CUSTODY AGREEMENT
AGREEMENT, dated as of April
28, 2006 by and between UNDERLYING FUNDS TRUST (the
“Trust”), a statutory trust organized and existing under the laws of the State
of Delaware, acting with respect to and on behalf of each of the series of the
Trust (each, a "Series") that are identified on Exhibit A hereto, as such
Exhibit A may be revised or supplemented from time to time as agreed in writing
by the parties hereto, and CUSTODIAL TRUST COMPANY, a
bank organized and existing under the laws of the State of New Jersey
("Custodian").
WHEREAS, the Trust desires
that the securities, funds and other assets of each Series be held and
administered by Custodian pursuant to this Agreement;
WHEREAS, each Series is an
investment portfolio represented by beneficial interests, specific to said
Series, of property in the Trust, which is a management investment company
registered under the 1940 Act (as hereinafter defined);
WHEREAS, Custodian represents
that it is a bank having the qualifications prescribed in the 1940 Act to act as
custodian for management investment companies registered under the 1940
Act;
NOW, THEREFORE, in
consideration of the mutual agreements herein made, the Trust and Custodian
hereby agree as follows:
-1-
ARTICLE
I
DEFINITIONS
Whenever
used in this Agreement, the following terms, unless the context otherwise
requires, shall mean:
1.1 "Authorized Person" means
any person authorized by resolution of the Trustees to give Oral Instructions
and Written Instructions on behalf of the Trust and identified, by name or by
office, in Exhibit B hereto or any person designated to do so by an investment
adviser of any Series who is named by the Trust in Exhibit C
hereto.
1.2 "Book-Entry System" means a
book-entry system maintained by a Federal Reserve Bank for securities of the
United States government or of agencies or instrumentalities thereof (including
government-sponsored enterprises).
1.3 "Business Day" means any day
on which banks in the State of New Jersey and New York are open for
business.
1.4 "Custody Account" means, with
respect to a Series, the account in the name of such Series, which is provided
for in Section 3.2 below.
1.5 "Domestic Securities
Depository" means The Depository Trust Company and any other clearing
agency registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, which acts as a securities
depository.
1.6 "Eligible Domestic Bank"
means a bank as defined in the 1940 Act.
-2-
1.7 "Eligible Foreign Custodian"
means any banking institution, trust company or other entity organized under the
laws of a country other than the United States which is eligible under the 1940
Act to act as a custodian for securities and other assets of a Series held
outside the United States.
1.8 “Eligible Foreign Securities
Depository” means an Eligible Securities Depository as defined in Rule
17f-7 under the 1940 Act.
1.9 “Foreign Assets” has the same
meaning as in Rule 17f-5 under the 1940 Act.
1.10 “Foreign Custody Manager” has
the same meaning as in Rule 17f-5 under the 0000 Xxx.
1.11 "Interests" means, with
respect to a Series, those interests in a series or class of beneficial
interests of the Trust that represent interests in such Series.
1.12 "Master Repurchase Agreement"
means the Master Repurchase Agreement of even date herewith between the Trust
and Bear, Xxxxxxx & Co. Inc. (“Bear Xxxxxxx”) as it may from time to time be
amended.
1.13 "Master Securities Loan
Agreement" (if applicable) means the Master Securities Loan Agreement of
even date herewith between the Trust and Bear, Xxxxxxx Securities Corp. (“BS
Securities”) as it may from time to time be amended.
1.14 "1940 Act" means the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
1.15 "Oral Instructions" means
instructions orally transmitted to and accepted by Custodian which are (a)
reasonably believed by Custodian to have been given by an Authorized Person, (b)
recorded and kept among the records of Custodian made in the ordinary
course of business, and (c) completed in accordance with Custodian's
requirements from time to time as to content of instructions and their manner
and timeliness of delivery by the Trust.
-3-
1.16 "Proper Instructions" means
Oral Instructions or Written Instructions. Proper Instructions may be continuing
Written Instructions when deemed appropriate by the Trust and
Custodian.
1.17 “Securities Depository” means
any Domestic Securities Depository or Eligible Foreign Securities
Depository.
1.18 "Trustees" means the Trustees
of the Trust or, when permitted under the 1940 Act, the Executive Committee
thereof, if any.
1.19 "Written Instructions" means
written communications received by Custodian that are (a) reasonably believed by
Custodian to have been signed or sent by an Authorized Person, (b) sent or
transmitted by letter, facsimile, central processing unit connection, on-line
terminal or magnetic tape, and (c) completed in accordance with Custodian's
requirements from time to time as to content of instructions and their manner
and timeliness of delivery by the Trust.
ARTICLE
II
APPOINTMENT
OF CUSTODIAN
2.1 Appointment. The Trust hereby
appoints Custodian as custodian of all such securities, funds and other assets
of each Series as may be acceptable to Custodian and from time to time delivered
to it by the Trust or others for the account of such Series.
-4-
2.2 Acceptance. Custodian hereby
accepts appointment as such custodian and agrees to perform the duties thereof
as hereinafter set forth.
ARTICLE
III
CUSTODY OF SECURITIES, FUNDS
AND OTHER ASSETS
3.1 Segregation. All securities
and non-cash property of a Series in the possession of Custodian (other than
securities maintained by Custodian with a sub-custodian appointed pursuant to
this Agreement or in a Securities Depository or Book-Entry System) shall be
physically segregated from other such securities and non-cash property in the
possession of Custodian. All cash, securities and other non-cash property of a
Series shall be identified as belonging to such Series.
3.2 Custody Account. (a) Custodian
shall open and maintain in its trust department a custody account in the name of
each Series, subject only to draft or order of Custodian, in which Custodian
shall enter and carry all securities, funds and other assets of such Series
which are delivered to Custodian and accepted by it.
(b) If, with respect to any
Series, Custodian at any time fails to receive any of the documents referred to
in Section 3.10(a) below, then, until such time as it receives such document, it
shall not be obligated to receive any securities into the Custody Account of
such Series and shall be entitled to return to such Series any securities that
it is holding in such Custody Account.
-5-
3.3 Securities in Physical Form.
Custodian may, but shall not be obligated to, hold securities that may be
held only in physical form.
3.4 Disclosure to Issuers of
Securities. Custodian is authorized to disclose the Trust's and any
Series' names and addresses, and the securities positions in such Series'
Custody Account, to the issuers of such securities when requested by them to do
so.
3.5 Employment of Domestic
Sub-Custodians. At any time and from time to time, Custodian in its
discretion may appoint and employ, and may also cease to employ, any Eligible
Domestic Bank as sub-custodian to hold securities and other assets of a Series
that are maintained in the United States and to carry out such other provisions
of this Agreement as it may determine, provided, however, that the employment of
any such sub-custodian has been approved by the Trust. The employment of any
such sub-custodian shall be at Custodian's expense and shall not relieve
Custodian of any of its obligations or liabilities under this
Agreement.
3.6 Employment of Foreign
Sub-Custodians. (a) Unless otherwise instructed in Written
Instructions, Custodian is authorized to hold any Foreign Asset of a Series in
any country in which all or a portion of the primary market for such Foreign
Asset is situated.
(b) At any time and from time to
time, Custodian in its discretion may appoint and employ in
accordance with the 1940 Act, and may also cease to employ, (i) any overseas
branch of any Eligible Domestic Bank, or (ii) any Eligible Foreign Custodian
selected by the Foreign Custody Manager, in each case as a foreign sub-custodian
for Foreign Assets of a Series, provided, however, that the
employment of any such overseas branch has been approved by the Trust and,
provided further, that, in the case of any such Eligible Foreign Custodian, the
Foreign Custody Manager has approved the agreement pursuant to which Custodian
employs such Eligible Foreign Custodian.
-6-
(c) Set forth on Exhibit D
hereto, with respect to each Series, are the foreign sub-custodians that
Custodian may employ pursuant to Section 3.6(b) above. Exhibit D shall be
revised from time to time as foreign sub-custodians are added or
deleted.
(d) If the Trust proposes to have
a Series make an investment which is to be held in a country in which Custodian
does not have appropriate arrangements in place with either an overseas branch
of an Eligible Domestic Bank or an Eligible Foreign Custodian selected by the
Foreign Custody Manager, then the Trust shall inform Custodian sufficiently in
advance of such investment to allow Custodian to make such
arrangements.
(e) Notwithstanding anything to
the contrary in Section 8.1 below, Custodian shall have no greater liability to
any Series or the Trust for the actions or omissions of any foreign
sub-custodian appointed pursuant to this Agreement than any such foreign
sub-custodian has to Custodian, and Custodian shall not be required to discharge
any such liability which may be imposed on it unless and until such foreign
sub-custodian has effectively indemnified Custodian against it or has otherwise
discharged its liability to Custodian in full.
(f) Upon the request of the
Foreign Custody Manager, Custodian shall furnish to the Foreign Custody Manager
information concerning all foreign sub-custodians employed pursuant to this
Agreement which shall be similar in kind and scope to any such
information that may have been furnished to the Foreign Custody
Manager in connection with the initial approval by the Foreign Custody Manager
of the agreements pursuant to which Custodian employs such foreign
sub-custodians or as otherwise required by the 1940 Act.
-7-
3.7 Employment of Other Agents.
Custodian may employ other suitable agents, which may include affiliates of
Custodian such as Bear Xxxxxxx or BS Securities, both of which are securities
broker-dealers, provided, however, that Custodian shall not employ (a) Bear
Xxxxxxx to hold any securities purchased from Bear Xxxxxxx under the Master
Repurchase Agreement or any other repurchase agreement between the Trust and
Bear Xxxxxxx, whether now or hereafter in effect, or (b) BS Securities to hold
any collateral pledged by BS Securities under the Master Securities Loan
Agreement or any other securities loan agreement between the Trust and BS
Securities, whether now or hereafter in effect. The appointment of
any agent pursuant to this Section 3.7 shall not relieve Custodian of any of its
obligations or liabilities under this Agreement.
3.8 Bank Accounts. In its
discretion and from time to time Custodian may open and maintain one or more
demand deposit accounts with any Eligible Domestic Bank (any such accounts to be
in the name of Custodian and subject only to its draft or order), provided,
however, that the opening and maintenance of any such account shall be at
Custodian's expense and shall not relieve Custodian of any of its obligations or
liabilities under this Agreement.
3.9 Delivery of Assets to
Custodian. Provided they are acceptable to Custodian, the Trust shall
deliver to Custodian the securities, funds and other assets of each Series,
including (a) payments of income, payments of principal and capital
distributions received by such Series with respect to securities, funds or
other assets owned by such Series at any time during the term of this
Agreement, and (b) funds received by such Series for the issuance, at any time
during such term, of Interests of such Series. Custodian shall not be under any
duty or obligation to require the Trust to deliver to it any securities or other
assets owned by a Series and shall have no responsibility or liability for or on
account of securities or other assets not so delivered.
-8-
3.10 Domestic Securities Depositories and
Book-Entry Systems. Custodian and any sub-custodian appointed pursuant to
Section 3.5 above may deposit and/or maintain securities of any Series in a
Domestic Securities Depository or in a Book-Entry System, subject to the
following provisions:
(a) Prior to a deposit of
securities of a Series in any Domestic Securities Depository or Book-Entry
System, the Trust shall deliver to Custodian a resolution of the Trustees,
certified by an officer of the Trust, authorizing and instructing Custodian (and
any sub-custodian appointed pursuant to Section 3.5 above) on an on-going basis
to deposit in such Domestic Securities Depository or Book-Entry System all
securities eligible for deposit therein and to make use of such Domestic
Securities Depository or Book-Entry System to the extent possible and practical
in connection with the performance of its obligations hereunder (or under the
applicable sub-custody agreement in the case of such sub-custodian), including,
without limitation, in connection with settlements of purchases and sales of
securities, loans of securities, and deliveries and returns of collateral
consisting of securities.
(b) Securities of a Series kept
in a Book-Entry System or Domestic Securities Depository shall be kept in an
account ("Depository Account") of Custodian (or of any
sub-custodian appointed pursuant to Section 3.5 above) in such
Book-Entry System or Domestic Securities Depository which includes only assets
held by Custodian (or such sub-custodian) as a fiduciary, custodian or otherwise
for customers.
-9-
(c) The records of Custodian with
respect to securities of a Series that are maintained in a Book-Entry System or
Domestic Securities Depository shall at all times identify such securities as
belonging to such Series.
(d) If securities purchased by a
Series are to be held in a Book-Entry System or Domestic Securities Depository,
Custodian (or any sub-custodian appointed pursuant to Section 3.5 above) shall
pay for such securities upon (i) receipt of advice from the Book-Entry System or
Domestic Securities Depository that such securities have been transferred to the
Depository Account, and (ii) the making of an entry on the records of Custodian
(or of such sub-custodian) to reflect such payment and transfer for the account
of such Series. If securities sold by a Series are held in a Book-Entry System
or Domestic Securities Depository, Custodian (or such sub-custodian) shall
transfer such securities upon (A) receipt of advice from the Book-Entry System
or Domestic Securities Depository that payment for such securities has been
transferred to the Depository Account, and (B) the making of an entry on the
records of Custodian (or of such sub-custodian) to reflect such transfer and
payment for the account of such Series.
(e) Custodian shall provide the
Trust with copies of any report obtained by Custodian (or by any sub-custodian
appointed pursuant to Section 3.5 above) from a Book-Entry System or Domestic
Securities Depository in which securities of a Series are kept on the internal
accounting controls and procedures for safeguarding securities
deposited in such Book-Entry System or Domestic Securities
Depository.
-10-
(f) At its election, the
Trust shall be subrogated to the rights of Custodian (or of any sub-custodian
appointed pursuant to Section 3.5 above) with respect to any claim against a
Book-Entry System or Domestic Securities Depository or any other person for any
loss or damage to a Series arising from the use of such Book-Entry System or
Domestic Securities Depository, if and to the extent that such Series has not
been made whole for any such loss or damage.
3.11 Foreign Securities
Depositories. (a) Unless otherwise instructed in
Written Instructions, Custodian may place and maintain Foreign Assets of the
Trust with an Eligible Foreign Securities Depository, provided that it has
delivered to the Trust an analysis of the custody risks associated with
maintaining assets with such Eligible Securities Depository. Custodian shall
monitor such custody risks on a continuing basis and promptly notify the Trust
of any material change in such risks.
(b) In performing its obligations
under Section 3.11(a) above, Custodian shall exercise reasonable care, prudence
and diligence. In the exercise of such care, prudence and diligence,
Custodian may rely upon assessments, determinations and monitoring made and
performed with respect to an Eligible Foreign Securities Depository by Citibank,
N.A. or such other operator of a global custody system as from time to time may
be employed by Custodian and approved by the Trust.
3.12 Relationship With Securities
Depositories. No Book-Entry System, Securities Depository, or other
securities depository or clearing agency (whether foreign or domestic) which it
is or may become standard market practice to use for the comparison
and settlement of trades in securities shall be an agent or sub-contractor of
Custodian for purposes of Section 3.7 above or otherwise.
-11-
3.13 Payments from Custody
Account. Upon receipt of Proper Instructions with respect to a Series but
subject to its right to foreclose upon and liquidate collateral pledged to it
pursuant to Section 8.3 below, Custodian shall make payments from the Custody
Account of such Series, but only in the following cases, provided, first, that
such payments are in connection with the clearance and/or custody of securities
or other assets, second, that there are sufficient funds in such Custody
Account, whether belonging to such Series or advanced to it by Custodian in its
sole and absolute discretion as set forth in Section 3.19 below, for Custodian
to make such payments, and, third, that after the making of such payments, such
Series would not be in violation of any margin or other requirements agreed upon
pursuant to Section 3.19 below:
(a) For the purchase of
securities for such Series but only (i) in the case of securities (other than
options on securities, futures contracts and options on futures contracts),
against the delivery to Custodian (or any sub-custodian appointed pursuant to
this Agreement) of such securities registered as provided in Section 3.21 below
or in proper form for transfer or, if the purchase of such securities is
effected through a Book-Entry System or Domestic Securities Depository, in
accordance with the conditions set forth in Section 3.10 above, and (ii) in the
case of options, futures contracts and options on futures contracts, against
delivery to Custodian (or such sub-custodian) of evidence of title thereto in
favor of such Series, the Custodian, any such sub-custodian, or any nominee
referred to in Section 3.21 below;
-12-
(b) In connection with the
conversion, exchange or surrender, as set forth in Section 3.14(f) below, of
securities owned by such Series;
(c) For transfer in accordance
with the provisions of any agreement among the Trust, Custodian and a securities
broker-dealer, relating to compliance with rules of The Options Clearing
Corporation and of any registered national securities exchange (or of any
similar organization or organizations) regarding escrow or other arrangements in
connection with transactions of such Series;
(d) For transfer in accordance
with the provisions of any agreement among the Trust, Custodian and a futures
commission merchant, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market (or any similar
organization or organizations) regarding margin or other deposits in connection
with transactions of such Series;
(e) For the funding of any time
deposit (whether certificated or not) or other interest-bearing account with any
banking institution (including Custodian), provided that Custodian shall receive
and retain such certificate, advice, receipt or other evidence of deposit (if
any) as such banking institution may deliver with respect to any such deposit or
account;
(f) For the purchase from a
banking or other financial institution of loan participations, but only if
Custodian has in its possession a copy of the agreement between the Trust and
such banking or other financial institution with respect to the purchase of such
loan participations and provided that Custodian shall receive and retain such
participation certificate or other evidence of participation (if any) as such
banking or other financial institution may deliver with respect to
any such loan participation;
-13-
(g) For the purchase and/or sale
of foreign currencies or of options to purchase and/or sell foreign currencies,
for spot or future delivery, for the account of such Series pursuant to
contracts between the Trust and any banking or other financial institution
(including Custodian, any sub-custodian appointed pursuant to this Agreement and
any affiliate of Custodian);
(h) For transfer to a securities
broker-dealer as margin for a short sale of securities for such Series, or as
payment in lieu of dividends paid on securities sold short for such
Series;
(i) For the payment as provided
in Article IV below of any dividends, capital gain distributions or other
distributions declared on the Interests of such Series;
(j) For the payment as provided
in Article IV below of the redemption price of the Interests of such
Series;
(k) For the payment of any
expense or liability incurred by such Series, including but not limited to the
following payments for the account of such Series: interest, taxes, and
administration, investment advisory, accounting, auditing, transfer agent,
custodian, trustee and legal fees, and other operating expenses of such Series;
in all cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses; and
(l) For any other proper purpose,
but only upon receipt of Proper Instructions, specifying the amount and purpose
of such payment, certifying such purpose to be a proper purpose of
such
Series,
and naming the person or persons to whom such payment is to be
made.
-14-
3.14 Deliveries from Custody Account.
Upon receipt of Proper Instructions with respect to a Series but subject
to its right to foreclose upon and liquidate collateral pledged to it pursuant
to Section 9.3 below, Custodian shall release and deliver securities and other
assets from the Custody Account of such Series, but only in the following cases,
provided, first, that such deliveries are in connection with the clearance
and/or custody of securities or other assets, second, there are sufficient
amounts and types of securities or other assets in such Custody Account for
Custodian to make such deliveries, and, third, that after the making of such
deliveries, such Series would not be in violation of any margin or other
requirements agreed upon pursuant to Section 3.19 below:
(a) Upon the sale of securities
for the account of such Series but, subject to Section 3.15 below, only against
receipt of payment therefor or, if such sale is effected through a Book-Entry
System or Domestic Securities Depository, in accordance with the provisions of
Section 3.10 above;
(b) To an offeror's depository
agent in connection with tender or other similar offers for securities of such
Series; provided that, in any such case, the funds or other consideration for
such securities is to be delivered to Custodian;
(c) To the issuer thereof or its
agent when such securities are called, redeemed or otherwise become payable,
provided that in any such case the funds or other consideration for such
securities is to be delivered to Custodian;
-15-
(d) To the issuer thereof or its
agent for exchange for a different number of certificates or other evidence
representing the same aggregate face amount or number of units; provided that,
in any such case, the new securities are to be delivered to
Custodian;
(e) To the securities broker
through whom securities are being sold for such Series, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion
pursuant to any plan of merger, consolidation, recapitalization, reorganization
or readjustment of the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying securities in connection with the
issuance or cancellation of depository receipts; provided that, in any such
case, the new securities and funds, if any, are to be delivered to
Custodian;
(g) In the case of warrants,
rights or similar securities, to the issuer of such warrants, rights or similar
securities, or its agent, upon the exercise thereof, provided that, in any such
case, the new securities and funds, if any, are to be delivered to
Custodian;
(h) To the borrower thereof, or
its agent, in connection with any loans of securities for such Series pursuant
to any securities loan agreement entered into by the Trust, but only against
receipt by Custodian of such collateral as is required under such securities
loan agreement;
(i) To any lender, or its agent,
as collateral for any borrowings from such lender by such Series that require a
pledge of assets of such Series, but only against receipt by
Custodian of the amounts borrowed;
-16-
(j) Pursuant to any authorized
plan of liquidation, reorganization, merger, consolidation or recapitalization
of such Series or the Trust;
(k) For delivery in accordance
with the provisions of any agreement among the Trust, Custodian and a securities
broker-dealer, relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or of any
similar organization or organizations) regarding escrow or other arrangements in
connection with transactions of such Series;
(l) For delivery in accordance
with the provisions of any agreement among the Trust, Custodian, and a futures
commission merchant, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market (or any similar
organization or organizations) regarding margin or other deposits in connection
with transactions of such Series;
(m) For delivery to a securities
broker-dealer as margin for a short sale of securities for such
Series;
(n) To the issuer of American
Depositary Receipts or International Depositary Receipts (hereinafter,
collectively, "ADRs") for such securities, or its agent, against a written
receipt therefor adequately describing such securities, provided that such
securities are delivered together with instructions to issue ADRs in the name of
Custodian or its nominee and to deliver such ADRs to Custodian;
-17-
(o) In the case of ADRs, to the
issuer thereof, or its agent, against a written receipt therefor adequately
describing such ADRs, provided that such ADRs are delivered together with
instructions to deliver the securities underlying such ADRs to Custodian or an
agent of Custodian; or
(p) For any other proper purpose,
but only upon receipt of Proper Instructions, specifying the securities or other
assets to be delivered, setting forth the purpose for which such delivery is to
be made, certifying such purpose to be a proper purpose of such Series, and
naming the person or persons to whom delivery of such securities or other assets
is to be made.
3.15 Delivery Prior to Final
Payment. When instructed by the Trust to deliver securities of a Series
against payment, Custodian shall be entitled, but only if in accordance with
generally accepted market practice, to deliver such securities prior to actual
receipt of final payment therefor and, exclusively in the case of securities in
physical form, prior to receipt of payment therefor. In any such case, such
Series shall bear the risk that final payment for such securities may not be
made or that such securities may be returned or otherwise held or disposed of by
or through the person to whom they were delivered, and Custodian shall have no
liability for any of the foregoing.
3.16 Credit Prior to Final Payment.
In its sole discretion and from time to time, Custodian may credit the Custody
Account of a Series, prior to actual receipt of final payment thereof, with (a)
proceeds from the sale of securities of such Series which it has been instructed
to deliver against payment, (b) proceeds from the redemption of securities or
other assets in such Custody Account, and (c) income from securities, funds or
other assets in such Custody Account. Any such credit shall be conditional upon
actual receipt by Custodian of final payment and may be reversed if
final payment is not actually received in full. Custodian may, in its
sole discretion and from time to time, permit a Series to use funds so credited
to its Custody Account in anticipation of actual receipt of final payment. Any
funds so used shall constitute an advance subject to Section 3.19
below.
-18-
3.17 Definition of Final Payment.
For purposes of this Agreement, "final payment" means payment in funds which are
(or have become) immediately available, under applicable law are irreversible,
and are not subject to any security interest, xxxx, xxxx or other
encumbrance.
3.18 Payments and Deliveries Outside the
United
States.
Notwithstanding anything to the contrary that may be required by Section 3.13 or
Section 3.14 above, or elsewhere in this Agreement, in the case of securities
and other assets maintained outside the United States and in the case of
payments made outside the United States, Custodian and any sub-custodian
appointed pursuant to this Agreement may receive and deliver such securities or
other assets, and may make such payments, in accordance with the laws,
regulations, customs, procedures and practices applicable in the relevant local
market outside the United States.
3.19 Clearing Credit. Custodian
may, in its sole discretion and from time to time, advance funds to the Trust to
facilitate the settlement of a Series' transactions in the Custody Account of
such Series. Any such advance (a) shall be repayable immediately upon demand
made by Custodian, (b) shall be fully secured as provided in Section 9.3 below,
and (c) shall bear interest at such rate, and be subject to such other terms and
conditions, as Custodian and the Trust may agree.
-19-
3.20 Actions Not Requiring Proper
Instructions. Unless otherwise instructed by the Trust, Custodian shall
with respect to all securities and other assets held for a Series:
(a) Subject to Section 8.4 below,
receive into the Custody Account of such Series any funds or other property,
including payments of principal, interest and dividends, due and payable on or
on account of such securities and other assets;
(b) Deliver securities of such
Series to the issuers of such securities or their agents for the transfer
thereof into the name of such Series, Custodian or any of the nominees referred
to in Section 3.21 below;
(c) Endorse for collection, in
the name of such Series, checks, drafts and other negotiable
instruments;
(d) Surrender interim receipts or
securities in temporary form for securities in definitive form;
(e) Execute, as custodian, any
necessary declarations or certificates of ownership under the federal income tax
laws of the United States, or the laws or regulations of any other taxing
authority, in connection with the transfer of such securities or other assets or
the receipt of income or other payments with respect thereto;
(f) Receive and hold for such
Series all rights and similar securities issued with respect to securities or
other assets of such Series;
(g) As may be required in the
execution of Proper Instructions, transfer funds from the Custody Account of
such
Series to
any demand deposit account maintained by Custodian pursuant to Section 3.8
above; and
-20-
(h) In general, attend to all
non-discretionary details in connection with the sale, exchange, substitution,
purchase and transfer of, and other dealings in, such securities and other
assets.
3.21 Registration and Transfer of
Securities. All securities held for a Series that are issuable
only in bearer form shall be held by Custodian in that form, provided that any
such securities shall be held in a Securities Depository or Book-Entry System if
eligible therefor. All other securities and all other assets held for a Series
may be registered in the name of (a) Custodian as agent, (b) any sub-custodian
appointed pursuant to this Agreement, (c) any Securities Depository, or (d) any
nominee or agent of any of them. The Trust shall furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper form
for transfer, or to register as in this Section 3.21 provided, any securities or
other assets delivered to Custodian which are registered in the name of a
Series.
3.22 Records. (a) Custodian shall
maintain complete and accurate records with respect to securities, funds and
other assets held for a Series, including (i) journals or other records of
original entry containing an itemized daily record in detail of all receipts and
deliveries of securities and all receipts and disbursements of funds; (ii)
ledgers (or other records) reflecting (A) securities in transfer, if any, (B)
securities in physical possession, (C) monies and securities borrowed and monies
and securities loaned (together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest received, and (E)
dividends receivable and interest accrued; and (iii) cancelled checks and bank
records related thereto. Custodian shall keep such other books and
records with respect to securities, funds and other assets of a Series which are
held hereunder as the Trust may reasonably request.
-21-
(b) All such books and records
maintained by Custodian for a Series shall (i) be maintained in a form
acceptable to the Trust and in compliance with rules and regulations of the
Securities and Exchange Commission, (ii) be the property of such Series and at
all times during the regular business hours of Custodian be made available
upon request for inspection by duly authorized officers, employees or
agents of the Trust and employees or agents of the Securities and Exchange
Commission, and (iii) if required to be maintained under the 1940 Act, be
preserved for the periods prescribed therein.
3.23 Account Reports by Custodian.
Custodian shall furnish the Trust with a daily activity statement, including a
summary of all transfers to or from the Custody Account of each Series (in the
case of securities and other assets maintained in the United States, on the day
following such transfers). At least monthly and from time to time, Custodian
shall furnish the Trust with a detailed statement of the securities, funds and
other assets held for each Series under this Agreement.
3.24 Other Reports by Custodian.
Custodian shall provide the Trust with such reports as the Trust may reasonably
request from time to time on the internal accounting controls and procedures for
safeguarding securities which are employed by Custodian or any sub-custodian
appointed pursuant to this Agreement.
3.25 Proxies and Other Materials.
(a) Unless otherwise instructed by the Trust, Custodian shall promptly deliver
to the Trust all notices of meetings, proxy materials (other than proxies) and
other announcements, which it receives regarding securities held by it in the
Custody Account of a Series. Whenever Custodian or any of its agents receives a
proxy with respect to securities in the Custody Account of a Series, Custodian
shall promptly request instructions from the Trust on how such securities are to
be voted, and shall give such proxy, or cause it to be given, in accordance with
such instructions. If the Trust timely informs Custodian that the Trust wishes
to vote any such securities in person, Custodian shall promptly seek to have a
legal proxy covering such securities issued to the Trust. Unless otherwise
instructed by the Trust, neither Custodian nor any of its agents shall exercise
any voting rights with respect to securities held hereunder.
-22-
(b) Unless otherwise instructed
by the Trust, Custodian shall promptly transmit to the Trust all other written
information received by Custodian from issuers of securities held in the Custody
Account of any Series. With respect to tender or exchange offers for such
securities or with respect to other corporate transactions involving such
securities, Custodian shall promptly transmit to the Trust all written
information received by Custodian from the issuers of such securities or from
any party (or its agents) making any such tender or exchange offer or
participating in such other corporate transaction. If the Trust, with respect to
such tender or exchange offer or other corporate transaction, desires to take
any action that may be taken by it pursuant to the terms of such offer or other
transaction, the Trust shall notify Custodian (i) in the case of securities
maintained outside the United States, such number of Business Days prior to the
date on which Custodian is to take such action as will allow Custodian to take
such action in the relevant local market for such securities in a timely
fashion, and (ii) in the case of all other securities, at least five
Business Days prior to the date on which Custodian is to take such
action.
-23-
3.26 Co-operation. Custodian shall
cooperate with and supply necessary information to the entity or entities
appointed by the Trust to keep the books of account of a Series and/or to
compute the value of the assets of a Series.
ARTICLE
IV
REDEMPTION OF SERIES’
INTERESTS; DIVIDENDS AND OTHER DISTRIBUTIONS
4.1 Transfer of Funds. From such
funds as may be available for the purpose in the Custody Account of a Series,
and upon receipt of Proper Instructions specifying that the funds are required
to redeem Interests of such Series or to pay dividends or other distributions to
holders of Interests of such Series, Custodian shall transfer each amount
specified in such Proper Instructions to such account of such Series or of an
agent thereof (other than Custodian), at such bank, as the Trust may designate
therein with respect to such amount.
4.2 Sole Duty of Custodian.
Custodian's sole obligation with respect to the redemption of Interests of a
Series and the payment of dividends and other distributions thereon shall be its
obligation set forth in Section 4.1 above, and Custodian shall not be required
to make any payments to the various holders from time to time of Interests of a
Series nor shall Custodian be responsible for the payment or distribution by the
Trust, or any agent designated in Proper Instructions given pursuant to Section
4.1 above, of any amount paid by Custodian to the account of the Trust or such
agent in accordance with such Proper Instructions.
-24-
ARTICLE
V
SEGREGATED
ACCOUNTS
Upon receipt of Proper Instructions to
do so, Custodian shall establish and maintain a segregated account or accounts
for and on behalf of any Series, into which account or accounts may be
transferred funds and/or securities, including securities maintained in a
Securities Depository:
(a) in accordance with the
provisions of any agreement among the Trust, Custodian and a securities
broker-dealer (or any futures commission merchant), relating to compliance with
the rules of The Options Clearing Corporation or of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions of such
Series,
(b) for purposes of segregating
funds or securities in connection with securities options purchased or written
by such Series or in connection with financial futures contracts (or options
thereon) purchased or sold by such Series,
(c) which constitute collateral
for loans of securities made by such Series,
(d) for purposes of compliance by
such Series with requirements under the 1940 Act for the maintenance of
segregated accounts by registered management investment companies in connection
with reverse repurchase agreements, when-issued, delayed delivery and firm
commitment transactions, and short sales of securities, and
-25-
(e) for other proper purposes,
but only upon receipt of Proper Instructions, specifying the purpose or purposes
of such segregated account and certifying such purposes to be proper purposes of
such Series.
ARTICLE
VI
CERTAIN REPURCHASE
TRANSACTIONS
6.1 Transactions. If and to the
extent that the necessary funds and securities of a Series have been entrusted
to it under this Agreement, and subject to Custodian's right to foreclose upon
and liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian,
as agent of such Series, shall from time to time (and unless the Trust gives it
Proper Instructions to do otherwise) make from the Custody Account of such
Series the transfers of funds and deliveries of securities which such Series is
required to make pursuant to the Master Repurchase Agreement and shall receive
for the Custody Account of such Series the transfers of funds and deliveries of
securities which the seller under the Master Repurchase Agreement is required to
make pursuant thereto. Custodian shall make and receive all such transfers and
deliveries pursuant to, and subject to the terms and conditions of, the Master
Repurchase Agreement.
6.2 Collateral. Custodian shall
daily xxxx to market the securities purchased under the Master Repurchase
Agreement and held in the Custody Account of a Series, and shall give to the
seller thereunder any such notice as may be required thereby in connection with
such xxxx-to-market.
6.3 Events of Default. Custodian
shall promptly notify the Trust of any event of default under the Master
Repurchase Agreement (as such term "event of default" is defined therein) of
which it has actual knowledge.
-26-
6.4 Master Repurchase Agreement.
Custodian hereby acknowledges its receipt from the Trust of a copy of the
Master Repurchase Agreement. The Trust shall provide Custodian, prior to the
effectiveness thereof, with a copy of any amendment to the Master Repurchase
Agreement.
ARTICLE
VII
CERTAIN SECURITIES LENDING
TRANSACTIONS [IF APPLICABLE]
7.1 Transactions. If and to the
extent that the necessary funds and securities of a Series have been entrusted
to it under this Agreement, and subject to Custodian's right to foreclose upon
and liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian,
as agent of such Series, shall from time to time (and unless the Trust gives it
Proper Instructions to do otherwise) make from the Custody Account of such
Series the transfers of funds and deliveries of securities which such Series is
required to make pursuant to the Master Securities Loan Agreement and shall
receive for the Custody Account of such Series the transfers of funds and
deliveries of securities which the borrower under the Master Securities Loan
Agreement is required to make pursuant thereto. Custodian shall make and receive
all such transfers and deliveries pursuant to, and subject to the terms and
conditions of, the Master Securities Loan Agreement.
7.2 Collateral. Custodian shall
daily xxxx to market, in the manner provided for in the Master Securities Loan
Agreement, all loans of securities which may from time to time be outstanding
thereunder.
-27-
7.3 Defaults. Custodian shall
promptly notify the Trust of any default under the Master Securities Loan
Agreement (as such term "default" is defined therein) of which it has actual
knowledge.
7.4 Master Securities Loan
Agreement. Custodian hereby acknowledges its receipt from the Trust of a
copy of the Master Securities Loan Agreement. The Trust shall provide Custodian,
prior to the effectiveness thereof, with a copy of any amendment to the Master
Securities Loan Agreement.
ARTICLE
VIII
CONCERNING THE
CUSTODIAN
8.1 Standard of Care. Custodian
shall be held to the exercise of reasonable care in carrying out its obligations
under this Agreement, and shall be without liability to any Series or the Trust
for any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim which does not arise from willful
misfeasance, bad faith or negligence on the part of Custodian. Custodian shall
be entitled to rely on and may act upon advice of counsel in all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. In no event shall Custodian be liable for special, incidental or
consequential damages, even if Custodian has been advised of the possibility of
such damages, or be liable in any manner whatsoever for any action taken or
omitted upon instructions from the Trust or any agent of the Trust.
8.2 Actual Collection Required.
Custodian shall not be liable for, or considered to be the custodian of, any
funds belonging to a Series or any money represented by a check, draft or other
instrument for the payment of money, until Custodian or its agents actually
receive such funds or collect on such instrument.
-28-
8.3 No Responsibility for Title,
etc. So long as and to the extent that it is in the exercise
of reasonable care, Custodian shall not be responsible for the title, validity
or genuineness of any assets or evidence of title thereto received or delivered
by it or its agents.
8.4 Limitation on Duty to
Collect. Custodian shall promptly notify the Trust whenever any money or
property due and payable from or on account of any securities or other assets
held hereunder for a Series is not timely received by it. Custodian shall not,
however, be required to enforce collection, by legal means or otherwise, of any
such money or other property not paid when due, but shall receive the proceeds
of such collections as may be effected by it or its agents in the ordinary
course of Custodian's custody and safekeeping business or of the custody and
safekeeping business of such agents.
8.5 Express Duties Only.
Custodian shall have no duties or obligations whatsoever except such duties and
obligations as are specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against Custodian. Custodian shall
have no discretion whatsoever with respect to the management, disposition or
investment of the Custody Account of any Series and is not a fiduciary to any
Series or the Trust. In particular, Custodian shall not be under any obligation
at any time to monitor or to take any other action with respect to compliance by
any Series or the Trust with the 1940 Act, the provisions of the Trust’s
declaration of trust or by-laws, or any Series' investment objectives, policies
and limitations as in effect from time to time.
-29-
ARTICLE
IX
INDEMNIFICATION
9.1 Indemnification. Each Series
shall indemnify and hold harmless Custodian, any sub-custodian appointed
pursuant to this Agreement and any nominee of any of them, from and against any
loss, damages, cost, expense (including attorneys' fees and disbursements),
liability (including, without limitation, liability arising under the Securities
Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, and any federal,
state or foreign securities and/or banking laws) or claim arising directly or
indirectly (a) from the fact that securities or other assets in the Custody
Account of such Series are registered in the name of any such nominee, or (b)
from any action or inaction, with respect to such Series, by Custodian or such
sub-custodian or nominee (i) at the request or direction of or in reliance on
the advice of the trust or any of its agents, or (ii) upon Proper Instructions,
or (c) generally, from the performance of its obligations under this Agreement
with respect to such Series, provided that Custodian, any such sub-custodian or
any nominee of any of them shall not be indemnified and held harmless from and
against any such loss, damage, cost, expense, liability or claim arising from
willful misfeasance, bad faith or negligence on the part of Custodian or any
such sub-custodian or nominee.
9.2 Indemnity to be Provided. If
the Trust requests Custodian to take any action with respect to securities or
other assets of a Series, which may, in the opinion of Custodian, result
in Custodian or its nominee becoming liable for the payment of money
or incurring liability of some other form, Custodian shall not be required to
take such action until such Series shall have provided indemnity
therefor to Custodian in an amount and form satisfactory to
Custodian.
-30-
9.3 Security. As security for the
payment of any present or future obligation or liability of any kind which a
Series may have to Custodian with respect to or in connection with the Custody
Account of such Series or this Agreement, or which such Series may otherwise
have to Custodian, the trust hereby pledges to Custodian all securities, funds
and other assets of every kind which are in such Custody Account or otherwise
held for such Series pursuant to this Agreement, and hereby grants to Custodian
a lien, right of set-off and continuing security interest in such securities,
funds and other assets.
ARTICLE
X
FORCE
MAJEURE
Custodian shall not be liable for any
failure or delay in performance of its obligations under this Agreement arising
out of or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority; actions
by any governmental authority, de jure or de facto; or inability to obtain
labor, material, equipment or transportation.
-31-
ARTICLE
XI
REPRESENTATIONS AND
WARRANTIES
11.1 Representations
With Respect to Series. The Trust represents and
warrants that (a) it has all necessary power and authority to perform the
obligations hereunder of each Series, (b) the execution and delivery by it of
this Agreement, and the performance by it of the obligations hereunder of each
Series, have been duly authorized by all necessary action and will not violate
any law, regulation, declaration of trust, by-law, or other instrument,
restriction or provision applicable to it or such Series or by which it or such
Series, or their respective assets, may be bound, and (c) this Agreement
constitutes a legal, valid and binding obligation of each Series, enforceable
against it in accordance with its terms.
11.2 Representations
of Custodian.
Custodian represents and warrants that (a) it has all necessary power and
authority to perform its obligations hereunder, (b) the execution and delivery
by it of this Agreement, and the performance by it of its obligations hereunder,
have been duly authorized by all necessary action and will not violate any law,
regulation, charter, by-law, or other instrument, restriction or provision
applicable to it or by which it or its assets may be bound, and (c) this
Agreement constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with its terms.
ARTICLE
XII
COMPENSATION OF
CUSTODIAN
Each Series shall pay Custodian such
fees and charges as are set forth in Exhibit E hereto, as such Exhibit E may
from time to time be revised by Custodian upon 14 days' prior written notice to
the Trust. Any annual fee or other charges payable by a Series shall be paid
monthly by automatic deduction from funds available therefor in the Custody
Account of such Series, or, if there are no such funds, upon presentation of an
invoice therefor. Out-of-pocket expenses incurred by Custodian in the
performance of its services hereunder for any Series and all other proper
charges and disbursements of the Custody Account of such Series shall be charged
to such Custody Account by Custodian and paid in the same manner as the annual
fee and other charges referred to in this Article XII.
-32-
ARTICLE
XIII
TAXES
13.1 Taxes
Payable by Series. Any and all taxes, including
any interest and penalties with respect thereto, which may be levied or assessed
under present or future laws or in respect of the Custody Account of any Series
or any income thereof shall be charged to such Custody Account by Custodian and
paid in the same manner as the annual fee and other charges referred to in
Article XII above.
13.2 Tax
Reclaims. Upon
the written request of the Trust, Custodian shall exercise, on behalf of any
Series, any tax reclaim rights of such Series which arise in connection with
foreign securities in the Custody Account of such Series.
ARTICLE
XIV
AUTHORIZED PERSONS;
NOTICES
14.1 Authorized
Persons.
Custodian may rely upon and act in accordance with any notice, confirmation,
instruction or other communication which is reasonably believed by
Custodian to have been given or signed on behalf of the Trust by one of the
Authorized Persons designated by the Trust in Exhibit B hereto, as it may from
time to time be revised. The Trust may revise Exhibit B hereto at any time by
notice in writing to Custodian given in accordance with Section 14.4 below, but
no revision of Exhibit B hereto shall be effective until Custodian actually
receives such notice.
-33-
14.2 Investment
Advisers.
Custodian may also rely upon and act in accordance with any Written or Oral
Instructions given with respect to a Series which are reasonably believed by
Custodian to have been given or signed by one of the persons designated from
time to time by any of the investment advisers of such Series who are specified
in Exhibit C hereto (if any) as it may from time to time be revised. The Trust
may revise Exhibit C hereto at any time by notice in writing to Custodian given
in accordance with Section 14.4 below, and each investment adviser specified in
Exhibit C hereto (if any) may at any time by like notice designate an Authorized
Person or remove an Authorized Person previously designated by it, but no
revision of Exhibit C hereto (if any) and no designation or removal by such
investment adviser shall be effective until Custodian actually receives such
notice.
14.3 Oral
Instructions.
Custodian may rely upon and act in accordance with Oral Instructions. All Oral
Instructions shall be confirmed to Custodian in Written Instructions. However,
if Written Instructions confirming Oral Instructions are not received by
Custodian prior to a transaction, it shall in no way affect the validity of the
transaction authorized by such Oral Instructions or the authorization given by
an Authorized Person to effect such transaction. Custodian shall incur no
liability to any Series or the Trust in acting upon Oral Instructions. To the
extent such Oral Instructions vary from any confirming Written Instructions,
Custodian shall advise the Trust of such variance, but unless confirming Written
Instructions are timely received, such Oral Instructions shall
govern.
-34-
14.4 Addresses
for Notices.
Unless otherwise specified herein, all demands, notices, instructions, and other
communications to be given hereunder shall be sent, delivered or given to the
recipient at the address, or the relevant telephone number, set forth after its
name hereinbelow:
If to the
Trust:
for
[INSERT NAME OF
SERIES]
c/o U.S.
Bancorp Mutual Fund Services
X.X. Xxx
000
Xxxxxxxxx,
XX 5320
Attention:
Xxx Xxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If to
Custodian:
CUSTODIAL
TRUST COMPANY
000
Xxxxxxxx Xxxxxx
Xxxxxxxxx,
Xxx Xxxxxx 00000-0000
Attention:
Vice President - Trust
Operations
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
or at
such other address as either party hereto shall have provided to the other by
notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
-35-
14.5 Remote
Clearance. With
the prior consent in writing of Custodian, the Trust may give Remote Clearance
Instructions (as defined hereinbelow) and Bulk Input Instructions (as defined
hereinbelow) for the receipt, delivery or transfer of securities, provided that
such Instructions are given in accordance with the procedures prescribed by
Custodian from time to time as to content of instructions and their manner and
timeliness of delivery by the Trust. Custodian shall be entitled to conclusively
assume that all Remote Clearance Instructions and Bulk Input Instructions have
been given by an Authorized Person, and Custodian is hereby irrevocably
authorized to act in accordance therewith. For purposes of this Agreement,
"Remote Clearance Instructions" means instructions that are input directly via a
remote terminal which is located on the premises of the Trust, or of an
investment adviser named in Exhibit C hereto, and linked to Custodian; and "Bulk
Input Instructions" means instructions that are input by bulk input computer
tape delivered to Custodian by messenger or transmitted to it via such
transmission mechanism as the Trust and Custodian shall from time to time agree
upon.
ARTICLE
XV
TERMINATION
Either party hereto may terminate this
Agreement with respect to one or more of the Series by giving to the other party
a notice in writing specifying the date of such termination, which shall be not
less than sixty (60) days after the date of the giving of such notice. Upon the
date set forth in such notice this Agreement shall terminate with respect to
each Series specified in such notice, and Custodian shall, upon receipt of a
notice of acceptance by the successor custodian, on that date (a) deliver
directly to the successor custodian or its agents all securities (other than
securities held in a Book-Entry System or Securities Depository) and other
assets then owned by such Series and held by Custodian as custodian, and (b)
transfer any securities held in a Book-Entry System or Securities Depository to
an account of or for the benefit of such Series, provided that such Series shall
have paid to Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled.
-36-
ARTICLE
XVI
LIMITATION OF
LIABILITIES
To the
extent that the Trustees of the Trust are regarded as entering into this
Agreement, they do so only as Trustees of the Trust and not individually. The
obligations under this Agreement of the Trust or any Series shall not be binding
upon any Trustee, officer or employee of the Trust individually, or upon any
holder of Interests in any Series individually, but shall be binding only upon
the assets and property of such Series. Such Trustees, officers, employees and
holders, when acting in such capacities, shall not be personally liable under
this Agreement, and Custodian shall look solely to the assets and property of
each Series for the performance of this Agreement with respect to such Series
and the payment of any claim against such Series under this
Agreement.
ARTICLE
XVII
TRANSFERS TO BS SECURITIES
AND AFFILIATES
Custodian shall, without any further
consent from Trust, promptly and fully comply with any order or instruction of
BS Securities or any affiliate thereof other than Custodian itself (BS
Securities and any such affiliate, a “Bear Xxxxxxx Entity”) that pursuant to any
Institutional Account Agreement then in effect between BS Securities and other
Bear Xxxxxxx Entities, on the one hand, and Trust, on the other hand, directs
Custodian to transfer any security or other property from the Account (i) to any
account of Trust at BS Securities or another Bear Xxxxxxx Entity or
(ii) to any account of BS Securities or another Bear Xxxxxxx Entity that is
maintained for the benefit of Trust, provided, however, that Custodian shall not
be obligated to comply with any such order or instruction if and to the extent
that any such security or other property credited to the Account is required as
collateral for any outstanding advance or other obligation under this Agreement
or any loan or other agreement between Custodian and Trust.
-37-
ARTICLE
XVIII
MISCELLANEOUS
18.1 Business
Days. Nothing
contained in this Agreement shall require Custodian to perform any function or
duty on a day other than a Business Day.
18.2 Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the conflict of law principles
thereof.
18.3 References
to Custodian. The
Trust shall not circulate any printed matter which contains any reference to
Custodian without the prior written approval of Custodian, excepting printed
matter contained in the prospectus or statement of additional information for a
Series and such other printed matter as merely identifies Custodian as custodian
for a Series. The Trust shall submit printed matter requiring approval to
Custodian in draft form, allowing sufficient time for review by Custodian and
its counsel prior to any deadline for printing.
18.4 No
Waiver. No
failure by either party hereto to exercise, and no delay by such party in
exercising, any right hereunder shall operate as a waiver thereof. The exercise
by either party hereto of any right hereunder shall not preclude the exercise of
any other right, and the remedies provided herein are cumulative and not
exclusive of any remedies provided at law or in equity.
-38-
18.5 Amendments. This Agreement cannot be
changed orally and, except as otherwise provided herein with respect to the
Exhibits attached hereto, no amendment to this Agreement shall be effective
unless evidenced by an instrument in writing executed by the parties
hereto.
18.6 Counterparts. This Agreement may be
executed in one or more counterparts, and by the parties hereto on separate
counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
18.7 Severability. If any provision of this
Agreement shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired thereby.
18.8 Successors
and Assigns. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party hereto without the written
consent of the other party. Any purported assignment in violation of this
Section 17.8 shall be void.
18.9 Jurisdiction. Any suit, action or
proceeding with respect to this Agreement may be brought in the Supreme Court of
the State of New York, County of New York, or in the United States District
Court for the Southern District of New York, and the parties hereto hereby
submit to the non-exclusive jurisdiction of such courts for the purpose of any
such suit, action or proceeding, and hereby waive for such purpose any other
preferential jurisdiction by reason of their present or future domicile or
otherwise. Each of the parties hereto hereby irrevocably waives
its right to trial by jury in any suit, action or proceeding with respect to
this Agreement.
-39-
18.10 Patriot
Act. The Trust acknowledges that Custodian is committed to complying with
United States statutory and regulatory requirements designed to combat money
laundering and terrorist financing. The USA Patriot Act requires that all
financial institutions obtain certain identification documents or other
information in order to comply with their customer identification procedures.
Until Customer provides the required information or documents requested by
Custodian in this regard, the Trust acknowledges that Custodian may not be able
to open an account for the Trust or any of the Series.
18.11 Headings. The headings of sections in
this Agreement are for convenience of reference only and shall not affect the
meaning or construction of any provision of this Agreement.
(signature
page follows)
-40-
IN WITNESS WHEREOF, each of
the parties hereto has caused this Agreement to be executed in its name and on
its behalf by its representative thereunto duly authorized, all as of the day
and year first above written.
|
on
behalf of and acting with respect to the
|
|
series
listed on Schedule A hereto
|
|
By:
/s/ Xxx Xxxxxxxxxx
|
|
Name:
Xxx Xxxxxxxxxx
|
|
Title:
President
|
|
CUSTODIAL
TRUST COMPANY
|
|
By:
/s/ Xxx
Xxxxxxxxxxx
|
|
Name:
Xxx Xxxxxxxxxxx
|
|
Title:
President
|
-41-
EXHIBIT
A
SERIES
|
Convertible
Bond Arbitrage -1
|
|
Fixed
Income Arbitrage - 1
|
|
Merger
Arbitrage - 1
|
|
Long/Short
Equity — Earnings Revision - 1
|
|
Long/Short
Equity — Momentum - 1
|
|
Long/Short
Equity — Deep Discount Value - 1
|
|
Long/Short
Equity — International - 1
|
|
Long/Short
Equity — Global - 1
|
|
Long/Short
Equity — REIT - 1
|
|
Distressed
Securities & Special Situations - 1
|
|
Distressed
Securities & Special Situations - 2
|
|
Global
Hedged Income – 1
|
-42-
Exhibit
B
Authorized
Persons
Set forth
below are the names and specimen signatures of the persons authorized by the
UNDERLYING FUNDS TRUST
to administer the custody Accounts of the series.
|
Name
|
Signature
|
|
|
Xxx
Xxxxxxxxxx
|
/s/Xxx Xxxxxxxxxx | |
|
Xxxxxxxx
Xxxxxxxxxx
|
/s/Xxxxxxxx Xxxxxxxxxx | |
-43-
EXHIBIT
C
INVESTMENT ADVISERS ALL SERIES
_______________________
-44-
EXHIBIT
D
APPROVED
FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
ALL
SERIES
|
Foreign
Sub-custodian
|
Country(ies)
|
Securities
Depositories
|
|
|
||
-45-
EXHIBIT E
CUSTODY FEES AND TRANSACTION
CHARGES
Annual Fee. Each Series shall
pay Custodian an annual fee equal to the greater of (i) $6,000, and (ii) the sum
of the amounts obtained by applying per annum percentage rates to the value of
the assets in the Custody Account of such Series as follows:
─ ____%
(three basis points) to the first $20 million, plus
─ ____%
(two basis points) to the next $20 million, plus
─ ____%
(one basis point) to all amounts over $40 million,
with such
fee to be payable monthly and with the value of such assets for this purpose
being their market value on the last Business Day of the month for which such
fee is charged.
Domestic Transaction Charges.
Each Series shall pay Custodian the following transaction charges for
transactions by such Series in the United States, all such charges to be payable
monthly:
(1) a transaction charge of $9
for each receive or deliver of book-entry securities into or from the Custody
Account of such Series (but not for any such receive or deliver of book-entry
securities loaned by such Series or constituting collateral for a loan of
securities, or any such receive or deliver in a repurchase transaction
representing (i) a cash sweep investment for such Series’ account or (ii) the
investment by such Series of cash collateral for a loan of
securities);
(2) a transaction charge of $40
for each receive or deliver into or from such Series’ Custody Account of
securities in physical form;
-46-
(3) a transaction charge of $3
for each principal payment on mortgage-backed and other asset-backed securities
in the Custody Account;
(4) a transaction charge for each
repurchase transaction in the Custody Account of such Series which represents a
cash sweep investment for such Series’ account, computed on the basis of a
360-day year and for the actual number of days such repurchase transaction is
outstanding at a rate of 0.10% (ten basis points) per annum on the amount of the
purchase price paid by such Series in such repurchase transaction;
(5) an administrative fee for
each purchase in the Custody Account of such Series of shares or other interests
in a money market or other fund, which purchase represents a cash sweep
investment for such Series’ account, computed for each day that there is a
positive balance in such fund to equal 1/365th of 0.10% (ten basis points) on
the amount of such positive balance for such day, provided, however, that no
such fee shall be charged if such money market or other fund, or any affiliate
thereof, pays fees or other remuneration to Custodian in connection with the
account or accounts that Custodian maintains with such money market or other
fund for the investment of the assets of Custodian’s customers;
(6) a charge of $7 for each
"free" domestic transfer of funds from the Custody Account of such Series;
and
(7) a service charge for each
holding of securities or other assets of such Series that are sold by way of
private placement or in such other manner as to require services by Custodian
which in its reasonable judgment are materially in excess of those ordinarily
required for the holding of publicly traded securities in the United
States.
International Fees and Transaction
Charges. Each Series shall pay Custodian the following fees and
transaction charges for Foreign Assets in the Custody Account of such Series and
for transactions by such Series outside the United States, all such fees and
charges to be payable monthly:
-47-
(1) a transaction charge of $35
for each receive or deliver of book-entry securities into or from the Custody
Account of such Series that settle in Euroclear or Clearstream;
(2) all fees and charges of the
Eligible Foreign Custodian (or overseas branch of an Eligible Domestic Bank)
and/or Eligible Foreign Securities Depository that are payable by Custodian with
respect to Foreign Assets in the Custody Account of such Series that are placed
or maintained by Custodian with such Eligible Foreign Custodian (or such
overseas branch) and/or such Eligible Foreign Securities
Depository;
(3) a fee, in such amount as
shall be determined by Custodian, for each tax reclaim made by Custodian with
respect to a Foreign Asset of such Series; and
(4) a charge of $7 for each
"free" international transfer of
funds
from the Custody Account of such Series;
-48-
(5) a service charge for each
holding of securities or other assets of such Series that are sold by way of
private placement or in such other manner as to require services by Custodian
which in its reasonable judgment are materially in excess of those ordinarily
required for the holding of Foreign Assets consisting of publicly traded
securities.
-49-
