CUSTODIAN AGREEMENT
Exhibit 10.3
THIS CUSTODIAN
AGREEMENT (this “Agreement”), dated as of July
22, 2010, is entered into among the UNITED STATES COMMODITY FUNDS
LLC, a Delaware limited liability company (the “Sponsor”), the UNITED STATES COMMODITY INDEX FUNDS
TRUST, a Delaware statutory trust (the “Trust”), on its own behalf and
on behalf of each series established and designated by the Trust as a fund and
listed on Annex A, including the United States Commodity Index Fund (each, a
“Fund”), and XXXXX BROTHERS XXXXXXXX &
CO. (“BBH&Co.” or the “Custodian”), a limited
partnership formed under the laws of the State of New York.
This
Agreement shall constitute a separate agreement between the Custodian, the
Sponsor, the Trust and each Fund, as if such Fund had executed a separate
Custodian Agreement. The Custodian hereby acknowledges that its rights and
obligations with respect to a Fund shall not create any right or other
obligations with respect to any other Fund listed on Annex A, as amended from
time to time, and acknowledges the additional limitation on liability of the
Sponsor, Trust and the Fund described in Section 9.3 of this
Agreement. Any Fund that becomes a party hereto by executing an
amendment to this Agreement substantially in the form of Annex B (each such
amendment together with the schedules attached thereto, an “Amendment”) shall become a
party to this Agreement and any references herein to the Fund shall be treated
as references to such Fund. The obligations of the Sponsor, Trust,
the Custodian and any Fund other than United States Commodity Index Fund, will
be subject to the terms and conditions of the Amendment to this Agreement to be
entered into with that Fund.
WITNESSETH:
WHEREAS,
the Sponsor has exclusive responsibility for the management and control of the
business and affairs of the Trust and the Fund; and
WHEREAS,
the Sponsor and the Trust wish to employ BBH&Co. to act as custodian for the
Fund’s Investments (as defined in Section 13.15) and to provide related
services, all as provided herein, and BBH&Co. is willing to accept such
employment, subject to the terms and conditions herein set forth;
NOW, THEREFORE,
in consideration of the mutual covenants and agreements herein contained, the
Sponsor, the Trust, on its own behalf and on behalf of the Fund, and BBH&Co.
hereby agree, as follows:
1. Appointment of
Custodian. The Trust and the Sponsor hereby appoint
BBH&Co. as the Fund’s custodian for its Investments, and BBH&Co. hereby
accepts such appointment. All Investments of the Fund delivered to
the Custodian or its agents or Subcustodians (as defined in Section 13) shall be
dealt with as provided in this Agreement. The duties of the Custodian
with respect to the Fund’s Investments shall be only as set forth expressly in
this Agreement, which duties are generally comprised of safekeeping and various
administrative duties that will be performed in accordance with Instructions and
as reasonably required to effect Instructions.
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2. Representations,
Warranties and Covenants. The Trust, on its own behalf and on
behalf of the Fund, and the Sponsor each hereby represents, warrants and
covenants each of the following:
2.1 This
Agreement has been, and at the time of delivery of each Instruction (as defined
in Section 4) such Instruction will have been, duly authorized, executed and
delivered by the Trust, on its own behalf and on behalf of the Fund, and the
Sponsor. This Agreement (including without limitation, the grant of a
security interest under Section 7.6 below) does not violate any Applicable Law
(as defined in Section 13) or conflict with or constitute a default under the
Fund’s prospectus or other organic document, agreement, judgment, order or
decree applicable to the Fund to which the Trust or the Sponsor is a party or by
which the Fund or its Investments are bound.
2.2 By
providing an Instruction with respect to the first acquisition of an Investment
in a jurisdiction other than the United States of America, the Trust and the
Sponsor shall be deemed to have confirmed to the Custodian that the Fund has (a)
made all determinations required to be made by the Fund under Applicable Law,
and (b) appropriately and adequately disclosed to its unitholders and all
persons who have rights in or to such Investments, all material investment
risks, including those relating to the custody and settlement infrastructure or
the servicing of securities in such jurisdiction.
2.3 The
Trust and the Sponsor shall safeguard and shall be solely responsible for the
safekeeping of any testkeys, identification codes, passwords, other security
devices or statements of account with which the Custodian provides
them. In furtherance and not limitation of the foregoing, in the
event the Trust and/or the Sponsor utilizes any on-line service offered by the
Custodian, the Trust, the Sponsor and the Custodian shall be fully responsible
for the security of each party’s respective connecting terminal, access thereto
and the proper and authorized use thereof and the initiation and application of
continuing effective safeguards in respect thereof. Additionally, if
the Trust and/or the Sponsor uses any on-line or similar communications service
made available by the Custodian, the Trust and the Sponsor shall be solely
responsible for ensuring the security of their access to the service and for the
use of the service, and shall only attempt to access the service and the
Custodian’s computer systems as directed by the Custodian. If the
Custodian provides any computer software to the Trust and/or the Sponsor
relating to the services described in this Agreement, the Trust and/or the
Sponsor will only use the software for the purposes for which the Custodian
provided the software to the Trust and/or the Sponsor, and will abide by the
license agreement accompanying the software and any other security policies
which the Custodian provides to the Trust and the Sponsor.
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2.4 By
providing an Instruction in respect of an Investment (which Instruction may
relate to among other things, the execution of trades), the Trust, on its own
behalf and on behalf of the Fund, and the Sponsor hereby (i) authorize
BBH&Co. to complete such documentation as may be required or appropriate for
the execution of the Instruction, and agree to be contractually bound to the
terms of such documentation “as is” (subject to Section 9 of this Agreement)
without recourse against BBH&Co.; (ii) represent, warrant and covenant that
the Trust, on its own behalf and on behalf of the Fund, and the Sponsor have
accepted and agreed to comply with all Applicable Law, terms and conditions to
which the Fund’s Investment may be bound, including without limitation,
requirements imposed by the Investment prospectus or offering circular,
subscription agreement, any application or other documentation relating to an
Investment (e.g., compliance with suitability requirements and eligibility
restrictions); (iii) acknowledge and agree that BBH&Co. will not be
responsible for the accuracy of any information provided to BBH&Co. by or on
behalf of the Trust, Fund and/or the Sponsor, or for any underlying commitment
or obligation inherent to an Investment; (iv) except as otherwise provided for
in Section 2.4 below, represent, warrant and covenant that the Trust, on its own
behalf and on behalf of the Fund, and/or Sponsor will not effect any sale,
transfer or disposition of Investment(s) held in the BBH&Co.’s name by any
means other than the issuance of an Instruction on behalf of the Fund by the
Trust and/or Sponsor to BBH&Co.; (v) acknowledge that collective investment
schemes (and/or their agent(s)) in which the Fund and/or Sponsor invests may pay
to BBH&Co. certain fees (including without limitation, shareholder servicing
and/or trailer fees) in respect of the Fund’s investments in such schemes; (vi)
agrees that BBH&Co. shall have no obligation or responsibility whatsoever to
respond to, or provide capital in connection with any capital calls, letters of
intent or other requirements as set out in the prospectus or offering circular
of an Investment; (vii) represent, warrant and covenant that the Trust, on its
own behalf and on behalf of the Fund, and/or Sponsor will provide BBH&Co.
with such information as is necessary or appropriate to enable BBH&Co.’s
performance pursuant to an Instruction or under this Agreement; (viii) represent
that the Fund is not a “Plan” (which term includes (1) employee benefit plans
that are subject to the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), or plans, individual retirement accounts and other
arrangements that are subject to Section 4975 of the US Internal Revenue Code of
1986, as amended (the “Code”), (2) plans, individual retirement accounts and
other arrangements that are subject to the prohibited transaction provisions of
Section 406 of ERISA or Section 4975 of the Code, and (3) entities the
underlying assets of which are considered to include “plan assets” of such
plans, accounts and arrangements), or an entity purchasing shares on behalf of,
or with the “plan assets” of, a Plan; (ix) undertake to inform BBH&Co. and
to keep the same updated as to its status under ERISA or Section 4975 of the
Code, each as amended, of the beneficial investor to the Investment, and as to
any tax withholding or benefit to which an Investment may be subject; and (x)
acknowledges that BBH&Co. shall have no obligation to fund any order placed
by the Fund and/or Sponsor for which the Fund does not have sufficient cash on
deposit with BBH&Co.
2.4.1 To
the extent that the Fund holds Investments in an account opened in the name of
BBH&Co. as custodian for and at the direction of the Fund and/or Sponsor,
and the Fund and/or Sponsor requests that BBH&Co. provide the Fund and/or
Sponsor with the capability to place orders and execute trades in fund shares
directly with such fund companies and/or their transfer agents which shall be
settled in an account established with each such fund company or its transfer
agent, the Fund and/or Sponsor hereby acknowledges that BBH&Co. is under no
obligation to agree to such arrangement but if BBH&Co. so agrees, the Fund
and/or Sponsor (i) acknowledges that all relevant terms under Section 2.4 above
apply thereto, (ii) authorizes BBH&Co. as custodian to grant a limited power
of attorney to the Fund, Sponsor or their designated agent to enable the Fund
and/or Sponsor to so execute, (iii) agrees to ensure that any instructions
issued by the Fund and/or Sponsor or their designated agent shall also be
concurrently submitted to BBH&Co., and (iv) shall adhere to any BBH&Co.
procedures established with each such fund or its transfer agent with respect
thereto including, but not limited to, the terms of the limited power of
attorney. The Fund and/or Sponsor also acknowledges and agrees that
(1) BBH&Co. is acting solely in its capacity as custodian and is not acting
as broker or introducing broker on behalf of the Fund or Sponsor, (2)
BBH&Co. is not receiving compensation in connection with the Fund and/or
Sponsor’s execution hereunder of trades with each such fund other than its usual
and customary custody fees and transaction charges, (3) it will provide such
account opening information to each such fund and/or transfer agent as and when
requested by such fund and/or transfer agent, and (4) BBH&Co. is not
responsible for (a) providing information published by the relevant distributor
or each such fund including, but not limited to, the prospectus for each such
Investment in a fund or for resolving execution queries or complaints relative
to any such Investment, and (b) assessing the suitability of any such Investment
executed directly by the Fund and/or Sponsor.
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2.5 The
Sponsor is, and will continue to be until the termination of this Agreement,
duly authorized to enter into this Agreement on behalf of the Trust and the
Fund, to bind the Trust and the Fund in connection with the obligations
hereunder, and to otherwise perform the terms herein.
3. Representations
and Warranties of BBH&Co. BBH&Co. hereby represents
and warrants that this Agreement has been duly authorized, executed and
delivered by BBH&Co. and does not violate any Applicable Law or conflict
with or constitute a default under BBH&Co.’s limited partnership agreement
or any agreement, instrument, judgment, order or decree to which BBH&Co. is
a party or by which it is bound.
4. Instructions. Unless
otherwise explicitly indicated herein, the Custodian shall perform its duties
pursuant to Instructions. As used herein, the term Instruction shall mean a
directive initiated by the Fund and/or the Sponsor, acting directly or through
its board of directors, officers or other Authorized Persons, which directive
shall conform to the requirements of this Section 4.
4.1 Authorized
Persons. For purposes hereof, an Authorized Person shall be a
person or entity authorized to give Instructions for or on behalf of the Fund,
the Trust and/or the Sponsor by written notices to the Custodian or otherwise in
accordance with procedures delivered to and acknowledged by the Custodian,
including without limitation the Fund’s Investment Advisor (as defined in
Section 13). The Custodian may treat any Authorized Person as having
full authority to issue Instructions for or on behalf of the Fund, Trust and/or
Sponsor hereunder unless the notice of authorization contains explicit
limitations as to said authority. The Custodian shall be entitled to
rely upon the authority of Authorized Persons until it receives appropriate
written notice from the Trust or the Sponsor to the contrary.
The
Sponsor and the Trust, on its own behalf and on behalf of the Fund, hereby
designate the Marketing Agent (as such term is defined under an Marketing Agent
Agreement entered into by the Sponsor and the Trust, on its own behalf and on
behalf of the Fund, as approved by the Custodian (the Marketing Agent Agreement)) as
an Authorized Person from whom the Custodian is hereby authorized to receive
Instructions to accept deposits of cash and securities in connection with the
purchase of Units (as such term is defined in the Prospectus) and the
distribution of cash and securities in connection with the redemption of
Units.
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4.2 Form of
Instruction. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian shall make
available to the Trust, Fund or the Sponsor from time to time unless the Trust
and/or the Sponsor shall elect to transmit such Instruction in accordance with
Subsections 4.2.1 through 4.2.3 of this Section.
4.2.1 Fund Designated
Secured-Transmission Method. Instructions may be transmitted
through a secured or tested electro-mechanical means identified on behalf of the
Fund by the Trust, the Sponsor or by an Authorized Person entitled to give
Instructions and acknowledged and accepted by the Custodian; it being understood
that such acknowledgment shall authorize the Custodian to receive and process
such means of delivery but shall not represent a judgment by the Custodian as to
the reasonableness or security of the method determined by the Authorized
Person.
4.2.2 Written
Instructions. Instructions may be transmitted in a writing
that bears the manual signature of Authorized Persons.
4.2.3 Other Forms of
Instruction. Instructions may also be transmitted by another
means determined by the Trust, the Sponsor or Authorized Persons and
acknowledged and accepted by the Custodian (subject to the same limits as to
acknowledgements as is contained in Subsection 4.2.1, above) including
Instructions given orally or by SWIFT, telex or telefax (whether tested or
untested).
When an
Instruction is given by means established under Subsections 4.2.1 through 4.2.3,
it shall be the responsibility of the Custodian to use reasonable care to adhere
to any security or other procedures established in writing between the Custodian
and the Authorized Person with respect to such means of Instruction, but such
Authorized Person shall be solely responsible for determining that the
particular means chosen is reasonable under the circumstances. Oral Instructions
shall be binding upon the Custodian only if and when the Custodian takes action
with respect thereto. With respect to telefax instructions, the
parties agree and acknowledge that receipt of legible instructions cannot be
assured, that the Custodian cannot verify that authorized signatures on telefax
instructions are original or properly affixed, and that the Custodian shall not
be liable for losses or expenses incurred through actions taken in reliance on
inaccurately stated, illegible or unauthorized telefax
instructions. The provisions of Section 4A of the Uniform Commercial
Code as currently in effect in the State of New York shall apply to the Fund’s
transfers performed in accordance with Instructions. The Funds
Transfer Services Schedule (as defined in Section 13) and the Electronic and
Online Services Schedule to this Agreement shall each comprise a designation of
form of a means of delivering Instructions for purposes of this Section
4.2.
4.3 Completeness and
Contents of Instructions. The Authorized Person shall be
responsible for assuring the adequacy and accuracy of
Instructions. Particularly, upon any acquisition or disposition or
other dealing in the Fund’s Investments and upon any delivery and transfer of
any Investment or moneys, the person initiating such Instruction shall give the
Custodian an Instruction with appropriate detail, including, without
limitation:
4.3.1 The
transaction date and the date and location of settlement;
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4.3.2 The
specification of the type of transaction;
4.3.3 A
description of the Investments or moneys in question, including, as appropriate,
quantity, price per unit, amount of money to be received or delivered and
currency information. Where an Instruction is communicated by
electronic means, or otherwise where an Instruction contains an identifying
number such as a CUSIP, SEDOL or ISIN number, the Custodian shall be entitled to
rely on such number as controlling notwithstanding any inconsistency contained
in such Instruction, particularly with respect to the Investment description;
and
4.3.4 The
name of the broker or similar entity concerned with execution of the
transaction.
If the
Custodian shall determine that an Instruction is either unclear or incomplete,
the Custodian may give prompt notice of such determination to the Trust and/or
the Sponsor, and the Trust and/or the Sponsor shall thereupon amend or otherwise
reform such Instruction. In such event, the Custodian shall have no
obligation to take any action in response to the Instruction initially delivered
until the redelivery of an amended or reformed Instruction.
4.4 Timeliness of
Instructions. In giving an Instruction, the Trust and/or the
Sponsor shall take into consideration delays which may occur due to the
involvement of a Subcustodian or agent, differences in time zones, and other
factors particular to a given market, exchange or issuer. When the
Custodian has established specific timing requirements or deadlines with respect
to particular classes of Instruction, or when an Instruction is received by the
Custodian at such a time that it could not reasonably be expected to have acted
on such Instruction due to time zone differences or other factors beyond its
reasonable control, the execution of any Instruction received by the Custodian
after such deadline or at such time (including any modification or revocation of
a previous Instruction) shall be at the risk of the Fund.
5. Safekeeping of
Fund Assets. The Custodian shall hold Investments delivered to
it or Subcustodians for the Fund in accordance with the provisions of this
Section. The Custodian shall not be responsible for (a) the
safekeeping of Investments not delivered or that are not caused to be issued to
it or its Subcustodians; (b) pre-existing faults or defects in Investments that
are delivered to the Custodian or its Subcustodians; or (c) the safekeeping of
Commodity Interests and Futures Contracts (each as defined in the Fund’s
prospectus). The Custodian is hereby authorized to hold with itself
or a Subcustodian, and to record in one or more accounts, all Investments
delivered to and accepted by the Custodian, any Subcustodian or their respective
agents pursuant to an Instruction or in consequence of any corporate
action. The Custodian shall hold Investments for the account of the
Fund and shall segregate Investments from assets belonging to the Custodian and
shall cause its Subcustodians to segregate Investments from assets belonging to
the Subcustodian in an account held for the Fund or in an account maintained by
the Subcustodian generally for non-proprietary assets of the
Custodian.
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5.1 Use of Securities
Depositories. The Custodian may deposit and maintain
Investments in any Securities Depository (as defined in Section 13), either
directly or through one or more Subcustodians appointed by the
Custodian. Investments held in a Securities Depository shall be held
(a) subject to the agreement, rules, statement of terms and conditions or other
document or conditions effective between the Securities Depository and the
Custodian or the Subcustodian, as the case may be, and (b) in an account for the
Fund or in bulk segregation in an account maintained for the non-proprietary
assets of the entity holding such Investments in the Securities
Depository. If market practice or the rules and regulations of the
Securities Depository prevent the Custodian, the Subcustodian or any agent of
either from holding its client assets in such a separate account, the Custodian,
the Subcustodian or other agent shall as appropriate segregate such Investments
for benefit of the Fund or for the benefit of clients of the Custodian generally
on its own books.
5.2 Certificated
Assets. Investments which are certificated may be held in
registered or bearer form: (a) in the Custodian’s vault; (b) in the vault of a
Subcustodian or agent of the Custodian or a Subcustodian; or (c) in an account
maintained by the Custodian, Subcustodian or agent at a Securities Depository;
all in accordance with customary market practice in the jurisdiction in which
any Investments are held.
5.3 Registered
Assets. Investments which are registered may be registered in
the name of the Custodian, a Subcustodian, or in the name of the Fund or a
nominee for any of the foregoing, and may be held in any manner set forth in
Section 5.2 above with or without any identification of fiduciary capacity in
such registration.
5.4 Book Entry
Assets. Investments which are represented by book-entry may be
so held in an account maintained by the Book-entry Agent (as defined in Section
13) on behalf of the Custodian, a Subcustodian or another agent of the
Custodian, or a Securities Depository.
5.5 Replacement of
Lost Investments. In the event of a loss of Investments for
which the Custodian is responsible under the terms of this Agreement, the
Custodian shall replace such Investment, or in the event that such replacement
cannot be effected, the Custodian shall pay to the Fund the fair market value of
such Investment based on the last available price as of the close of business in
the relevant market on the date that a claim was first made to the Custodian
with respect to such loss, or, if less, such other amount as shall be agreed by
the parties as the date for settlement.
6. Administrative
Duties of the Custodian. The Custodian shall perform the
following administrative duties with respect to Investments of the
Fund.
6.1 Purchase of
Investments. Pursuant to Instructions, Investments purchased
for the account of the Fund shall be paid for (a) against delivery thereof to
the Custodian or a Subcustodian, as the case may be, either directly or through
a Clearing Corporation (as defined in Section 13) or a Securities Depository (in
accordance with the rules of such Securities Depository or such Clearing
Corporation), or (b) otherwise in accordance with an Instruction, Applicable
Law, generally accepted trade practices, or the terms of the instrument
representing such Investment.
6.2 Sale of
Investments. Pursuant to Instructions, Investments sold for
the account of the Fund shall be delivered (a) against payment therefor in cash,
by check or by bank wire transfer, (b) by credit to the account of the Custodian
or the applicable Subcustodian, as the case may be, with a Clearing Corporation
or a Securities Depository (in accordance with the rules of such Securities
Depository or such Clearing Corporation), or (c) otherwise in accordance with an
Instruction, Applicable Law, generally accepted trade practices, or the terms of
the instrument representing such Investment.
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6.3 Delivery and
Receipt in Connection with Borrowings of the Fund or other Collateral and Margin
Requirements. Pursuant to Instructions and subject to the last
sentence in Section 6.4 below, the Custodian may deliver or receive Investments
or cash of the Fund in connection with borrowings or loans by the Fund and other
collateral and margin requirements.
6.4 Futures and
Over-the-Counter (OTC) Contracts. If, pursuant to an
Instruction, the Custodian shall become a party to an agreement with the Trust
or the Sponsor, on behalf of the Fund, and a futures commission merchant
regarding margin or a counterparty to an OTC contract (Tri-Party Agreement), the
Custodian shall (a) receive and retain, to the extent the same is provided to
the Custodian, confirmations or other documents evidencing the purchase or sale
by the Fund of exchange-traded futures contracts or the entering into of an
option, forward or other derivatives transaction by the Fund; (b) when required
by such Tri-Party Agreement, deposit and maintain in an account opened pursuant
to such Agreement (Margin
Account) segregated either physically or by book-entry in a Securities
Depository for the benefit of any futures commission merchant, such Investments
of the Fund as shall have been designated as initial, maintenance or variation
“margin” deposits or other collateral intended to secure the Fund’s performance
of its obligations under the terms of any exchange-traded futures contracts and
commodity options; and (c) thereafter pay, release or transfer Investments into
or out of the Margin Account in accordance with the provisions of such Tri-Party
Agreement. Alternatively, the Custodian may deliver Investments, in accordance
with an Instruction, to a futures commission merchant for margin purposes or to
the counterparty or its custodian. The Custodian shall in no event be
responsible for the acts and omissions of any futures commission merchant or the
counterparty or its custodian, to whom Investments are delivered pursuant to
this Section; for the sufficiency of Investments held in any Margin Account; for
funding margin deposits or otherwise providing Advances (as defined in Section
13) for the purpose of margin or other collateral in any Margin Account; or, for
the performance of any terms of any exchange-traded futures contracts, commodity
options, forward contracts and other derivative transactions. In
addition, the Custodian shall not be required to transfer margin or any other
assets of the Fund to a Margin Account if at the time of such request, such
transfer would reduce the aggregate market value of all unencumbered securities,
cash, cash equivalents and other unencumbered liquid assets of the Fund in the
custody of the Custodian to less than ten (10) percent of the then current net
asset value of the Fund.
6.5 Contractual
Obligations and Similar Investments. From time to time, the
Fund’s Investments may include Investments that are not ownership interests as
may be represented by certificate (whether registered or bearer), by entry in a
Securities Depository or by book entry agent, registrar or similar agent for
recording ownership interests in the relevant Investment. If the Fund
shall at any time acquire such Investments, including without limitation deposit
obligations, loan participations, repurchase agreements and derivative
arrangements, the Custodian shall (a) receive and retain, to the extent the same
are provided to the Custodian, confirmations or other documents evidencing the
arrangement; and (b) perform on the Fund’s account in accordance with the terms
of the applicable arrangement, but only to the extent directed to do so by an
Instruction. The Custodian shall have no responsibility for
agreements on behalf of the Fund running to the Trust or the Sponsor as to which
it is not a party other than to retain, to the extent the same are provided to
the Custodian, documents or copies of documents evidencing the arrangement and,
in accordance with an Instruction, to include such arrangements in reports made
to the Fund.
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6.6 Exchange
of Securities. Unless otherwise directed by an Instruction, the
Custodian shall: (a) exchange securities held for the account of the
Fund for other securities in connection with any reorganization,
recapitalization, conversion, split-up, change of par value of shares or similar
event, and (b) deposit any such securities in accordance with the terms of any
reorganization or protective plan.
6.7 Surrender of
Securities. Unless otherwise directed by an Instruction, the
Custodian may surrender securities: (a) in temporary form for definitive
securities; (b) for transfer into the name of an entity allowable under Section
5.3; and (c) for a different number of certificates or instruments representing
the same number of shares or the same principal amount of
indebtedness.
6.8 Rights, Warrants,
Etc. Pursuant to an Instruction, the Custodian shall (a)
deliver warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to any agent of such issuer or trustee, for purposes of
exercising such rights or selling such securities, and (b) deposit securities in
response to any invitation for the tender thereof.
6.9 Mandatory
Corporate Actions. Unless otherwise directed by an
Instruction, the Custodian shall: (a) comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions or similar rights of
securities ownership affecting securities held on the Fund’s account and
promptly notify the Sponsor for the benefit of the Fund of such action, and (b)
collect all stock dividends, rights and other items of like nature with respect
to such securities.
6.10 Income
Collection. Unless otherwise directed by an Instruction, the
Custodian shall collect any amount due and payable to the Fund with respect to
Investments and promptly credit the amount collected to a Principal Account or
an Agency Account (each defined in Section 13); provided, however, that the
Custodian shall not be responsible for: (a) the collection of amounts due and
payable with respect to Investments that are in default, or (b) the collection
of cash or share entitlements with respect to Investments that are
not registered in the name of the Custodian or its
Subcustodians. The Custodian is hereby authorized to endorse and
deliver any instrument required to be so endorsed and delivered to effect
collection of any amount due and payable to the Fund with respect to
Investments.
6.11 Ownership
Certificates and Disclosure of the Fund’s Interest. The
Custodian is hereby authorized to execute on behalf of the Fund ownership
certificates, affidavits or other disclosure required under Applicable Law or
established market practice in connection with the receipt of income, capital
gains or other payments by the Fund with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
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With
respect to securities issued in the United States of America, the Custodian
[ ] may [ X ] may not release the identity of the
Fund to an issuer which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct communications
between such issuer and the Fund. IF NO BOX IS CHECKED, THE CUSTODIAN
SHALL RELEASE
SUCH INFORMATION UNTIL IT RECEIVES CONTRARY INSTRUCTIONS FROM THE
FUND. With respect to securities issued outside of the United States
of America, information shall be released in accordance with law or custom of
the particular country in which such security is located.
6.12 Proxy
Materials. The Custodian shall deliver, or cause to be
delivered, to the Sponsor for the benefit of the Fund proxy forms, notices of
meeting, and any other notices or announcements materially affecting or relating
to Investments received by the Custodian or any nominee.
6.13 Taxes. The
Custodian shall, where applicable, assist the Sponsor and the Trust in the
reclamation of taxes withheld on dividends and interest payments received by the
Fund. In the performance of its duties with respect to tax
withholding and reclamation, the Custodian shall be entitled to rely on the
advice of counsel and upon information and advice regarding the Fund’s tax
status that is received on behalf of the Fund from the Sponsor or the Trust
without duty of separate inquiry.
6.14 Other
Dealings. The Custodian shall otherwise act as directed by
Instructions, including without limitation effecting the free payments of moneys
or the free delivery of securities, provided that such Instruction shall
indicate the purpose of such payment or delivery and that the Custodian shall
record the party to whom such payment or delivery is made.
The
Custodian shall attend to all nondiscretionary details in connection with the
sale or purchase or other administration of Investments, except as otherwise
directed by an Instruction, and may make payments to itself or others for minor
expenses of administering Investments under this Agreement; provided that the
Sponsor or the Trust shall have the right to request an accounting on behalf of
the Fund with respect to such expenses.
In
fulfilling the duties set forth in Sections 6.6 through 6.10 above, the
Custodian shall provide to the Sponsor for the benefit of the Fund all material
information pertaining to a corporate action which the Custodian actually
receives; provided that the Custodian shall not be responsible for the
completeness or accuracy of such information. Information relative to any
pending corporate action made available to the Sponsor for the benefit of the
Fund via any of the services described in the Electronic and Online Services
Schedule shall constitute the delivery of such information by the Custodian
hereunder. Any advance credit of cash or shares expected to be
received as a result of any corporate action shall be subject to actual
collection and may, when the Custodian deems collection unlikely, be reversed by
the Custodian.
The
Custodian may at any time or times in its discretion appoint (and may at any
time remove) agents (other than Subcustodians) to carry out some or all of the
administrative provisions of this Agreement (Agents), provided, however,
that the appointment of such agent shall not relieve the Custodian of its
administrative obligations under this Agreement.
10
7. Cash Accounts,
Deposits and Money Movements. Subject to the terms and
conditions set forth in this Section 7, the Trust and the Sponsor each hereby
authorizes the Custodian to open and maintain on behalf of the Fund, with itself
or with Subcustodians, cash accounts in United States Dollars, in such other
currencies as are the currencies of the countries in which the Fund maintains
Investments or in such other currencies as the Trust or the Sponsor shall from
time to time request by Instruction.
7.1 Types of Cash
Accounts. Cash accounts opened on the books of the Custodian
(Principal Accounts)
shall be opened in the name of the Fund. Such accounts collectively
shall be a deposit obligation of the Custodian and shall be subject to the terms
of this Section 7 and the general liability provisions contained in Section
9. Cash accounts opened on the books of a Subcustodian may be opened
in the name of the Fund or the Custodian or in the name of the Custodian for its
customers generally (Agency
Accounts). Such deposits shall be obligations of the Subcustodian and
shall be treated as an Investment of the Fund. Accordingly, the
Custodian shall be responsible for exercising reasonable care in the
administration of such accounts but shall not be liable for their repayment in
the event such Subcustodian, by reason of its bankruptcy, insolvency or
otherwise, fails to make repayment.
7.1.1 Administrative
Accounts. In connection with the services provided hereunder,
the Custodian is hereby directed to open cash accounts on its books and records
from time to time for the purposes of receiving subscriptions and/or processing
redemptions on behalf of the Fund and/or for the purposes of aggregating,
netting and/or clearing transactions (including, without limitation foreign
exchange, repurchase agreements, capital stock activity, expense payment) or
other administrative purposes, each on behalf of the Fund (each an “Account”). Each
such Account shall be subject to the terms and conditions of this Agreement and
the Fund and/or the Sponsor shall be liable for the satisfaction of its
obligations in connection with each Account.
7.2 Payments and
Credits with Respect to the Cash Accounts. The Custodian shall
make payments from or deposits to any of said accounts in the course of carrying
out its administrative duties, including but not limited to income collection
with respect to the Fund’s Investments, and otherwise in accordance with
Instructions. The Custodian and its Subcustodians shall be required
to credit amounts to the cash accounts only when moneys are actually received in
cleared funds in accordance with banking practice in the country and currency of
deposit. Any credit made to any Principal or Agency Account before
actual receipt of cleared funds shall be provisional and may be reversed by the
Custodian in the event such payment is not actually collected. Unless otherwise
specifically agreed in writing by the Custodian or any Subcustodian, all
deposits shall be payable only at the branch of the Custodian or Subcustodian
where the deposit is made or carried.
11
7.3 Currency and
Related Risks. The Fund and the Sponsor each bears risks of
holding or transacting in any currency, including any xxxx to market exposure
associated with a foreign exchange transaction undertaken with the
Custodian. The Custodian shall not be liable for any loss or
damage arising from the applicability of any law or regulation now or hereafter
in effect, or from the occurrence of any event, which may delay or affect the
transferability, convertibility or availability of any currency in the country
(a) in which such Principal or Agency Accounts are maintained or (b) in which
such currency is issued, and in no event shall the Custodian be obligated to
make payment of a deposit denominated in a currency during the period during
which its transferability, convertibility or availability has been affected by
any such law, regulation or event. Without limiting the generality of
the foregoing, neither the Custodian nor any Subcustodian shall be required to
repay any deposit made at a foreign branch of either the Custodian or
Subcustodian if such branch cannot repay the deposit due to a cause for which
the Custodian would not be responsible in accordance with the terms of Section 9
of this Agreement unless the Custodian or such Subcustodian expressly agrees in
writing to repay the deposit under such circumstances. All currency
transactions in any account opened pursuant to this Agreement are subject to
exchange control regulations of the United States and of the country where such
currency is the lawful currency or where the account is maintained. Any taxes,
costs, charges or fees imposed on the convertibility of a currency held by the
Fund shall be for the account of the Fund.
7.4 Foreign Exchange
Transactions. The Custodian shall, subject to the terms of
this Section, settle foreign exchange transactions (including contracts,
futures, options and options on futures) on behalf and for the account of the
Fund with such currency brokers or banking institutions, including
Subcustodians, as the Fund and/or Sponsor may direct pursuant to
Instructions. The Custodian may act as principal in any foreign
exchange transaction with the Fund in accordance with Section 7.4.2 of this
Agreement. The obligations of the Custodian in respect of all foreign
exchange transactions (whether or not the Custodian shall act as principal in
such transaction) shall be contingent on the free, unencumbered transferability
of the currency transacted on the actual settlement date of the
transaction.
7.4.1 Third Party
Foreign Exchange Transactions. The Custodian shall process
foreign exchange transactions (including without limitation contracts, futures,
options, and options on futures), where any third party acts as principal
counterparty to the Fund on the same basis it performs duties as agent for the
Fund with respect to any other of the Fund’s Investments. Accordingly, the
Custodian shall only be responsible for delivering or receiving currency on
behalf of the Fund in respect of such contracts pursuant to Instructions. The
Custodian shall not be responsible for the failure of any counterparty
(including any Subcustodian) in such agency transaction to perform its
obligations thereunder. The Custodian (a) shall transmit cash and Instructions
to and from the currency broker or banking institution with which a foreign
exchange contract or option has been executed pursuant hereto, (b) may make free
outgoing payments of cash in the form of United States Dollars or foreign
currency without receiving confirmation of a foreign exchange contract or option
or confirmation that the countervalue currency completing the foreign exchange
contract has been delivered or received or that the option has been delivered or
received, and (c) shall hold all confirmations, certificates and other documents
and agreements received by the Custodian and evidencing or relating to such
foreign exchange transactions in safekeeping. The Fund accepts full
responsibility for its use of third-party foreign exchange dealers and for
execution of said foreign exchange contracts and options and understands that
the Fund shall be responsible for any and all costs and interest charges which
may be incurred by the Fund or the Custodian as a result of the failure or delay
of third parties to deliver foreign exchange.
12
7.4.2 Foreign Exchange
with the Custodian as Principal. The Custodian may as
principal undertake foreign exchange transactions with the Fund as the Custodian
and the Trust or Sponsor on behalf of the Fund may agree from time to
time. In such event, the foreign exchange transaction will be
performed in accordance with the particular agreement of the parties, or in the
event a principal foreign exchange transaction is initiated by an Instruction in
the absence of specific agreement, such transaction will be performed in
accordance with the usual commercial terms of the Custodian. In the
event that the Fund defaults on the settlement of any such foreign exchange
transaction with the Custodian, the Fund shall be liable for contracted currency
of the transaction together with any xxxx to market exposure associated with the
replacement purchase of the contracted currency undertaken with the
Custodian.
7.5 Delays. If
no event of Force Majeure shall have occurred and be continuing and in the event
that a delay shall have been caused by the negligence or willful misconduct of
the Custodian in carrying out an Instruction to credit or transfer cash, the
Custodian shall be liable to the Fund: (a) with respect to Principal
Accounts, for interest to be calculated at the rate customarily paid on such
deposit and currency by the Custodian on overnight deposits at the time the
delay occurs for the period from the day when the transfer should have been
effected until the day it is in fact effected; and, (b) with respect to Agency
Accounts, for interest to be calculated at the rate customarily paid on such
deposit and currency by the Subcustodian on overnight deposits at the time the
delay occurs for the period from the day when the transfer should have been
effected until the day it is in fact effected. The Custodian shall not be liable
for delays in carrying out such Instructions to transfer cash which are not due
to the Custodian’s own negligence or willful misconduct.
7.6 Advances.
If, for any reason in connection with this Agreement the Custodian or any
Subcustodian makes an Advance to facilitate settlement or otherwise for the
benefit of the Fund (whether or not any Principal or Agency Account shall be
overdrawn either during, or at the end of, any Business Day (defined as any day
other than a day on which any of the Futures Exchanges upon which a Benchmark
Component Futures Contract is traded is closed for regular trading1), the Trust, on its own behalf and on behalf
of the Fund, and the Sponsor each hereby does:
7.6.1 acknowledge
that the Fund shall have no right, title or interest in or to any Investments
purchased with such Advance or proceeds of such Investments, and that any credit
to an account of Fund shall be provisional, until: (a) the debit of the
Principal or Agency Account by Custodian for an amount equal to Advance Costs;
and/or (b) if such debit produces an overdraft in such account, reimbursement to
the Custodian or Subcustodian for the amount of such overdraft;
7.6.2 acknowledge
that the Custodian has an automatically perfected statutory security interest in
Investments purchased with any such Advance (as defined in Section 13) pursuant
to Section 9-206 of the Uniform Commercial Code as in effect in the State of New
York from time to time;
1 “Futures
Exchanges” shall include the New York Mercantile Exchange (“NYMEX”), ICE Futures
(“ICE”), Chicago Board of Trade (“CBOT”), Chicago Mercantile Exchange (“CME”),
London Metal Exchange (“LME”), Commodity Exchange, Inc. (“COMEX”) or on other
foreign exchanges (such exchanges, collectively, the “Futures
Exchanges”). “Benchmark Component Futures Contract” shall mean the
Futures Contracts that at any given time make up the index of the
Fund.
13
7.6.3 in
addition, in order to secure the obligations of the Fund to pay or perform any
and all obligations of the Fund pursuant to this Agreement, including without
limitation to repay any Advance made pursuant to this Agreement, grant to the
Custodian a security interest in all Investments and proceeds thereof (as
defined in the Uniform Commercial Code as currently in effect in the State of
New York); and agree to take, and agree that the Custodian may take, in respect
of the security interest referenced above, any further actions that the
Custodian may reasonably require.
7.7 Custodian’s
Rights. Neither the Custodian nor any Subcustodian shall be
obligated to make any Advance or to allow an Advance to occur to the Fund, and
in the event that the Custodian or any Subcustodian does make or allow an
Advance, any such Advance and any transaction giving rise to such Advance shall
be for the account and risk of the Fund and shall not be deemed to be a
transaction undertaken by the Custodian for its own account and
risk. If such Advance shall have been made or allowed by a
Subcustodian or any other person, the Custodian may assign all or part of its
security interest referenced above and any other rights granted to the Custodian
hereunder to such Subcustodian or other person. If the Fund shall
fail to repay the Advance Costs when due, the Custodian or its assignee, as the
case may be, shall be entitled to a portion of the available cash balance in any
Agency or Principal Account equal to such Advance Costs, and the Trust and
Sponsor authorizes the Custodian, on behalf of the Fund, to pay an amount equal
to such Advance Costs irrevocably to such Subcustodian or other person, and to
dispose of any property in such Account to the extent necessary to make such
payment. Any Investments and funds credited to accounts subject to
this Agreement created pursuant hereto shall be treated as financial assets
credited to securities accounts under Articles 8 and 9 of the Uniform Commercial
Code as in effect in the State of New York from time to
time. Accordingly, the Custodian and any Subcustodian shall have the
rights and benefits of a secured creditor that is a securities intermediary
under such Articles 8 and 9.
7.8 Integrated
Account. For purposes hereof, deposits maintained in all
Principal Accounts (whether or not denominated in United States Dollars) shall
collectively constitute a single and indivisible current account with respect to
the Fund’s obligations to the Custodian or its assignee, and balances in the
Principal Accounts shall be available for satisfaction of the Fund’s obligations
under this Section 7. The Custodian shall further have a right of
offset against the balances in any Agency Account maintained hereunder to the
extent that the aggregate of all Principal Accounts is overdrawn.
8. Subcustodians and
Securities Depositories. Subject to the provisions hereinafter
set forth in this Section 8, the Trust and the Sponsor each hereby authorizes
the Custodian to utilize Securities Depositories to act on behalf of the Fund
and to appoint from time to time and to utilize Subcustodians. With respect to
securities and funds held by a Subcustodian, either directly or indirectly
(including by a Securities Depository or Clearing Corporation), notwithstanding
any provisions of this Agreement to the contrary, payment for securities
purchased and delivery of securities sold may be made prior to receipt of
securities or payment, respectively, and securities or payment may be received
in a form, in accordance with (a) governmental regulations, (b) rules of
Securities Depositories and the Clearing Corporations, (c) generally accepted
trade practice in the applicable local market, (d) the terms and characteristics
of the particular Investment, or (e) the terms of the
Instructions.
14
8.1 Domestic
Subcustodians and Securities Depositories. The Custodian may
deposit and/or maintain, either directly or through one or more agents appointed
by the Custodian, Investments of the Fund in any Securities Depository in the
United States of America, including The Depository Trust Company, provided such
Securities Depository meets applicable requirements of the Federal Reserve Bank
or of the Securities and Exchange Commission. The Custodian may, at any time and
from time to time, appoint any bank meeting the requirements of a custodian and
the rules and regulations thereunder, to act on behalf of the Fund as a
Subcustodian for purposes of holding Investments of the Fund in the United
States.
8.2 Responsibility
for Subcustodians. The Custodian shall be liable to the Fund
for any loss or damage to the Fund caused by or resulting from the acts or
omissions of any domestic Subcustodian to the extent that such acts or omissions
would be deemed to be negligence, gross negligence or willful misconduct in
accordance with the terms of the relevant subcustodian agreement under the laws,
circumstances and practices prevailing in the place where the act or omission
occurred.
9. Responsibility of
the Custodian. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care under the facts and
circumstances prevailing in the market where performance is
effected. Subject to the specific provisions of this Section, the
Custodian shall be liable for any direct damage incurred by the Fund in
consequence of the Custodian’s negligence, bad faith or willful
misconduct. In no event shall the Custodian be liable hereunder for
any special, indirect, punitive or consequential damages arising out of,
pursuant to or in connection with this Agreement even if the Custodian has been
advised of the possibility of such damages. It is agreed that the
Custodian shall have no duty to assess the risks inherent in the Fund’s
Investments or to provide investment advice with respect to such Investments and
that the Fund as principal shall bear any risks attendant to particular
Investments such as failure of a counterparty or issuer.
9.1 Limitations of
Performance. The Custodian shall not be responsible under this
Agreement for any failure to perform its duties, and shall not be liable
hereunder for any loss or damage in association with such failure to perform,
for or in consequence of the following causes:
9.1.1 Force
Majeure. Force Majeure shall mean any
circumstance or event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and which adversely
affects the performance by the Custodian of its obligations hereunder, by the
Subcustodian of its obligations under its Subcustody Agreement or by any other
agent of the Custodian or the Subcustodian, including any event caused by,
arising out of or involving (a) an act of God, (b) accident, fire, water damage
or explosion, (c) any computer, system or other equipment failure or malfunction
caused by any computer virus or the malfunction or failure of any communications
medium, (d) any interruption of the power supply or other utility service, (e)
any strike or other work stoppage, whether partial or total, (f) any delay or
disruption resulting from or reflecting the occurrence of any Sovereign Risk,
(g) any disruption of, or suspension of trading in, the securities, commodities
or foreign exchange markets, whether or not resulting from or reflecting the
occurrence of any Sovereign Risk, (h) any encumbrance on the transferability of
a currency or a currency position on the actual settlement date of a foreign
exchange transaction, whether or not resulting from or reflecting the occurrence
of any Sovereign Risk, or (i) any other cause similarly beyond the reasonable
control of the Custodian.
15
9.1.2 Sovereign
Risk. Sovereign Risk shall mean, in respect of any
jurisdiction, including the United States of America, where Investments are
acquired or held hereunder or under a subcustody agreement, (a) any act of war,
terrorism, riot, insurrection or civil commotion, (b) the imposition of any
investment, repatriation or exchange control restrictions by any Governmental
Authority, (c) the confiscation, expropriation or nationalization of any
Investments by any Governmental Authority, whether de facto or de jure, (d) any
devaluation or revaluation of the currency, (e) the imposition of taxes, levies
or other charges affecting Investments, (f) any change in the Applicable Law, or
(g) any other economic or political risk incurred or experienced.
9.2 Limitations on
Liability of the Custodian. The Custodian shall not be liable
for any loss, claim, damage or other liability arising from the following
causes:
9.2.1 Failure of Third
Parties. The failure of any third party
including: (a) the Sponsor or the Trust; (b) any futures commission
merchant(s); (c) any issuer of Investments or book-entry or other agent of and
issuer; (d) any counterparty with respect to any Investment, including any
issuer of exchange-traded or other futures, option, derivative or commodities
contract; (e) failure of an Investment Advisor or other agent of the Fund; or
(f) failure of other third parties similarly beyond the control or choice of the
Custodian.
9.2.2 Information
Sources. The Custodian may rely upon information received from
issuers of Investments or agents of such issuers, information received from
Subcustodians and from other commercially reasonable sources such as commercial
data bases and the like, but shall not be responsible for specific inaccuracies
in such information, provided that the Custodian has relied upon such
information in good faith, or for the failure of any commercially reasonable
information provider.
9.2.3 Reliance on
Instruction. Action by the Custodian or the Subcustodian in
accordance with an Instruction, even when such action conflicts with, or is
contrary to any provision of, the Trust’s or the Sponsor’s constituent
documents, Applicable Law, or actions by the directors of the Sponsor or
unitholders of the Fund.
9.2.4 Restricted
Securities. The limitations inherent in the rights,
transferability or similar investment characteristics of a given Investment of
the Fund.
16
9.3 Limitations on
Liability of the Sponsor, Trust and the Fund. The Custodian
agrees to look solely to the assets of the Fund and to the Sponsor and its
assets in respect of any claim against or obligation of the Fund. The
Administrator acknowledges and agrees that liability of the Fund, as a series of
the Trust, is limited pursuant to Section 3804(a) of the Delaware Statutory
Trust Act, such that (a) the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to the Fund shall be
enforceable against the assets of the Fund only, and not against the assets of
the Trust generally or the assets of any other series of the Trust, and (b) none
of the debts, liabilities, obligations and expenses incurred, contracted for, or
otherwise existing with respect to the Trust generally and any other series of
the Trust shall be enforceable against the assets of the Fund.
10. Indemnification.
10.1 The
Fund and the Sponsor each hereby indemnifies the Custodian and each
Subcustodian, and their respective agents, nominees and the partners, employees,
officers and directors, and agrees to hold each of them harmless from and
against all claims and liabilities, including counsel fees and taxes, reasonably
incurred or assessed against any of them in connection with the performance of
this Agreement and any Instruction.
10.2 The
Custodian hereby indemnifies the Fund, the Trust and the Sponsor, and their
respective agents, nominees and the partners, employees, officers and directors,
and agrees to hold each of them harmless from and against all claims and
liabilities, including counsel fees and taxes, reasonably incurred or assessed
against any of them as a direct result of the Custodian’s negligence, willful
misconduct or bad faith in its performance of this Agreement and any
Instruction.
11. Reports and
Records. The Custodian shall:
11.1 create
and maintain records relating to the performance of its obligations under this
Agreement;
11.2 make
available to the Fund, the Trust and/or the Sponsor, their respective auditors,
agents and employees, upon reasonable request and during normal business hours
of the Custodian, all records maintained by the Custodian pursuant to Section
11.1 above, subject, however, to all reasonable security requirements of the
Custodian then applicable to the records of its custody customers generally;
and
11.3 make
available to the Fund, the Trust and/or the Sponsor all Electronic Reports (as
defined in Section 13); it being understood that the Custodian shall not be
liable hereunder for the inaccuracy or incompleteness thereof or for errors in
any information included therein.
The
Sponsor shall examine all records, howsoever produced or transmitted, promptly
upon receipt thereof and notify the Custodian promptly of any discrepancy or
error therein. Unless the Trust or the Sponsor delivers written
notice of any such discrepancy or error within a reasonable time after its
receipt thereof, such records shall be deemed to be true and
accurate. It is understood that the Custodian now obtains and will in
the future obtain information on the value of assets from outside sources which
may be utilized in certain reports made available to the Fund, the Trust and the
Sponsor. The Custodian deems such sources to be reliable but it is acknowledged
and agreed that the Custodian does not verify nor represent nor warrant as to
the accuracy or completeness of such information and accordingly shall be
without liability in selecting and using such sources and furnishing such
information.
17
12. Miscellaneous.
12.1 Proxies,
etc. The Trust, on its own behalf and on behalf of the Fund,
and/or the Sponsor will promptly execute and deliver, upon request, such
proxies, powers of attorney or other instruments as may be necessary or
desirable for the Custodian to provide, or to cause any Subcustodian to provide,
custody services.
12.2 Entire
Agreement. This Agreement (including any schedules and
exhibits attached hereto and thereto) contains all of the agreements among the
parties hereto and thereto with respect to the transactions contemplated hereby
and thereby and supersedes all prior agreements or understandings, whether
written or oral, among the parties with respect thereto.
12.3 Amendment and
Modification. This Agreement may be amended, modified or
supplemented only by a written instrument executed by all parties
hereto.
12.4 Successors and
Assigns; Assignment. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. This Agreement shall not be
assigned by any party without the prior written consent of the other parties and
any assignment without such consent shall be null and void.
12.5 Waiver of
Compliance. Except as otherwise provided in this Agreement,
any failure of any of the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but any such waiver, or the failure to insist upon strict compliance
with any obligation, covenant, agreement or condition herein, shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure or
breach.
12.6 Severability. The
parties hereto desire that the provisions of this Agreement be enforced to the
fullest extent permissible under the law and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, in the event that any
provision of this Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
12.7 Notices. All
notices, waivers, or other communications pursuant to this Agreement shall be in
writing and shall be deemed to be sufficient if delivered personally, by
facsimile (and, if sent by facsimile, followed by delivery by
nationally-recognized express courier), sent by nationally-recognized express
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
18
|
|
(1)
|
if
to Sponsor, to:
|
|
|
United
States Commodity Funds LLC
|
|
|
0000
Xxxxxx Xxx Xxxxxxx, Xxxxx 000
|
|
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
|
|
Attention:
Xxxxxxxx X. Xxxxxx
|
|
|
(2)
|
if
to the Trust or the Fund, to:
|
|
|
c/o
United States Commodity Funds LLC
|
|
|
0000
Xxxxxx Xxx Xxxxxxx, Xxxxx 000
|
|
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
|
|
Attention:
Xxxxxxxx X. Xxxxxx
|
|
|
(3)
|
if
to the Custodian, to:
|
|
|
Xxxxx
Brothers Xxxxxxxx & Co.
|
|
|
00
Xxxxx Xxxxxx
|
|
|
Xxxxxx,
Xxxxxxxxxxxxx 00000
|
|
|
Attn:
Telephone: (000)
000-0000
|
|
|
Facsimile:
(617) 772- ____
|
or such
other address as the Sponsor, the Trust or the Custodian may have designated in
writing to the other.
All such
notices and other communications shall be deemed to have been delivered and
received (i) in the case of personal delivery or delivery by a
nationally-recognized express courier, on the date of such delivery if delivered
during business hours on a Business Day or, if not delivered during business
hours on a Business Day, the first Business Day thereafter, and (ii) in the case
of mailing or delivery by facsimile, upon receipt by the intended
party.
12.8 Governing Law;
Jurisdiction.
12.8.1 All
questions concerning the construction, interpretation and validity of this
Agreement shall be governed by and construed and enforced in accordance with the
domestic laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule (whether in the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. In furtherance of the foregoing, the internal
law of the State of New York will control the interpretation and construction of
this Agreement, even if under such jurisdiction’s choice of law or conflict of
law analysis, the substantive law of some other jurisdiction would ordinarily or
necessarily apply.
19
12.8.2 Each
party irrevocably consents and agrees, for the benefit of the other parties,
that any legal action, suit or proceeding against it with respect to its
obligations, liabilities or any other matter arising out of or in connection
with this Agreement or any related agreement may be brought in the courts of the
State of New York and hereby irrevocably consents and submits to the
non-exclusive jurisdiction of each such court in personam, generally and
unconditionally with respect to any action, suit or proceeding for itself and in
respect of its properties, assets and revenues. Each party irrevocably waives
any immunity to jurisdiction to which it may otherwise be entitled or become
entitled (including sovereign immunity, immunity to pre-judgment attachment and
execution) in any legal suit, action or proceeding against it arising out of or
based on this Agreement or any related agreement or the transactions
contemplated hereby or thereby which is instituted in any court of the State of
New York.
The
provisions of this Section 12.8 shall survive any termination of this Agreement,
in whole or in part.
12.9 No
Partnership. The Custodian acts as an independent contractor
with respect to the services provided under this Agreement. The terms
and conditions of this Agreement do not create a partnership relationship
between the Custodian and the Sponsor, the Custodian and the Trust or between
the Custodian and the Fund. Each of the Sponsor and the Trust, on its
own behalf and on behalf of the Fund, acknowledges that the Custodian may enter
into similar agreements with others without the consent of the Sponsor or the
Trust.
12.10 Interpretation.
The article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties and shall not
in any way affect the meaning or interpretation of this Agreement.
12.11 No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any
party.
12.12 Counterparts;
Facsimile Signatures. 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. Facsimile
counterpart signatures to this Agreement shall be acceptable and
binding.
12.13 Other
Usages. The following usages shall apply in interpreting this
Agreement: (i) references to a governmental or quasi-governmental agency,
authority or instrumentality shall also refer to a regulatory body that succeeds
to the functions of such agency, authority or instrumentality; and (ii)
“including” means “including, but not limited to.”
12.14 Confidentiality. The
parties hereto agree that each shall treat confidentially the terms and
conditions of this Agreement and all information provided by each party to the
other regarding its business and operations. All confidential
information provided by a party hereto shall be used by the other party hereto
solely for the purpose of rendering or obtaining services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not apply to any information that is
publicly available when provided or thereafter becomes publicly available other
than through a breach of this Agreement, or that is required to be disclosed by
or to any bank examiner of the Custodian or any Subcustodian, any Regulatory
Authority, any auditor of the parties hereto, or by judicial or administrative
process or otherwise by Applicable Law, including for the avoidance of doubt,
any filing of this Agreement (excluding any terms relating to fees) by or on
behalf of the Fund with any regulator with authority over the
Fund.
20
12.15 Counsel. In
fulfilling its duties hereunder, the Custodian shall be entitled to receive and
act upon the advice of (i) counsel regularly retained by the Custodian in
respect of such matters, (ii) counsel for the Fund or (iii) such counsel as the
Fund, the Sponsor and the Custodian may agree upon, with respect to all
matters. The Custodian shall not be considered to have engaged in any
misconduct or to have acted negligently when soliciting and following such
advice.
12.16 Conflict. Nothing
contained in this Agreement shall prevent the Custodian and its associates from
(i) dealing as a principal or an intermediary in the sale, purchase or loan of
the Fund’s Investments to, or from the Custodian or its associates; (ii) acting
as a custodian, a subcustodian, a trustee, an agent, securities dealer, an
investment manager or in any other capacity for any other client; or (iii)
buying, holding, lending, and dealing in any way in any assets for the benefit
of its own account, for the account of any other client, or for the account of
the Fund.
12.17 Privacy. In
the course of carrying out its obligations under this Agreement, each party
shall maintain physical, procedural and/or electronic safeguards reasonably
designed to protect information regarding the Fund and its investors that such
party has obtained or to which such party has gained access.
13. Definitions. The
following defined terms will have the respective meanings set forth
below.
13.1 Advance(s)
shall mean any extension of credit by or through the Custodian or by or through
any Subcustodian and shall include, without limitation, amounts due to the
Custodian as the principal counterparty to any foreign exchange transaction with
the Fund as described in Section 7.4.2 hereof, or paid to third parties for
account of the Fund or in discharge of any expense, tax or other item payable by
the Fund.
13.2 Advance
Costs shall mean any Advance, interest on the Advance and any related
expenses, including without limitation any xxxx to market loss of the Custodian
or Subcustodian on any Investment to which Section 7.6.1 applies.
13.3 Agency
Account(s) shall mean any deposit account opened on the books of a
Subcustodian or other banking institution in accordance with Section
7.1.
13.4 Agent(s)
shall have the meaning set forth in the last sentence of Section 6.
13.5 Applicable
Law shall mean with respect to each jurisdiction, all (a) laws, statutes,
treaties, regulations, guidelines (or their equivalents); (b) orders,
interpretations, licenses and permits; and (c) judgments, decrees, injunctions,
writs, orders and similar actions by a court of competent jurisdiction;
compliance with which is required or customarily observed in such
jurisdiction.
21
13.6 Authorized
Person(s) shall mean any person or entity authorized to give Instructions
on behalf of the Fund and/or the Sponsor in accordance with Section
4.1.
13.7 Book-entry
Agent shall mean an entity acting as agent for the issuer of Investments
for purposes of recording ownership or similar entitlement to Investments,
including without limitation a transfer agent or registrar.
13.8 Business
Day shall have the meaning set forth in Section 7.6 hereof.
13.9 Clearing
Corporation shall mean any entity or system established for purposes of
providing securities settlement and movement and associated functions for a
given market.
13.10 Electronic and
Online Services Schedule shall mean any separate agreement entered into
among the Custodian, the Sponsor and the Trust, on its own behalf and on behalf
of the Fund or its authorized representative with respect to certain matters
concerning certain electronic and online services as described therein and as
may be made available from time to time by the Custodian to the
Fund.
13.11 Electronic
Reports shall mean any reports prepared by the Custodian and remitted to
the Fund, the Trust, the Sponsor or their respective authorized representative
via the internet or electronic mail.
13.12 Funds Transfer
Services Schedule shall mean any separate agreement entered into among
the Custodian, the Sponsor and the Trust, on its own behalf and on behalf of the
Fund, or their respective authorized representative with respect to certain
matters concerning the processing of payment orders from Principal Accounts of
the Fund.
13.13 Instruction(s)
shall have the meaning assigned in Section 4.
13.14 Investment
Advisor shall mean any person or entity who is an Authorized Person to
give Instructions with respect to the investment and reinvestment of the Fund’s
Investments.
13.15 Investment(s)
shall mean any investment asset of the Fund, including without
limitation: securities, bonds, notes, and debentures as well as receivables,
derivatives, contractual rights or entitlements and other intangible assets, but
excluding Futures Contracts and Commodity Interests (each as defined in the
Fund’s prospectus).
13.16 Margin
Account shall have the meaning set forth in Section 6.4
hereof.
13.17 Principal
Account(s) shall mean deposit accounts of the Fund carried on the books
of BBH&Co. as principal in accordance with Section 7.
13.18 Safekeeping
Account shall mean an account established on the books of the Custodian
or any Subcustodian for purposes of segregating the interests of the Fund (or
clients of the Custodian or Subcustodian) from the assets of the Custodian or
any Subcustodian.
22
13.19 Securities
Depository shall mean a central or book entry system or agency
established under Applicable Law for purposes of recording the ownership and/or
entitlement to investment securities for a given market.
13.20 Subcustodian(s)
shall mean each bank appointed by the Custodian pursuant to Section 8
hereof, but shall not include Securities Depositories.
13.21 Tri-Party
Agreement shall have the meaning set forth in Section 6.4
hereof.
14. Compensation. The
Trust, on its own behalf and on behalf of the Fund, and the Sponsor agree that
the Sponsor and/or the Fund will pay to the Custodian (a) a fee in an amount set
forth in the fee letter among the Trust, on its own behalf and on behalf of the
Fund, the Sponsor and the Custodian in effect on the date hereof or as amended
from time to time, and (b) all reasonable out-of-pocket expenses incurred under
this Agreement by the Custodian, including the fees and expenses of all
Subcustodians, and payable from time to time. Amounts payable by the
Sponsor and/or the Fund under and pursuant to this Section 14 shall be payable
by wire transfer to the Custodian at BBH&Co. in New York, New
York.
15. Termination. This
Agreement may be terminated by either party in accordance with the provisions of
this Section. The provisions of this Agreement and any other rights
or obligations incurred or accrued by any party hereto prior to termination of
this Agreement shall survive any termination of this
Agreement. Termination of this Agreement with respect to any Fund
shall not result in the termination of this Agreement with respect to any other
Fund listed on Annex A.
15.1 Term, Notice and
Effect. This Agreement shall have an initial term of two (2)
years from the date hereof. Thereafter, this Agreement shall automatically renew
for successive one (1) year periods unless any party terminates this Agreement
by providing written notice no later than seventy-five (75) days prior to the
expiration of the applicable term to the other parties at their address set
forth herein. Upon the completion of the initial term, any party to
this Agreement may elect to terminate this Agreement at any time by delivering
90 days notice thereof to the other parties.
15.2 Successor
Custodian. In the event of the appointment of a successor
custodian, it is agreed that the Investments of the Fund held by the Custodian
or any Subcustodian shall be delivered to the successor Custodian in accordance
with reasonable Instructions. The Custodian agrees to cooperate with
the Fund in the execution of documents and performance of other actions
necessary or desirable in order to facilitate the succession of the new
custodian. If no successor custodian shall be appointed, the
Custodian shall in like manner transfer the Fund’s Investments in accordance
with Instructions.
23
15.3 Delayed
Succession. If no Instruction has been given as of the
effective date of termination, the Custodian may at any time on or after such
termination date and upon ten (10) consecutive calendar days written notice to
the Trust and the Sponsor either (a) deliver the Investments of the Fund held
hereunder to the Fund at the address designated for the Trust and the Fund for
receipt of notices hereunder; or (b) deliver any Investments held hereunder to a
bank or trust company having a capitalization of $50,000,000 equivalent and
operating under the Applicable Law of the jurisdiction where such Investments
are located, such delivery to be at the risk of the Fund. In the
event that Investments or moneys of the Fund remain in the custody of the
Custodian or its Subcustodians after the date of termination owing to the
failure of the Trust or the Sponsor to issue Instructions with respect to their
disposition or owing to the fact that such disposition could not be accomplished
in accordance with such Instructions despite diligent efforts of the Custodian,
the Custodian shall be entitled to compensation for its services with respect to
such Investments and moneys during such period as the Custodian or its
Subcustodians retain possession of such items and the provisions of
this Agreement shall remain in full force and effect until disposition in
accordance with this Section is accomplished.
24
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly
executed as of the date first above written.
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XXXXX
BROTHERS XXXXXXXX & CO.
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By:
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Name:
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Title:
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UNITED
STATES COMMODITY FUNDS LLC
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By:
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Name:
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Title:
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UNITED
STATES COMMODITY INDEX FUNDS TRUST, on its own behalf and on
behalf
of the United States Commodity Index Fund
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By:
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United
States Commodity Funds LLC, as Sponsor
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By:
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Name:
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Title:
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||
25
FUNDS
TRANSFER SERVICES SCHEDULE
(“FTSS”)
In
accordance with Section 4.2 of the Custodian Agreement, the Trust, on behalf of
itself and the Fund, and the Sponsor acknowledge the following terms and
conditions in respect of all funds transfers effected by the
Custodian. Terms not otherwise defined herein shall have the meanings
accorded to them in the Custodian Agreement.
1. Transmission of Payment
Orders. Each funds transfer Instruction (“FT Instruction”) shall be
transmitted by such secured or authenticated means and subject to such security
procedures as the Custodian shall make available to the Trust and the Sponsor
from time to time (such transmission method and security procedures, a Custodian Designated Security
Procedure), unless the Trust or the Sponsor shall elect to transmit such
FT Instruction in accordance with a Fund Designated Security Procedure (as
defined in Section 4 below). The Trust and the Sponsor acknowledge
and agree that the Custodian will use the security procedures referenced in
Sections 3 and 4 below solely to authenticate a FT Instruction, as set forth
herein, and not to detect any errors or omissions therein.
2. Custodian
Designated Security Procedure. The Custodian will make the following
Custodian Designated Security Procedures available to the Trust and the Sponsor
for use in communicating FT Instructions to the Custodian:
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·
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BBH Worldview® Payment
Products. The Custodian offers to the Trust and the
Sponsor use of its BBH Worldview Payment Products (“BBH Worldview”), which
are Custodian proprietary on-line payment order authorization facilities
with built-in authentication procedures. The Custodian, the
Trust and the Sponsor shall each be responsible for maintaining the
confidentiality of passwords or other codes used by them in connection
with BBH Worldview. The Custodian will act on FT Instructions received
through BBH Worldview without duty of further confirmation unless the
Trust or the Sponsor notifies the Custodian that its password is not
secure. The Trust and the Sponsor agree that access to, and use
of, BBH Worldview shall be governed by an Electronic and On-line Services
Schedule, which the Trust, on behalf of itself and the Fund, and the
Sponsor will execute prior to access to BBH
Worldview.
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·
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SWIFT
Transmission. The Custodian, the Trust and the Sponsor
shall comply with SWIFT’s authentication procedures. The Custodian will
act on FT Instructions received via SWIFT provided the instruction is
authenticated by the SWIFT system.
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·
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Written
Instructions. Instructions may be transmitted in an
original writing that bears the manual signature of an Authorized
Person(s).
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26
3. Fund Designated Security
Procedure. FT Instructions may be transmitted through such
other means, and subject to such additional security procedures, as may be
elected on behalf of the Fund by the Sponsor (or by an Authorized Person
entitled to give Instructions) and acknowledged and accepted by the Custodian
(the transmission methods and security procedures referenced below, as may be
supplemented by such additional security procedures, each a Fund Designated Security
Procedure); it being understood that the Custodian’s acknowledgment shall
authorize it to accept such means of delivery but shall not represent a judgment
by the Custodian as to the reasonableness or security of the means utilized by
the Trust and the Sponsor.
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·
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Computer
Transmission. The Custodian is able to accept
transmissions sent from the Trust or the Sponsor’s computer facilities to
the Custodian’s computer facilities. If the Trust or the
Sponsor determines to use its proprietary transmission or other electronic
transmission method, it must provide Custodian sufficient notice and
information to allow testing or other confirmation that FT Instructions
received via the Fund Designated Security Procedure can be processed in
good time and order. The Custodian may require the Trust and
the Sponsor to execute additional documentation prior to the use of such
transmission method.
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·
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Facsimile
Transmission. A FT Instruction transmitted to the
Custodian by facsimile transmission must be transmitted by the Trust or
the Sponsor to a telephone number specified from time to time by the
Custodian for such purposes. The Custodian will then follow one
of the procedures below:
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(i)
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If
the facsimile requests a non-repetitive order, the Custodian will call the
Trust and the Sponsor and request to speak to a person authorized to
validate orders on behalf of the Fund and the Sponsor, and confirm the
authorization and details of the payment order (a Callback);
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(ii)
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If
the facsimile FT Instruction pertains to a repetitive payment order (see
Section 7 below), the Custodian may (at its sole discretion) perform a
Callback. Each of the Trust, on behalf of itself and the Fund,
and the Sponsor acknowledges that prior to its issuance of any repetitive
payment order, it must (a) request that the appropriate repetitive payment
order process be approved and set up at the Custodian, and (b) complete
such documentation as may be required by the Custodian, including a PPO
(as defined in Section 7).
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The
Custodian shall rely on the purported identity of the originator but due to the
lack of reliability of a facsimile signature, it will not perform signature
verification on facsimiles.
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·
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Telephonic. The
Trust or the Sponsor may call a telephonic payment order into the
Custodian at the telephone number designated from time-to-time by the
Custodian for that purpose. The caller shall identify
herself/himself as an Authorized Person. The Custodian shall
obtain the FT Instruction details from the caller. The
Custodian shall then follow one of the procedures
below:
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27
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(i)
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If
the telephonic FT Instruction pertains to a non-repetitive payment order,
the Custodian will perform a Callback;
or
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(ii)
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If
the telephonic FT Instruction pertains to a repetitive payment order (see
Section 7 below), the Custodian may (at its sole discretion) perform a
Callback. The Trust and the Sponsor acknowledge that prior to
its issuance of any repetitive payment order, it must (a) request that the
appropriate repetitive payment order process be approved and set up at the
Custodian, and (b) complete such documentation as may be required by the
Custodian, including a PPO.
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In
electing to transmit a FT Instruction via a Fund Designated Security Procedure,
the Trust and the Sponsor (i) agrees to be bound by the transaction(s) or
payment order(s) specified on said FT Instruction, whether or not authorized,
and accepted by the Custodian in compliance with such Fund Designated Security
Procedure, and (ii) accepts the risk associated with such Fund Designated
Security Procedure and confirms it is commercially reasonable for the
transmission and authentication of the FT Instruction.
The
parties agree that the transmission by the Sponsor or the Trust of a FT
Instruction by means of any of the above Fund Designated Security Procedures and
the Custodian’s acceptance and execution of such FT Instruction shall constitute
a FT Instruction sent via a Fund Designated Security Procedure and governed by
the terms of this FTSS.
4. Rejection of Payment Orders;
Rescission of Designated Security Procedure. The Custodian
shall give the Trust and the Sponsor timely notice of the Custodian’s rejection
of a FT Instruction. Such notice may be given in writing, via a
Custodian Designated Security Procedure or any Fund Designated Security
Procedure used by the Trust and the Sponsor, or orally by telephone, each of
which is hereby deemed commercially reasonable. In the event the
Custodian fails to execute a properly executable FT Instruction and fails to
give the Trust and the Sponsor notice of the Custodian’s non-execution, the
Custodian shall be liable only for the actual damages of the Trust, the Fund or
the Sponsor and only to the extent that such damages are recoverable under UCC
4A (as defined in Section 13 below). The Custodian, after providing
prior written notice, may decide to no longer accept a particular Fund or
Custodian Designated Security Procedure, or to do so only on revised terms, in
the event that it determines that such agreed or established method of
transmission represents a security risk or is attendant to any general change in
the Custodian’s policy regarding FT Instructions. Notwithstanding
anything in this FTSA and the Agreement to the contrary, the Custodian shall in
no event be liable for any consequential, indirect, special or punitive damages
under this FTSA, whether or not such damages relate to services covered by UCC
4A, even if the Custodian was advised of the possibility of such
damages.
5. Cancellation of Payment
Orders. The Trust and the Sponsor may cancel a FT
Instruction but the Custodian shall have no liability for the Custodian’s
failure to act on a cancellation FT Instruction unless the Custodian has
received such cancellation FT Instruction at a time and in a manner affording
the Custodian reasonable opportunity to act prior to the Custodian’s execution
of the original FT Instruction. Any cancellation FT Instruction shall
be sent and confirmed by such means as is set forth in Section 3 or 4
above.
28
6. Preauthorized Repetitive
Payment Orders. The Trust and the Sponsor may establish with
the Custodian a process to preauthorize certain repetitive payments or
transfers. The Trust and the Sponsor will execute all documentation
required by the Custodian, including a separate Preauthorized Repetitive Payment
Order (PPO)
form. The PPO shall be delivered to the Custodian in writing or by
another Custodian Designated Security Procedure or Fund Designated Security
Procedure, and will become effective after the Custodian shall have had a
reasonable opportunity to act thereon (or if later, two (2) banking days after
receipt by the Custodian). The PPO may take the form of
either:
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(i)
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A standing instruction
in which the Trust and the Sponsor provides in the PPO all required
information for a FT Instruction (except for the transfer date and amount)
on a “standing instructions” basis. The Trust and the Sponsor
may from time-to-time instruct the Custodian to make a payment under the
PPO, in writing or another Custodian Designated Security Procedure or Fund
Designated Security Procedure, which instruction shall reference the
repetitive line number (a number assigned to it by the Custodian after
execution of the PPO), details of the payment, the transfer date and the
amount of the transfer; or
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(ii)
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A
recurring instruction
in which the Trust and the Sponsor supplies all required
information for a FT Instruction with an instruction to process such
payments with a specific frequency.
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7. Responsibility for the
Detection of Errors in Payment Orders; Liability of the
Parties. The purpose of any Fund Designated Security Procedure
or Custodian Designated Security Procedure is to confirm the authenticity of any
FT Instruction and is not designed to detect errors or omissions in such FT
Instructions. Therefore, the Custodian is not responsible for
detecting any Trust and/or Sponsor error or omission contained in any FT
Instruction received by the Custodian. In the event that the FT
Instruction either (i) identifies the beneficiary by both a name and an
identifying account number and the name and number identify different persons or
entities, or (ii) identifies the beneficiary by both a name and an identifying
number and the number identifies a person or entity different from the
beneficiary identified by name, execution of the relevant payment order, payment
to the beneficiary, cancellation of the payment order or actions taken by the
Custodian or the Trust and the Sponsor in respect of such payment order may be
made solely on the basis of the number.
The
Custodian shall not be liable for interest on the amount of any FT Instruction
that was not authorized or was erroneously executed unless the Trust and the
Sponsor so notifies the Custodian within thirty (30) days following the Trust
and the Sponsor’s receipt of notice that such FT Instruction was
processed. Any compensation payable in the form of interest shall be
payable in accordance with UCC 4A. If a FT Instruction in the name of
the Fund and the Sponsor and accepted by the Custodian was not authorized by the
Trust and/or the Sponsor, the liability of the parties will be governed by the
applicable provisions of UCC 4A.
29
ELECTRONIC
AND ON-LINE SERVICES SCHEDULE
This
Electronic and On-Line Services Schedule (this Schedule) to a Custodian
Agreement dated as of July 22, 2010 (as amended from time to time hereafter, the
Agreement) by and among
Xxxxx Brothers Xxxxxxxx & Xx. (xx, xx xxx), Xxxxxx Xxxxxx
Commodity Funds LLC (the Sponsor), the United States
Commodity Index Funds Trust, a Delaware statutory trust (the Trust), on its own behalf and
on behalf of the series established and designated by the Trust, the [INSERT
NAME OF FUND] (the Fund)
(the Sponsor and the Trust, on its own behalf and on behalf of the Fund,
collectively, you, your), provides general
provisions governing your use of and access to the Services (as hereinafter
defined) provided to you by us via the Internet (at xxx.xxxxx.xxx or such other
URL as we may instruct you to use to access our products) and via a
direct dial-up connection between your computer and our computers, as of July
22, 2010 (the Effective Date). Use of the Services constitutes acceptance of the
terms and conditions of this Schedule, any Appendices hereto, the Terms and
Conditions posted on our web site, and any terms and conditions specifically
governing a particular Service or our other products, which may be set forth in
the Agreement or in a separate related agreement (collectively, the Related
Agreements).
1. General Terms.
You will
be granted access to our suite of online products, which may include, but shall
not be limited to the following services via the Internet or dial-up connection
(each separate service is a Service; collectively referred
to as the Services):
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1.1.
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BBH
WorldView®, a system for effectuating securities and fund trade
instruction and execution, processing and handling instructions, and for
the input and retrieval of other
information;
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1.2.
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F/X
WorldView, a system for executing foreign exchange
trades;
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1.3.
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Fund
WorldView, a system for receiving fund and prospectus
information;
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1.4.
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BBHCOnnect,
a system for placing securities trade instructions and following the
status and detail of trades;
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1.5.
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ActionViewSM,
a system for receiving certain corporate action
information;
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1.6.
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Risk
View, an interactive portfolio risk analysis tool;
and
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1.7.
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Such
other services as we shall from time to time
offer.
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2. Security /
Passwords.
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2.1.
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A
digital certificate and/or an encryption key may be required to access
certain Services. You may apply for a digital certificate
and/or an encryption key by following the procedures set forth at xxxx://xxx.xxx.xxx/xxxxx/. You
also will need an identification code (ID) and password(s)
(Password) to
access the Services.
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30
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2.2.
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You
agree to safeguard your digital certificate and/or encryption key, ID, and
Password and not to give or make available, intentionally or otherwise,
your digital certificate, ID, and/or Password to any unauthorized
person. You must immediately notify us in writing if you
believe that your digital certificate and/or encryption key, Password, or
ID has been compromised or if you suspect unauthorized access to your
account by means of the Services or otherwise, or when a person to whom a
digital certificate and/or an encryption key, Password, or ID has been
assigned leaves or is no longer permitted to access the
Services.
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2.3.
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We
will not be responsible for any breach of security, or for any
unauthorized trading or theft by any third party, caused by your failure
(be it intentional, unintentional, or negligent) to maintain the
confidentiality of your ID and/or Password and/or the security of your
digital certificate and/or encryption
key.
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3. Instructions.
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|
3.1.
|
Proper
instructions under this Schedule shall be provided as designated in the
Related Agreements (Instructions).
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|
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3.2.
|
The
following additional provisions apply to Instructions provided via the
Services:
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|
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a.
|
Instructions
sent by electronic mail will not be accepted or acted
upon.
|
|
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b.
|
You
authorize us to act upon Instructions received through the Services
utilizing your digital certificate, ID, and/or Password as though they
were duly authorized written instructions, without any duty of
verification or inquiry on our part, and agree to hold us harmless for any
losses you experience as a result.
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|
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c.
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From
time to time, the temporary unavailability of third party
telecommunications or computer systems required by the Services may result
in a delay in processing Instructions. In such an event, we
shall not be liable to you or any third party for any liabilities, losses,
claims, costs, damages, penalties, fines, obligations, or expenses of any
kind (including without limitation, reasonable attorneys', accountants',
consultants', or experts' fees and disbursements) that you experience due
to such a delay.
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4. Electronic
Documents.
We may
make periodic statements, disclosures, notices, and other documents available to
you electronically, and, subject to any delivery and receipt verification
procedures required by law, you agree to receive such documents electronically
and to check the statements for accuracy. If you believe any such
statement contains incorrect information, you must follow the procedures set
forth in the Related Agreement(s).
31
5. Malicious Code.
You
understand and agree that you will be responsible for the introduction (by you,
your employees, agents, or representatives) into the Services, whether
intentional or unintentional, of (i) any virus or other code, program, or
sub-program that damages or interferes with the operation of the computer system
containing the code, program or sub-program, or halts, disables, or interferes
with the operation of the Services themselves; or (ii) any device, method, or
token whose knowing or intended purpose is to permit any person to circumvent
the normal security of the Services or the system containing the software code
for the Services (Malicious
Code). You agree to take all necessary actions and precautions
to prevent the introduction and proliferation of any Malicious Code into those
systems that interact with the Services.
6. Indemnification.
For
avoidance of doubt, you hereby agree that the provisions in the Related
Agreement(s) related to your indemnification of us and any limitations on our
liability and responsibilities to you shall be applicable to this Agreement, and
are hereby expressly incorporated herein. You agree that the Services are
comprised of telecommunications and computer systems, and that it is possible
that Instructions, information, transactions, or account reports might be added
to, changed, or omitted by electronic or programming malfunction, unauthorized
access, or other failure of the systems which comprise the Services, despite the
security features that have been designed into the Services. You agree that we
will not be liable for any action taken or not taken in complying with the terms
of this Schedule, except for our willful misconduct or gross
negligence. The provisions of this paragraph shall survive the
termination of this Schedule and the Related Agreements.
7. Payment.
You may
be charged for services hereunder as set forth in a fee schedule from time to
time agreed by us.
8. Term/Termination.
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|
8.1.
|
This
Schedule is effective as of the date you sign it or first use the
Services, whichever is first, and continues in effect until such time as
either you or we terminate the Schedule in accordance with this Section 8
and/or until your off-line use of the Services is
terminated.
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|
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8.2.
|
We
may terminate your access to the Services at any time, for any reason,
with five (5) business days prior notice; provided that we may terminate
your access to the Services with no prior notice (i) if your account with
us is closed, (ii) if you fail to comply with any of the terms of this
Agreement, (iii) if we believe that your continued access to the Services
poses a security risk, or (iv) if we believe that you are violating or
have violated applicable laws, and we will not be liable for any loss you
may experience as a result of such termination. You may
terminate your access to the Services at any time by giving us ten (10)
business days notice. Upon termination, we will cancel all your
Passwords and IDs and any in-process or pending Instructions will be
carried out or cancelled, at our sole
discretion.
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32
9. Miscellaneous.
|
|
9.1.
|
Notices. All
notices, requests, and demands (other than routine operational
communications, such as Instructions) shall be in such form and effect as
provided in the Related
Agreement(s).
|
|
|
9.2.
|
Inconsistent
Provisions. Each Service may be governed by separate
terms and conditions in addition to this Schedule and the Related
Agreement(s). Except where specifically provided to the
contrary in this Schedule, in the event that such separate terms and
conditions conflict with this Schedule and the Related Agreement(s), the
provisions of this Schedule shall prevail to the extent this Schedule
applies to the transaction in
question.
|
|
|
9.3.
|
Binding Effect; Assignment;
Severability. This Schedule shall be binding on you,
your employees, officers and agents. We may assign or delegate
our rights and duties under this Schedule at any time without notice to
you. Your rights under this Schedule may not be assigned
without our prior written consent. In the event that any provision of this
Schedule conflicts with the law under which this Schedule is to be
construed or if any such provision is held invalid or unenforceable by a
court with jurisdiction over you and us, such provision shall be deemed to
be restated to effectuate as nearly as possible the purposes of the
Schedule in accordance with applicable law. The remaining
provisions of this Schedule and the application of the challenged
provision to persons or circumstances other than those as to which it is
invalid or unenforceable shall not be affected thereby, and each such
provision shall be valid and enforceable to the full extent permitted by
law.
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|
|
9.4.
|
Choice of Law; Jury
Trial. This Schedule shall be governed by and construed,
and the legal relations between the parties shall be determined, in
accordance with the laws of the State of New York, without giving effect
to the principles of conflicts of laws. Each party agrees to waive its
right to trial by jury in any action or proceeding based upon or related
to this Agreement. The parties agree that all actions and
proceedings based upon or relating to this Schedule shall be litigated
exclusively in the federal and state courts located within New York City,
New York.
|
33
ANNEX
A
LIST
OF SERIES TRUST(S) ESTABLISHED
|
Fund
|
Relevant
Schedule
|
||
|
1.
|
United
States Commodity Index Fund
|
Schedule
1 to this
Agreement
|
34
SCHEDULE
1
TO
THE CUSTODIAN AGREEMENT
DATED
JULY 22, 0000
XXXXXXX
XXXXX XXXXXXXX XX
XXXXXX
XXXXXX COMMODITY INDEX FUND
Benchmark
Component Futures Contract shall mean the Futures Contracts (as defined
in the Prospectus) that at any given time make up the index of the
Fund.
The Fund
shall mean United States Commodity Index Fund.
35
IN
WITNESS WHEREOF, each of the parties hereto has caused this Schedule to be duly
executed as of the date first above written.
The
undersigned acknowledges that (I/we) have received a copy of this
document.
|
XXXXX
BROTHERS XXXXXXXX & CO.
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
UNITED
STATES COMMODITY FUNDS LLC
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
UNITED
STATES COMMODITY INDEX FUNDS TRUST, on its own behalf and on
behalf
of the United States Commodity Index Fund
|
By:
|
United
States Commodity Funds LLC, as Sponsor
|
||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
36
ANNEX
B
FORM
OF AMENDMENT AGREEMENT TO ADD SERIES TRUST(S) TO
TO
THE CUSTODIAN AGREEMENT
This Amendment to the Custodian
Agreement dated ____________ (this “Amendment”), is made and entered into by and
among UNITED STATES COMMODITY
FUNDS LLC, a Delaware limited liability company (the “Sponsor”), the UNITED STATES COMMODITY INDEX FUNDS
TRUST, a Delaware statutory trust (the “Trust”), on its own behalf and
on behalf of the UNITED STATES
COMMODITY INDEX FUND and [INSERT FUND NAME] (each, a
“Fund”), and XXXXX BROTHERS XXXXXXXX &
CO. (“BBH&Co.” or the “Custodian”) (each, a “Party”
and collectively, “the Parties”).
WHEREAS, the Parties have entered into
a certain Custodian Agreement dated July 22, 2010 (the “Agreement”);
and
WHEREAS, the parties hereto desire to
amend the Agreement as provided herein by amending Annex A of this Agreement and
supplementing this Agreement with the attached Schedule 1 to this
Amendment.
NOW
THEREFORE, for and in consideration of the agreements herein made and other good
and valuable consideration, the parties hereto agree as follows:
I. AMENDMENTS
The
Agreement is hereby amended by making the following change to Annex A
thereto:
LIST
OF SERIES TRUST(S) ESTABLISHED
|
Fund
|
Relevant
Schedules
|
||
|
1.
|
United
States Commodity Index Fund
|
Schedule
1 to this Agreement
|
|
|
2.
|
[INSERT
FUND NAME]
|
Schedule
1 to the Amendment Agreement dated _____________
|
|
|
3.
|
[INSERT
FUND NAME]
|
Schedule
1 to the Amendment Agreement dated _____________
|
|
|
4.
|
|||
|
5.
|
The
Parties acknowledge that Schedule 1-__ of this Amendment shall supplement and
not supersede Schedule 1 of the Agreement.
37
II. REPRESENTATIONS
Each
Party represents to the other Parties that:-
(a) Status. It is duly
organized and validly existing under the laws of the jurisdiction of its
organization or incorporation and, if relevant under such laws, in good
standing;
(b) Powers. It has the
power to execute and deliver this Amendment and to perform its obligations
hereunder, and has taken all necessary action to authorize such execution,
delivery and performance;
(c) No Violation or
Conflict. Such execution, delivery and performance do not
violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets;
(d) Consents. All
governmental and other consents that are required to have been obtained by it
with respect to this Amendment have been obtained and are in full force and
effect and all conditions of any such consents have been complied with;
and
(e) Obligations
Binding. Its obligations under this Amendment constitute its
legal, valid and binding obligations, enforceable in accordance with its
respective terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors’ rights generally and subject, as
to enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at
law)).
III. MISCELLANEOUS
(a) Entire
Agreement. The Amendment constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings (except as other wise provided herein)
with respect thereto.
(b) Counterparts. This
Amendment may be executed in multiple counterparts, each of which when executed
and delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same instrument.
(c) Headings. The
headings used in this Amendment are for convenience of reference only and are
not to affect the construction of or to be taken into consideration in
interpreting this Amendment.
(d) Governing
Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York.
(e) Terms. Terms used
in this Amendment, unless otherwise defined herein, shall have the meanings
ascribed to them in the Agreement.
38
(f) Agreement. Any
and all references to the Agreement shall hereafter refer to the Agreement as
amended by this Amendment and as the same may be amended, supplemented or
modified from time to time. Unless otherwise defined herein,
capitalized terms not defined herein shall have the same meanings assigned to
such terms in the Agreement as amended by this Amendment.
Except as
amended hereby, all other terms and conditions of the Agreement shall remain the
same and in full force and effect.
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of
the date first written above.
|
UNITED
STATES COMMODITY FUNDS LLC
|
|
|
By:
|
|
|
Name:
Title:
|
|
UNITED
STATES COMMODITY INDEX FUNDS TRUST, on its own behalf and on
behalf
of the United States Commodity Index Fund
|
By:
|
United
States Commodity Funds LLC, as Sponsor
|
||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
UNITED
STATES COMMODITY INDEX FUNDS TRUST, on behalf of [INSERT
FUND
NAME]
|
By:
|
United
States Commodity Funds LLC, as Sponsor
|
||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
XXXXX BROTHERS XXXXXXXX &
CO.
|
By:
|
|
|
|
Name:
|
||
|
Title:
|
||
|
Address:
|
||
|
Telephone:
|
||
|
Facsimile:
|
39
SCHEDULE
1
TO
THE AMENDMENT AGREEMENT DATED ____________________
DEFINED
TERMS RELATING TO
[INSERT
NAME OF FUND]
Benchmark
Component Futures Contract shall mean _____________________.
The Fund
shall mean _____________________.
40
IN
WITNESS WHEREOF, each of the parties hereto has caused this Schedule to be duly
executed as of the date first above written.
The
undersigned acknowledges that (I/we) have received a copy of this
document.
|
UNITED
STATES COMMODITY FUNDS LLC
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
UNITED
STATES COMMODITY INDEX FUNDS TRUST, on its own behalf and on
behalf
of [INSERT FUND
NAME]
|
By:
|
United
States Commodity Funds LLC, as Sponsor
|
||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
XXXXX BROTHERS XXXXXXXX &
CO.
|
|
||
|
Name:
|
||
|
Title:
|
||
|
Address:
|
||
|
Telephone:
|
||
|
Facsimile:
|
41
