto must be in writing, executed by both parties.
(e) SEVERABILITY. In the event that one or more provisions hereof
are held invalid, illegal or unenforceable in any respect on the basis of any
particular circumstances or in any jurisdiction, the validity, legality and
enforceability of such provision or provisions under other circumstances or in
other jurisdictions and of the remaining provisions shall not in any way be
affected or impaired.
10
(f) WAIVER. Except as otherwise provided herein, no failure or delay
on the part of either party in exercising any power or right hereunder operates
as a waiver, nor does any single or partial exercise of any power or right
preclude any other or further exercise, or the exercise of any other power or
right. No waiver by a party of any provision hereof, or waiver of any breach or
default, is effective unless in writing and signed by the party against whom the
waiver is to be enforced.
(g) REPRESENTATIONS AND WARRANTIES. (i) Customer hereby represents
and warrants to Bank that: (A) it has full authority and power to deposit and
control the Financial Assets and cash deposited in the Accounts; (B) it has all
necessary authority to use Bank as its custodian; (C) this Agreement constitutes
its legal, valid and binding obligation, enforceable in accordance with its
terms; (D) it shall have full authority and power to borrow moneys and enter
into foreign exchange transactions; and (E) it has not relied on any oral or
written representation made by Bank or any person on its behalf, and
acknowledges that this Agreement sets out to the fullest extent the duties of
Bank. (ii) Bank hereby represents and warrants to Customer that: (A) it has the
full power and authority to perform its obligations hereunder, (B) this
Agreement constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms; and (C) that it has taken all necessary action to
authorize the execution and delivery hereof.
(h) NOTICES. All notices hereunder shall be effective when actually
received. Any notices or other communications which may be required hereunder
are to be sent to the parties at the following addresses or such other addresses
as may subsequently be given to the other party in writing: (a) Bank: JPMorgan
Chase Bank, 0 Xxxxx XxxxxXxxx Xxxxxx, Xxxxxxxx, X.X. 00000, Attention: Global
Investor Services, Investment Management Group; and (b) Customer: c/o Chase
Global Asset Management and Mutual Funds, 0 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx,
Xxx Xxxx 00000, Attention: Xxxxxxx X. XxXxx.
(i) TERMINATION. This Agreement may be terminated by Customer or
Bank by giving sixty (60) days' written notice to the other, provided that such
notice to Bank shall specify the names of the persons to whom Bank shall deliver
the Assets in the Accounts. If notice of termination is given by Bank, Customer
shall, within sixty (60) days following receipt of the notice, deliver to Bank
Instructions specifying the names of the persons to whom Bank shall deliver the
Assets. In either case Bank shall deliver the Assets to the persons so
specified, after deducting any amounts which Bank determines in good faith to be
owed to it under Section 13. If within sixty (60) days following receipt of a
notice of termination by Bank, Bank does not receive Instructions from Customer
specifying the names of the persons to whom Bank shall deliver the Assets, Bank,
at its election, may deliver the Assets to a bank or trust company doing
business in the State of New York to be held and disposed of pursuant to the
provisions hereof, or to Authorized Persons, or may continue to hold the Assets
until Instructions are provided to Bank.
(j) MONEY LAUNDERING. Customer warrants and undertakes to Bank for
itself and its agents that all Customer's customers are properly identified in
accordance with U.S. Money Laundering Regulations as in effect from time to
time.
(k) IMPUTATION OF CERTAIN INFORMATION. Bank shall not be held
responsible for and shall not be required to have regard to information held by
any person by imputation or information of which Bank is not aware by virtue of
a "Chinese Wall" arrangement. If Bank becomes aware of confidential information
which in good faith it feels inhibits it from effecting a transaction hereunder
Bank may refrain from effecting it.
15. DEFINITIONS.
As used herein, the following terms shall have the meaning hereinafter
stated:
11
(a) "Certificated Security" shall mean a security that is
represented by a certificate.
(b) "Custody Account" shall mean each Securities custody account on
Bank's records to which Financial Assets are or may be credited pursuant hereto.
(c) "Entitlement Holder" shall mean the person on the records of a
Securities Intermediary as the person having a Securities Entitlement against
the Securities Intermediary.
(d) "Financial Asset" shall mean, as the context requires, either
the asset itself or the means by which a person's claim to it is evidenced,
including a Certificated Security or Uncertificated Security, a security
certificate, or a Securities Entitlement. Financial Assets shall not include
cash.
(e) "Securities" shall mean stocks, bonds, rights, warrants and
other negotiable and non-negotiable paper whether issued as Certificated
Securities or Uncertificated Securities and commonly traded or dealt in on
securities exchanges or financial markets, and other obligations of an issuer,
or shares, participations and interests in an issuer recognized in an area in
which it is issued or dealt in as a medium for investment and any other property
as shall be acceptable to Bank for the Custody Account.
(f) "Securities Entitlement" shall mean the rights and property
interest of an Entitlement Holder with respect to a Financial Asset as set forth
in Part 5 of the Uniform Commercial Code.
(g) "Securities Intermediary" shall mean Bank, a Subcustodian, a
securities depository, and any other financial institution which in the ordinary
course of business maintains custody accounts for others and acts in that
capacity.
(h) "Uncertificated Security" shall mean a security that is not
represented by a certificate.
(i) "Uniform Commercial Code" shall mean Article 8 of the Uniform
Commercial Code of the State of New York, as the same may be amended from time
to time.
16. COMPLIANCE WITH SEC RULE 17f-5.
(a) Customer's board of directors (or equivalent body) (hereinafter
'Board') hereby delegates to Bank, and Bank hereby accepts the delegation to it,
of the obligation to perform as Customer's 'Foreign Custody Manager' (as that
term is defined in Securities and Exchange Commission ("SEC") rule 17f-5(a)(2)
as promulgated under the Investment Company Act of 1940, as amended ("1940
Act")), for the purposes of (i) selecting Eligible Foreign Custodians (as that
term is defined in SEC rule 17f-5(a)(1), and as the same may be amended from
time to time, or that have otherwise been made exempt pursuant to an SEC
exemptive order) to hold Financial Assets and Cash and (ii) evaluating the
contractual arrangements with such Eligible Foreign Custodians (as set forth in
SEC rule 17f-5(c)(2)). Anything in this Agreement to the contrary
notwithstanding, the Bank shall in no event be deemed to have selected any
Eligible Securities Depository (as defined in SEC rule 17f-7), the use of which
is mandatory by law or regulation.. (Eligible Securities Depositories used by
Bank as of the date hereof are set forth in Appendix 1-A hereto, and as the same
may be amended on notice to Customer from time to time.)
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board of the placement
of Financial Assets and Cash with particular Eligible Foreign Custodians
and of any material change in the arrangements with such Eligible
Foreign Custodians, with such reports to be provided to Customer's Board
at such times as the Board deems reasonable and appropriate based on the
circumstances of
12
Customer's foreign custody arrangements (and until further notice from
Customer such reports shall be provided not less than quarterly with
respect to the placement of Financial Assets and Cash with particular
Eligible Foreign Custodians and with reasonable promptness upon the
occurrence of any material change in the arrangements with such Eligible
Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in performing
as Customer's Foreign Custody Manager as a person having responsibility
for the safekeeping of Financial Assets and Cash would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have determined
that Financial Assets and Cash placed and maintained in the safekeeping
of such Eligible Foreign Custodian shall be subject to reasonable care,
based on the standards applicable to custodians in the relevant market,
after having considered all factors relevant to the safekeeping of such
Financial Assets and Cash, including, without limitation, those factors
set forth in SEC rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with the Eligible Foreign
Custodian requires that the Eligible Foreign Custodian will provide
reasonable care for Financial Assets and Cash based on the standards
applicable to custodians in the relevant market.
(v) have established a system to monitor the continued appropriateness
of maintaining Financial Assets and Cash with particular Eligible
Foreign Custodians and of the governing contractual arrangements; it
being understood, however, that in the event that Bank shall have
determined that the existing Eligible Foreign Custodian in a given
country would no longer afford Financial Assets and Cash reasonable care
and that no other Eligible Foreign Custodian in that country would
afford reasonable care, Bank shall promptly so advise Customer and shall
then act in accordance with the Instructions of Customer with respect to
the disposition of the affected Financial Assets and Cash.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Financial Assets and Cash on behalf of Customer with Eligible Foreign Custodians
pursuant to a written contract deemed appropriate by Bank.
(c) Bank represents to Customer that it is a U.S. Bank as defined in
Rule 17f-5(a)(7). Customer represents to Bank that: (1) the Financial Assets and
Cash being placed and maintained in Bank's custody are subject to the 1940 Act,
as the same may be amended from time to time; (2) its Board: (i) has determined
that it is reasonable to rely on Bank to perform as Customer's Foreign Custody
Manager (ii) or its investment adviser shall have determined that Customer may
maintain Financial Assets and Cash in each country in which Customer's Financial
Assets and Cash shall be held hereunder and determined to accept the risks
arising therefrom (including, but not limited to, a country's financial
infrastructure), prevailing custody and settlement practices, laws applicable to
the safekeeping and recovery of Financial Assets and Cash held in custody, and
the likelihood of nationalization, currency controls and the like) (collectively
("Country Risk")). Nothing contained herein shall require Bank to make any
selection or to engage in any monitoring on behalf of Customer that would entail
consideration of Country Risk.
(d) Bank shall provide to Customer an analysis of the risks associated
with maintaining assets with Eligible Securities Depositories. Bank shall
monitor the custody risks associated with maintaining assets with the Eligible
Securities Depositories on a continuing basis, and promptly notify the Customer
of any material change in these risks. Customer hereby acknowledges that: (i)
such information is solely designed to inform Customer of market conditions and
procedures and is not intended as a recommendation to invest or not invest in
particular markets; and (ii) Bank has gathered the information
13
from sources it considers reliable, but that Bank shall have no responsibility
for inaccuracies or incomplete information unless the Bank knows such
information is inaccurate or incomplete.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first-above written.
X.X. XXXXXX XXXXXXX SERIES TRUST
By:
------------------------------------------
Xxxxxx Xxxxx
Title: President
Date: January 21, 2003
JPMORGAN CHASE BANK
By:
------------------------------------------
Xxxxxxx Xxxxx
Title: Vice President and Assistant Treasurer
Date: January 21, 2004
14
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this ___ day of ____________, 200_, before me personally came
Xxxxxx Xxxxx, to me known, who being by me duly sworn, did depose and say that
he resides in ______________________________________, that he is President of
the entity described in and which executed the foregoing instrument; that he
knows the seal of said entity, that the seal affixed to said instrument is such
seal, that it was so affixed by order of said entity, and that he/she signed
his/her name thereto by like order.
--------------------------
Xxxxxx Xxxxx
Sworn to before me this ___ day
of ________________, 200_.
------------------------------
Notary
00
XXXXX XX XXX XXXX )
: ss.
COUNTY OF NEW YORK )
On this ___ day of _____________, 200_, before me personally came
______________________, to me known, who being by me duly sworn, did depose and
say that he/she resides in _________________________________; that he/she is a
Vice President of JPMORGAN CHASE BANK, the corporation described in and which
executed the foregoing instrument; that he/she knows the seal of said
corporation, that the seal affixed to said instrument is such corporate seal,
that it was so affixed by order of the Board of Directors of said corporation,
and that he/she signed his/her name thereto by like order.
Sworn to before me this ___ day
of _______________, 200_.
------------------------------
Notary
16
Schedule A
SUBCUSTODIANS
Appendix 1-A
ELIGIBLE SECURITIES DEPOSITORIES
Appendix 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid Customer in its determinations regarding Country Risk, Bank
shall furnish annually and upon the initial placing of Financial Assets and Cash
into a country the following information (check items applicable):
A. Opinions of local counsel concerning:
/X/ i. Whether applicable foreign law would restrict the access
afforded Customer's independent public accountants to books and
records kept by an eligible foreign custodian located in that
country.
/X/ ii. Whether applicable foreign law would restrict the Customer's
ability to recover its Financial Assets and Cash in the event of
the bankruptcy of an Eligible Foreign Custodian located in that
country.
/X/ iii. Whether applicable foreign law would restrict the Customer's
ability to recover Financial Assets that are lost while under
the control of an Eligible Foreign Custodian located in the
country.
B. Written information concerning:
/X/ i. The foreseeability of expropriation, nationalization, freezes,
or confiscation of Customer's Financial Assets and Cash.
/X/ ii. Whether difficulties in converting Customer's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.]
/X/ C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) depositories (including depository
evaluation), if any.
/X/ 2. To aid Customer in monitoring Country Risk, Bank shall furnish board
the following additional information:
Market flashes, including with respect to changes in the information in
market reports.
PROXY SERVICE RIDER
To Custody Agreement
With
JPMORGAN CHASE BANK
Dated as of January 21, 2003
1. Global Proxy Services ("Proxy Services") shall be provided for the
countries listed in the procedures and guidelines ("Procedures")
furnished to Customer, as the same may be amended by Bank from time to
time on prior notice to Customer. The Procedures are incorporated by
reference herein and form a part of this Rider.
2. Proxy Services shall consist of those elements as set forth in the
Procedures, and shall include (a) notifications ("Notifications") by
Bank to Customer of the dates of pending shareholder meetings,
resolutions to be voted upon and the return dates as may be received by
Bank or provided to Bank by its Subcustodians or third parties, and (b)
voting by Bank of proxies based on Customer Instructions. Original proxy
materials or copies thereof shall not be provided. Notifications shall
generally be in English and, where necessary, shall be summarized and
translated from such non-English materials as have been made available
to Bank or its Subcustodian. In this respect Bank's only obligation is
to provide information from sources it believes to be reliable and/or to
provide materials summarized and/or translated in good faith. Bank
reserves the right to provide Notifications, or parts thereof, in the
language received. Upon reasonable advance request by Customer, backup
information relative to Notifications, such as annual reports,
explanatory material concerning resolutions, management recommendations
or other material relevant to the exercise of proxy voting rights shall
be provided as available, but without translation.
3. While Bank shall attempt to provide accurate and complete Notifications,
whether or not translated, Bank shall not be liable for any losses or
other consequences that may result from reliance by Customer upon
Notifications where Bank prepared the same in good faith.
4. Notwithstanding the fact that Bank may act in a fiduciary capacity with
respect to Customer under other agreements or otherwise under the
Agreement, in performing Proxy Services Bank shall be acting solely as
the agent of Customer, and shall not exercise any discretion with regard
to such Proxy Services.
5. Proxy voting may be precluded or restricted in a variety of
circumstances, including, without limitation, where the relevant
Financial Assets are: (i) on loan; (ii) at registrar for registration or
reregistration; (iii) the subject of a conversion or other corporate
action; (iv) not held in a name subject to the control of Bank or its
Subcustodian or are otherwise held in a manner which precludes voting;
(v) not capable of being voted on account of local market regulations or
practices or restrictions by the issuer; or (vi) held in a margin or
collateral account.
6. Customer acknowledges that in certain countries Bank may be unable to
vote individual proxies but shall only be able to vote proxies on a net
basis (e.g., a net yes or no vote given the voting instructions received
from all customers).
7. Customer shall not make any use of the information provided hereunder,
except in connection with the funds or plans covered hereby, and shall
in no event sell, license, give or otherwise make
the information provided hereunder available, to any third party, and
shall not directly or indirectly compete with Bank or diminish the
market for Proxy Services by provision of such information, in whole or
in part, for compensation or otherwise, to any third party.
8. The names of Authorized Persons for Proxy Services shall be furnished to
Bank in accordance with Section 10 of the Agreement. Proxy Services fees
shall be as set forth in Section 13 of the Agreement or as separately
agreed.
2
SPECIAL TERMS AND CONDITIONS RIDER
CUSTODY AGREEMENT
WITH JPMORGAN CHASE BANK
DATED AS OF January 21, 2003
DOMESTIC ONLY
SPECIAL TERMS AND CONDITIONS RIDER
DOMESTIC CORPORATE ACTIONS AND PROXIES
With respect to domestic U.S. and Canadian Financial Assets (the latter if held
in DTC), the following provisions shall apply rather than the provisions of
Section 8 of the Agreement and the Global Proxy Service rider:
Bank shall send to Customer or the Authorized Person for a
Custody Account, such proxies (signed in blank, if issued in
the name of Bank's nominee or the nominee of a central
depository) and communications with respect to Financial
Assets in the Custody Account as call for voting or relate to
legal proceedings within a reasonable time after sufficient
copies are received by Bank for forwarding to its customers.
In addition, Bank shall follow coupon payments, redemptions,
exchanges or similar matters with respect to Financial Assets
in the Custody Account and advise Customer or the Authorized
Person for such Account of rights issued, tender offers or any
other discretionary rights with respect to such Financial
Assets, in each case, of which Bank has received notice from
the issuer of the Financial Assets, or as to which notice is
published in publications routinely utilized by Bank for this
purpose.
FEES
The fees referenced in Section 13 hereof cover only domestic and euro-dollar
holdings.
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
DOMESTIC CORPORATE ACTIONS AND PROXIES
With respect to domestic U.S. and Canadian Financial Assets (the latter if held
in DTC), the following provisions shall apply rather than the pertinent
provisions of Section 8 of the Agreement and the Global Proxy Service rider:
Bank shall send to Customer or the Authorized Person for a
Custody Account, such proxies (signed in blank, if issued in
the name of Bank's nominee or the nominee of a central
depository) and communications with respect to Financial
Assets in the Custody Account as call for voting or relate to
legal proceedings within a reasonable time after sufficient
copies are received by Bank for forwarding to its customers.
In addition, Bank shall follow coupon payments, redemptions,
exchanges or similar matters with respect to Financial Assets
in the Custody Account and advise Customer or the Authorized
Person for such Account of rights issued, tender offers or any
other discretionary rights with respect to such Financial
Assets, in each case, of which Bank has received notice from
the issuer of the Financial Assets, or as to which notice is
published in publications routinely utilized by Bank for this
purpose.
Schedule B
FEES
DOMESTIC CUSTODY FEES DOMESTIC TRANSACTION FEES
1 basis point on the first $250MM DTC $8.00 per transaction* /$5.00 automated
..75 basis points on the next $250MM PTC/FBE $8.00 per transaction* /$6.00
automated
..50 basis points on the remainder Physical $15.00 per transaction
Income Collection $10.00 per transaction
Wire Charges (outbound only) $5.00 per wire
FUND ACCOUNTING FEES
BASE FUND ACCOUNTING: $45,000 per single class fund per year
MULTICLASS ACCOUNTING FEE: $6,000 per additional class (after A) per year
PRICE QUOTES FEE: $.50 per quote per day
In addition to the standard fund accounting charge of $45,000, and the standard
multiclass charge of $6,000 per class (after the initial class), there will be a
charge of $40,000 ($20,000 for the second and third sectors of the funds).
This fee schedule will be in effect for a period of 2 years. New markets added,
or additional services required that are not included in this schedule will be
negotiated separately and added to this schedule as the need arises.
Agreed to as of the 21st day of
January, 2003
X.X. XXXXXX XXXXXXX SERIES TRUST
By:
-------------------------------------------
Title: Xxxxxx Xxxxx, President
JPMORGAN CHASE BANK
By:
-------------------------------------------
Xxxxxxx Xxxxx
Title: Vice President and Assistant Treasurer
